"Investment activity has reflected a wait-and-see attitude," Robert W. Miller, senior vice president, multi-housing properties group, CB Richard Ellis, tells GlobeSt.com. "Developers, equity partners and lenders are approaching new projects with more caution."

Besides the dearth of class A for-sale product, there is also a shortage of prime development sites. The resulting effect is a plunge in building permits and a definite construction slowdown.

Miller feels this scenario should generate strong competition for the available properties for the rest of the year. "Demand for apartment properties by private capital investors should remain strong (but) institutional buyers remain on the sidelines," the broker says. However, Miller doesn't think sales volume will approach the 2000 number.

Only seven properties were sold in the first half, six of them class B assets. Just two complexes housed more than 160 units. A total 12 properties were sold over the past 12 months.

The sales picture grows grimmer when the numbers are pulled up on the screen: Total sales of $68.1 million averaged $52,505 per unit among 1,298 units, the highest average price per unit since 1998 but the lowest total dollar figure and volume.

By comparison, 24 properties containing 6,277 units were sold in 2000 for $308.1 million or an average $49,093 per unit. In 1999, 38 apartment complexes containing 9,481 units closed for a total $393.4 million or an average $41,490 per unit. The strongest year recently was 1998 when 47 properties with 13,803 units sold for an aggregate $585.2 million or an average $42,395 per unit.

On the absorption side, metro Orlando's multifamily industry is in healthy condition, the CBRE numbers show. In the first half, 3,670 new units were delivered with a net absorption of 5,150 units. There are 7,800 new units under construction (5,500 conventional units and 2,300 tax-credit units). Over the past 18 months, 16,000 units were completed and 14,500 units were rented. The market now has 129,000 apartments.

The hottest multifamily submarkets are Sanford/Lake Mary, MetroWest/Kirkman, East Orlando/University and Southwest Orlando. Occupancy is up by four percentage points overall to 93.6%. Miller projects occupancy will hit 94% in December of this year.

Average rental rates are up by 2.8% in the past six months and 5.2% over the past 12 months, primarily driven by new construction.

"However, when you factor out new construction and only look at existing, stabilized properties, same-store average rental rates have increased by a healthy 3.3% during the past 12 months," Miller says.

The South Orlando submarket had a 4.9% rent increase in the first half, the highest among a dozen submarkets. Miller expects rents to continue rising "but at more moderate levels than in the past."

Compared to other metro centers, however, Orlando's rents are more than competitive and below monthly mortgage payments on most new homes, brokers suggest. For example, the CBRE study shows a three bedroom-two bath apartment is renting for an average $862 per month; two bedroom, two bath, $770; two bedroom, one bath, $654; and one bedroom, one bath, $618.

Concessions have been reduced by 21% since yearend 2000, the study notes. Selected submarkets show higher concessions where new construction levels are high.

"As of mid year 2001, net effective rents were 2.6% below quoted streets, whereas they were 3.3% below street rents at yearend 2000," Miller says.

The multifamily specialist feels the metro Orlando market is firming up. "With lower construction activity, absorption on pace for a record year and occupancy rates rising again, the market appears to be strengthening," he tells GlobeSt.com.