Multifamily Market Alive and Well in Florida, Assesses Mortgage Broker

ORLANDO-Multifamily product is at the forefront of desirable real estate in Orlando and throughout the major markets of Florida, but the assets are getting more expensive to develop, a leading Orlando mortgage and investment banking firm tells GlobeSt.com.

For example, in suburban Orlando, development costs are approaching $90,000 per unit, while urban projects in some cases are nearing $150,000 per unit.

Land prices have escalated as much as $13,000 per unit in certain upscale suburban planned developments in Orlando and $20,000 per unit in South Florida’s affluent Boca Raton community. Downtown, dirt is costing $20,000 per unit in Orlando and $22,000 per unit in Downtown Boca.

Still, “the top-tiered markets, for the most part, are holding their own, especially when compared to the early ’90s,” Mark L. Findura, president of R.J. Twitty & Co. II Inc., tells GlobeSt.com. The B markets, however, are not faring as well.

“Concessions in extremely overbuilt markets have, at times, approached two months free rent per year,” Findura says.

Cap rates have decreased by 25 to 50 basis points over the past 12 months and the pipeline for dispositions has diminished, the broker says.

At the same time, unit sizes and rents have also increased. Owners are targeting tenants “interested in the ownership qualities in inherent in for-sale homes/townhomes,” Findura says.

Unit sizes range from 600 sf to 2,000 sf. Rents are rising, too, up to $2,000 per month at some Orlando area complexes and $3,000 per month in Boca Raton.

The supply side continues to grow. “Florida has survived two rather significant downturns in the ’90s where supply outpaced demand,” Findura recalls.

Overall, the class A and student markets appear to be the most resilient, the broker says. Leading the way with class A product in Orlando are developers Epoch, Trammell Crow Co., Post Properties, Echelon, GDC and Lincoln Property Co.

One factor affecting development costs is the expanded amenities developers are attaching with the product. They include parks, gardens, nine to 14-foot ceilings, surround sound, attached garages (some two-car), units over retail shops, pubs, and even florists and coffee houses.

Twitty has posted over $200 million apartment financing and sales over the past nine months. Pending apartment transactions total an additional $53 million for projects in Orlando and Atlanta. The firm’s principals aggregately have closed over 19,000 multifamily unit transactions.

Orlando projects closed over the last three quarters comprise a $65 million joint venture for Park Avenue at MetroWest, funded by Prudential, the $29 million sale of Gates of Harbortown, financed by Northwestern Mutual, the $24 million joint venture for Timacuan in suburban Lake Mary, funded by Prudential, and the $8.5 million land sale for Park Avenue at MetroWest, funded by MetroWest PD.

In Tampa, 80 miles west of Downtown Orlando, Twitty brokered the $28-million construction financing for the Tuscany Bay Apartments, funded by SouthTrust Bank, and the $33-million joint venture for Westchase Apartments, financed by Prudential.

The firm handled a $15.5-million permanent financing for Plantation Park in Charlotte, funded by ING.