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ORLANDO-Marcus & Millichap Real Estate Investment Brokerage Co. continues to paint a rosy picture of the metro area’s multifamily market but the numbers apparently are there to support the scenario, according to a new market analysis by the local office of the Encino, CA-based firm.

National buyers are focusing on Central Florida where property appreciation and reasonable deals abound, the report states. But prices for the properties are inching upwards.

“The median sales price is on track to increase by more than 20% before year end, to more than $52,000 per unit,” says Steven M. Ekovich, first vice president and regional manager of the firm’s local office. “Many of the trends contributing to this increase appear to be capable of lasting for at least the next 12 to 18 months.”

He says “national and local apartment investors have noticed the improvement in fundamentals, and strong demand is driving prices to new heights.” The $5-million-and-up segment of the market is accounting for more activity than usual, Ekovich says. “National buyers are concentrating on the Orlando region due to upside potential and affordability,” he adds. “As a result, sellers are putting together portfolios that are attracting strong interest from out-of-state buyers.”

A slowdown in new construction is helping to shore up vacancy rates, the broker says. Developers will deliver only 2,250 units this year, off nearly 900 units from 2003. The Southeast/Airport and the Southwest/435 submarkets together will account for half of 2004′s completion total.

“Developers are attracted to these regions due their accessibility to theme parks to the south,” the broker says. There are more than 5,000 units filling the construction pipeline with the majority located in the south Orlando and south Orange County.

“Job growth is strong in the leisure and hospitality industries and in the business and professional services sectors, signaling the diversity of the local employment pool,” Ekovich says. Vacancy is “rebounding strongly and should improve by 60 basis points to end 2004 at 7.7%,” he says. “Gains in vacancy are due to stronger demand associated with local in-migration and employment growth.”

The lowest vacancy rates in the metro area are in the more mature submarkets to the north, such as West Altamonte Springs and Northeast, State Road 436 and State Road 551 where access to office complexes are in demand. “Despite recent price appreciation, single-family homes are still relatively affordable in Orlando, and the loss of renters to homeownership remains a concern for local apartment owners,” Ekovich says.

Asking rents are expected to increase by 3% to $778 per month by year end. “The highest submarket rents in Orlando are those within close proximity to employment centers,” the broker says. Areas near theme parks support average rents of $919 per month in the far south submarket. “The Southwest/435 submarket, which is adjacent to Disney’s property, is expected to post the strongest rent growth this year at 4.4%,” Ekovich notes.

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