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ORLANDO-The area’s estimated 140,000-unit multifamily inventory is expected to experience a solid growth year in 2004 as employers anticipate creating 32,000 new jobs which should bolster occupancy and demand, according to separate third-quarter studies by the local offices of Marcus & Millichap Real Estate Brokerage Services Inc. and CB Richard Ellis Inc.

The brokerages, however, differ on their assessment of the investment sales market. CBRE sees robust activity; Marcus & Millichap says the market is lagging.

“Interest from investors was very strong in the third quarter and may get even stronger in 2004,” says Robert W. Miller, senior vice president in CBRE’s local office. “The Orlando market has seen more than four times as many multi-housing sales thus far in 2003 as compared to one year ago.”

Miller says there were 32 multifamily sales totaling about $431.9 million for the first nine months of this year. Those numbers compare with seven sales for about $89.8 million in the comparable 2002 period. The broker says 17 of the 32 sales this year came in the third quarter.

But Steven M. Ekovich, vice president and regional manager of Marcus & Millichap’s Orlando and Tampa offices, doesn’t see it that way at all. “Sales velocity has slowed this year with few transaction reported in the first nine months of year, but prices remain strong,” he says.

Ekovich’s figures show just over $100 million in multifamily sales was reported in the January-September period. That number compares with $253 million in 2002 sales and $196 million in 2001. “The median price rose from $40,600 per unit in 2002 to $48,000 per unit” at the end of the third quarter, Ekovich says. “

He says the city’s employment base is “forecast to expand dramatically in 2004, with growth of 3.4% anticipated. Tenant demand will remain high and completions low, allowing vacancy to decline in 2004.”

He expects “these improvements in market fundamentals will encourage further price appreciation in all apartment classes in the Orlando region next year.”

Ekovich notes the expected creation of 32,000 new jobs in 2004 “places Orlando among the fastest-growing employment markets in the United States for 2004.” In all of 2003, he says 13,000 jobs will be added, a gain of 1.4%. The leisure and hospitality sector is expected to add 6,000 new positions, a 3.7% gain. The education and health services and professional and business services sectors will each add 3,000 jobs. In 2004, the leisure and hospitality sector is expected to add 11,000 new employees, Ekovich says.

Construction is slowing, with just 2,500 units to be delivered in 2004, down from 4,700 units in 2003, the Marcus & Millichap study shows. But CBRE, using statistics from Dallas-based M/PF Research Inc., says “more than 2,900 units are expected to be completed in the fourth quarter of this year.” CBRE’s Miller notes “the increase in supply is likely to prevent significant gains through the end of 2003, but the market seems poised for a comeback in 2004.”

Miller puts the vacancy factor at 6.7%, or 93.3% occupancy. Ekovich has the vacancy level at 9.4%, or 90.6% occupancy. “Overall vacancy will decrease to 9% in 2004 after climbing by an estimated 50 basis points in 2003 to 9.4%,” he says.

“Demand remains firm, but absorption has not been strong enough to offset new deliveries,” Ekovich says. The Southwest/435 submarket’s vacancy is expected to rise from 8.7% in 2002 to 11.1% by year-end 2003, but will remain flat in 2004, the broker predicts. The far North Orlando submarket continues to record declining vacancy, dropping from 10% in 2002 to 9.4% in 2003, while expecting a dip to 9% nest year.

Asking rents are on track to reach and average $750 per month at the end of this year, an increase of 1.4% from 2002, the Marcus & Millichap study shows. Asking rents and effective rents will both increase in 2004, by 2% and 2.4% respectively. Effective rents dropped in 2003 by 1.2% to an estimated $678 per month.

The Northwest/US 441 submarket will probably have the strongest rent growth in 2004, with asking rents and effective rents each expected to increase by 2.7%, according to the Marcus & Millichap report.

“All other submarkets will experience growth in both asking rents and effective rents, except the Southeast/Airport submarket,” Ekovich projects.

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