Apartment Slowdown Won't Affect Investment Values or Market Demand, Top Builder Contends

Storey tells GlobeSt.com strong job growth in metro Orlando last year was more than enough to offset record rental construction. "Basically, we have been immune to the slowdown and values in multifamily have remained strong," Storey says.

"Statistics show that since 1985, rental apartments in Central Florida comprise one of the most stable real estate investments in the market," Storey tells GlobeSt.com. Although he sees fewer apartment starts this year, job growth and absorption are strong. The general contractor is confident the rapid apartment construction pace will pick up again in 2002.

The luxury apartment segment will grow more slowly than entry level communities renting for 70 cents to 80 cents per sf, he says. "A significant portion of the new construction over the past two years has been in the luxury class where rents today range from 85 cents to 80 cents per sf," the contractor says. "Over the next year or 18 months, we should see occupancy remain at better than 90% and rents should increase into the low 90s, or more than 90 cents per sf."

One of the biggest problems facing luxury apartment developers today is the shortage of good sites. "Impact fees, coupled with steadily rising land prices, have limited opportunities in the luxury apartment market," Storey says.

Essex Builders Group has carved a niche in the luxury time share and apartment construction markets over the 10 years of its existence. The company is currently negotiating terms of a joint venture agreement to develop and build a 350-unit, $19 million luxury apartment project in Dallas. Several former Trammell Crow Co. partners are potential joint venture participants.