Condo Conversions Decimate Rental Inventories

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MIAMI-Buyers of multifamily properties are flooding into the South Florida apartment market, primarily for condo conversion. More than 10,700 residential rental units were removed from South Florida’s multifamily stock last year, primarily for condo conversion, according to Gene A. Berman, a managing director of Marcus & Millichap and regional manager of the company’s Fort Lauderdale office. The strength of the condo conversion market is especially evident when the number of repeat sales is examined, according to Berman.

His firm’s data shows that approximately 200 of the 1,700 (multifamily property sale) deals that occurred from 2002 to mid-2005 involved properties that sold at least one other time during the period. “Average turnaround time for repeat sales is 13 months,” he says, “and assets are resold at an average premium of 28% to their initial per-unit price. In the instances of repeat sales, owners have been able to realize a substantial profit after holding an asset for a little more than a year,” he explains, “because buyers continue to stream into the market.”