JLL Predicts $450M of Hotel Investment in Fort Lauderdale

FORT LAUDERDALE, FL—Investors may be flocking to Miami hotels but that doesn't leave the rest of South Florida out of the picture. Indeed, Fort Lauderdale, the yacht capital of the world, is attracting hotel investors to its shores.

Here's the backstory: The Miami hotel market has witnessed record-breaking transaction volumes annually since the downturn. But there are very few acquisition opportunities many investors are likely to employ hold strategies to maximize asset value. Now, Jones Lang LaSalle reports, Fort Lauderdale is hitting a peak in investor interest with projections of more than $450 million in hotel transactions expected to close in the next 12 months.

“Fort Lauderdale is becoming a premier location for leisure travelers and investors alike,” says Gregory Rumpel, managing director of JLL's Hotels & Hospitality Group. “The market, once positioned to capture Miami's infinite tourism overflow due to its location just 30 minutes north, has become a key destination itself. Thirteen-million tourists are expected to visit this year.”

In the last 24 months, Rumple and his Miami team have closed about $900 million in acquisition and finance transactions. And $722 million of which have been in Florida.

“Increased visitor demand coupled with upscale hotel product is attracting investors who are looking to deploy capital into the South Florida hotel market,” Rumpel says. “Available product in Miami is rising in price these days, so Fort Lauderdale becomes the natural choice for investment.”

As of August 2013, occupancy in Fort Lauderdale increased 47 consecutive months and revenue per available room (RevPAR) and average daily rates (ADR) are on the upswing, JLL reports. These key lodging fundamentals are being driving by strong city-wide marketing initiatives and leisure demand.

“During the 2007 'peak', Fort Lauderdale's market had very little upper-upscale, luxury product. The current supply, which was either under construction, ramping up or under renovation, was impacted by the economic crisis and prevented from experiencing its full potential,” says Rumpel. “With new luxury hotel product now in the market, and a constrained supply pipeline, the Fort Lauderdale lodging market is expected to see higher investment levels than ever before.”

Fort Lauderdale witnessed a 21% increase in hotel RevPAR from 2010 to 2012, and is up eight percent through year-to-date August 2013. The market remains robust and its strengthening performance is attracting private equity and REIT players seeking to capture market share as opportunities become available in Fort Lauderdale.

Investment opportunities currently being marketed by JLL in the area include the B Ocean Fort Lauderdale, which received a multi-million dollar renovation in 2010, and Bahia Mar, a 39-acre ocean front complex featuring one of the country's biggest marinas and the 296-key Doubletree by Hilton.

“Fort Lauderdale is experiencing a significant amount of momentum,” says Andrew Dickey, vice president of JLL's Hotels & Hospitality Group in Miami. “Business and leisure travelers are discovering all Fort Lauderdale has to offer, and hotel owners, operators and developers are responding to strong market performance by constructing or renovating high-quality properties.”

International tourism into Fort Lauderdale has tripled in the past three years, creating no shortage of demand for lodging. The city is easily accessible due to its proximity to three international airports and two of the busiest cruise ship ports in the world.

To accommodate this increased demand, the city of Fort Lauderdale has outlined an extensive expansion plan with nearly $6.5 billion allocated toward the development of infrastructure projects, including $1.2 billion apportioned to the Fort Lauderdale International Airport, and $2 billion for Port Everglades.

Dubbed the “Internet Coast,” and home to more than 6,000 high technology firms, in 2012, CNNMoney named Fort Lauderdale one of the best places to live and launch a business. The market is emerging as a global trade arena, with more than 40% of businesses in the area engaged in, or supporting, international commerce. Beyond its rapidly growing business environment, Fort Lauderdale offers countless high quality dining options, entertainment venues, shopping locations, museums, and art galleries to its visitors.

“Infrastructure improvement and new development are powering forward, and the momentum is attracting investment to the city ensuring positive growth and change,” says Nicki Grossman, president and CEO, Fort Lauderdale Visitors and Convention Bureau. “For example, the city is currently seeking development of a hotel convention center to cater to the needs of larger groups. The demand is there and this project would build an even more robust market.”