ORLANDO-Faced with declining apartment occupancies and development plans for 4,000 new units on top of the 5,400 existing units, Sanford, FL city commissioners have frozen all new multifamily construction for nine months.
The municipality, 25 miles north of Downtown Orlando, has a permanent population of only 37,500.
Developers are expected to test the legality of the moratorium shortly in a number of planned civil lawsuits, area real estate lawyers tell GlobeSt.com on condition of anonymity.
The apartment glut was rooted in the 1995 opening of the 1.2 million-sf Seminole Towne Center, developed by Simon Properties Trust of Indianapolis, IN. Federal tax breaks on affordable apartment housing development for low-income tenants have also fueled the apartment construction blitz, area brokers tell GlobeSt.com.
“It’s like the office, industrial or retail sector,” a Sanford broker tells GlobeSt.com on condition of anonymity. “Apartment developers, like their brothers in the other categories will build anything, anywhere at any time so long as they are getting a break on funding or can use other people’s money.” The broker calls that strategy “the OPM principle.”
In the past two years alone, four apartment communities totaling 1,000 units have opened along the Interstate 4 corridor stretching from State Road 46 to Lake Mary Boulevard.
Occupancy levels at existing apartments in northwest Seminole County are down to 83% from 94% in 2000, according to Charles Wayne Consulting Inc., a Maitland, FL-based real estate researcher.
“Supply has obviously outpaced demand,” Dean Fritchen, senior associate, Coldwell Banker Commercial Real Estate Services, Winter Park, FL, tells GlobeSt.com. “The boom is over” in Sanford, at least, Fritchen says.