MIAMI—Heading into 2018, where does opportunity lay for multifamily developers? What about investors?

GlobeSt.com caught up with Calum Weaver, executive managing director with Cushman & Wakefield's South Florida Multifamily team, to get exclusive insights from his report in this year-end wrap-up interview. You can still read part one of this interview: Did the 2017 South Florida Multifamily Market Live Up to the 2016 Hype?

GlobeSt.com: Heading into 2018, where does opportunity lay for multifamily investors and developers?

Weaver: Despite a dwindling supply of available properties, South Florida multifamily investment opportunities still exist in the value add and affordable housing markets. Value-add opportunities remain in high demand as investors look to target underserved, middle-market tenants, primarily in submarkets with little new construction in the last 20 or so years.

Opportunity also exists in suburban areas with strong school districts, where developments with larger units and family-oriented amenities like playgrounds and dog parks can perform well. Senior communities are in demand near affluent single-family markets with high walkability.

GlobeSt.com: What other predictions do you have for the South Florida multifamily market in the year ahead?

Weaver: One trend to watch in 2018 is the increasing size of multifamily sales. The size of multifamily sales is also changing.

For the past two years, 85% of the total sales occurred over $20 million. Historically, sales under $20 million accounted for over 30% of deal activity in South Florida. Sales under $20 million dropped by 43% from $829 million in 2016 to $472 million in 2017.

There is no panacea that accounts for the shift, however, factors such as limited available product to buy and a buy-sell bid gap have contributed to fewer sub-$20 million sales. In short, I anticipate more bigger sales in the market and fewer smaller sized sales.

Other things to look out for in 2018 include:

Value- add opportunities in submarkets with plus or minus 20-year delivery gap in new construction;
Affordable housing remains drastically underserved. It's important to understand the House tax reform bill and the possible elimination of private-activity bonds, as this this could have negative consequences for affordable development;
Price per pound: Look for assets below replacement cost. Go beyond the in-place numbers.
Properties near the Brightline and New Tri-Rail stations;
Senior communities near affluent single-family markets and in areas with good walkability;
Income-producing development sites for multifamily and condo.

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