What Miami Burb Will Post Best MF Rent Growth?

MIAMI—Which markets will achieve the highest multifamily rents in the current cycle? Will financing changes impact multifamily development? What factors will have the biggest impact on multifamily in the next 12 to 18 months?

You've got questions. Robert Given, who leads CBRE's South Florida Multi-Housing Group, has answers. We caught up with Given, whose group completed over 43 sale transactions totaling in excess of $1.2 billion—that's over 10,000 units—in volume in 2013, to get his take on these issues. If you missed part one of this exclusive interview, you can still go back and read Miami Multifamily Still Seeking Equilibrium.

GlobeSt.com: What markets do you see achieving the highest rents in the current cycle?

Given: We expect the highest rents to be achieved in Brickell, Coral Gables, East Boca Raton/Delray, and again, some of those suburban-urban centers like Downtown Doral and Pembroke Gardens. They could reach $2.25 per square foot in the suburbs and $2.75 per square foot in the core urban markets. These new highwater mark rents would be about 25% to 30% higher than during previous peaks.

GlobeSt.com: Are there changes in financing that are impacting development?

Given: Construction loans have edged up from 65% to 70% in many cases, as it becomes more difficult to make  the development spreads necessary to justify the new development. There's more financing entering the market both for construction financing and for stable assets. In addition to the agencies, we're seeing a lot  more banks get involved and for value-add projects, more CBMS lending opportunities.

GlobeSt.com: What is going to have the biggest impact on multifamily over the next  12 to 18 months?

Given: Continued job creation and expansion of the tourism industry are critical, and both are moving in the right direction. We've even heard mumblings of spec office development.

The development of the high-speed rail line between Miami and Orlando also has the potential to be transformative. South American investors, who in prior cycles were comfortable holding small amounts of condo inventory and making small-cap to mid-cap land plays, are also starting to come in with larger amounts of investment capital looking for bigger opportunities.