ORLANDO-Condo converters are driving the multifamily sales market here, elevating per-unit prices to new highs in the first half of the year, according to a new industry analysis by Marcus & Millichap Real Estate Investment Brokerage Co.

So far in 2005, 20 deals involving assets valued at $20 million and more have been either closed or contracted. Over the past 12 months, deals totaling $20 million and more have accounted for 64% of transaction volume, up from 47% during the previous 12-month period, according to the analysis.

Transactions in 2005 include 13 by condo conversion buyers. The deals were priced at an average $140,000 per unit or 7% more than the median price of all deals valued at $20 million and more this year, says Steven M. Ekovich, Marcus & Millichap's Florida regional manager.

"Bolstered by the sale of a property with more than 1,000 units, the average size of an asset purchased for conversion has increased to more than 400 units, compared with 384 units last year," Ekovich says. At the same time, the average deal size has jumped to $53 million from $42 million. For all apartment deals, prices over the past 12 months have risen 26% to $55,952 per unit.

"Complexes selling for less than $10 million accounted for 72% of transaction velocity, and prices for these assets increased 20% to $47,727 per unit during the period," Ekovich says. He notes that recent activity in the less-than-$10 million segment has been concentrated in the South Central submarket, which includes Downtown, Maitland and Winter Park. Deals for less than $10 million in the South Central submarket typically involve properties with 60 units or less that are more than 30 years old.

"There is nothing presently occurring to diminish optimism about the Orlando apartment market," Ekovich sums up. "The metro's eye-opening growth continues unabated and apartment fundamentals are improving as a consequence," he notes. "A potential risk to continued improvement, though, might be a slowdown in leisure and hospitality. Even then, strong growth in other industries could mitigate the reduction in apartment demand that might arise from a scaling back in the sector."