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HOLLYWOOD, FL-The housing market may be down, but the strong fundamentals in the nonresidential sector are fueling investment activity throughout South Florida. In recent months, however, the market is experiencing a shift away from private to institutional investment, according to panelists during Wednesday’s RealShare South Florida event at the Hollywood Hard Rock Hotel.

“We have raised equity through private equity,” said Butters Construction & Development Inc. director of acquisitions Jeff Lapidus. “Our shift will be changing from private equity to institutional partners.”

Lapidus and other panelists discussed the trend during a session entitled, “Who’s Buying, Who’s Selling and Why in South Florida.” The panel was one of the best attended during the half-day event. Crocker Partners LLC senior vice president Angelo Bianco said during recent deals, his firm has teamed itself with institutional partners from areas, such as New York City and Washington, DC, that are looking for companies with knowledge of the local marketplace.

The shift can be explained, in part, because institutional investors often do not require as high a return on their investment as private investors, panelists said.

Due to its growth over the past several years, South Florida is considered a core market for commercial activity, akin to markets like New York City and Washington, DC. In addition to its strength, South Florida has some unique characteristics such as geographic barriers to entry. The area is bounded on the east by the Atlantic Ocean and the west by the Everglades. With virtually all available land already built out, existing properties will continue to thrive, resulting in long-term rental rate increases in office and other property types. “It’s a place where you’re going to have peak-to-peak growth,” Bianco said.

Despite the shift, private investors have not fled the market. “The private investors in Florida are so savvy that they complete well with other investors,” said CB Richard Ellis executive vice president, investment properties Christian Lee.

Lapidus added that, in recent months, the company has increased its typical five- to seven-year holding period to achieve expected yields. “We’ve got to get NOI up without cap rate compression,” he said. “To get the growth we need, we have to hold the property longer.”

The RealShare conference series is presented by Real Estate Media, publishers of GlobeSt.com and Real Estate Forum, as well as a number of industry newsletters.

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