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ORLANDO-Apartment building sales and land to build new apartments are setting no records this year in metro Orlando’s investment market, according to a new analysis by Grubb & Ellis Co.

Through September, 14 properties with a total 3,482 units were sold for an aggregate $170 million or $49,068 per unit. In the peak 1999 period, 31 properties comprising 7,984 units sold for a total $341.3 million or $42,749 per unit.

“The drop in sales volume is the apparent result of investor concerns over increased supply, lack of appetite by pension funds and REITs, and an ongoing gap between bid and ask prices,” Steve Flanagan, senior vice president, multihousing investment group in the Grubb & Ellis Orlando office, tells GlobeSt.com.

Flanagan says investors “seem to be seeking going-in returns in the 9%-plus range, while property sellers seem convinced that capitalization rates of 8.5% or less are justified by the current level of interest rates.”

The largest transaction of the year to date was the $24.8 million, 336-unit Alexandria Apartments in southwest Orlando sold by Spanos Corp. to New York-based Sentinel Real Estate Corp. for $73,669 per unit.

An even higher per-unit price was recorded in the $17.3 million recapitalization by Katahdin Properties of the 212-unit Archstone Promenade at Fashion Square Mall at $81,604 per unit.

Flanagan and his longtime associate, Keith Ray, vice president, multihousing investment group, see some careful shopping in the coming months by buyers.

“We anticipate an investment sales market dominated by opportunistic buyers–at least until the impact of Sept. 11 on tourism and job creation works its way through the market,” Ray tells GlobeSt.com.

Like multihousing building sales, land sales are also in the basement. Nine-month sales totaled $31.1 million to handle 3,374 new units, down 64% from the 1999 peak when sales of $85.9 million supported 11,415 units, the Grubb & Ellis analysis shows.

Curiously, the report notes, the average price per apartment unit has risen 24% to $9,200 this year from $7,500 in 1999.

“This phenomenon is due to some combination of demand being focused on higher quality sites and Orange County’s continued de factor moratorium on residential rezoning,” Ray says.

He and Flanagan anticipate “modest growth in multihousing land sales, at least through the first half of 2002,” the broker says. The land focus will be largely in east and southeast Orlando and along the Interstate 4 corridor from Millennia to Altamonte Springs.

“This view is, of course, tempered by our inability to predict the impact of Sept. 11 on the Central Florida economy,” Flanagan says.

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