CBRE CENTRAL FLORIDA MULTI-HOUSING GROUP: $ 570 million, 5,391 units closed in Central Florida 2007ORLANDO, FL--ORLANDO RENTAL MARKET FUNDAMENTALS
Metro Orlando’s multi-family rental market finished 2007 approaching stabilization a
s the effects of the condo conversion “shadow” market began to wane, according to a March mar
ket overview prepared by Shelton D. Granade, (photo at right) first vice president, CB Richard Ellis--Central Florida Multi-Housing Group, and Luke Wickham, (photo at left) director of operations in the same group.
Metro Orlando’s multi-family rental market finished 2007 approaching stabilization a
s the effects of the condo conversion “shadow” market began to wane, according to a March mar
ket overview prepared by Shelton D. Granade, (photo at right) first vice president, CB Richard Ellis--Central Florida Multi-Housing Group, and Luke Wickham, (photo at left) director of operations in the same group.Gross occupancy for the metro area finished above 94% at year end, according to M/PF Research. That figure was down about 1 point from a year earlier but held steady from March to December 2007. Average rent was also down about 1% for the year from $839 to $829 as many units intended for conversion to condominiums had to aggressively lease back up as rentals.
The encouraging news is that demand was up again in 3rd and 4th Qtr of 2007, and rents and occupancy are expected to rise throughout 2008. The shadow market is approaching stabilization and new construction of market-rate rentals will be modest this year. Both of those factors should bode well for the performance of apartment properties in 2008 and beyond. The following chart summarizes historical and forecasted statistics for Orlando:
2007 Sales Highlights
Orlando Sales: $ 1.06 billion
Avg. Price Per Unit: $90,083
Most Active Buyer: Private Investors
# Properties Purchased by Year Built:
2000 – current: 9
1990 – 1999: 9
1980 – 1989: 7
prior to 1979: 18
TOTAL 43
Orlando Sales: $ 1.06 billion
Avg. Price Per Unit: $90,083
Most Active Buyer: Private Investors
# Properties Purchased by Year Built:
2000 – current: 9
1990 – 1999: 9
1980 – 1989: 7
prior to 1979: 18
TOTAL 43
MARKET SNAPSHOT: Orlando’s total employment growth over the next two years is projected to be the best in the country – more than 116,000 new jobs from 2008 - 2010.
PROJECTIONS FOR CENTRAL FLORIDA
• Orlando’s increasing population and state leading job growth should stimulate demand for apartments, thus increasing occupancy and effective rental rates modestly in 2008
• By year end ‘08, annualized vacancy is expected to be 3.7% while average rents are forecast to grow from $829 to $861 per month according to MPF/Torto Wheaton
• As the homes and condos of more individuals and families go into foreclosure, those people will enter the rental market thus increasing demand for rental units
• Purchases of single family homes will continue to decrease, which will in turn keep traditional renters in apartment communities
• The condo conversion shadow market will be stabilized and leased by 3rd Qtr 2008
• Concessions are likely to remain prevalent early in the year, but will probably lessen further in the 2nd and 3rd Quarter of 2008.
• Orlando is poised for strong rent growth in the latter part of 2008 and early 2009
• Demand for rental units will continue to exceed the supply of new units under construction
• Orlando’s increasing population and state leading job growth should stimulate demand for apartments, thus increasing occupancy and effective rental rates modestly in 2008
• By year end ‘08, annualized vacancy is expected to be 3.7% while average rents are forecast to grow from $829 to $861 per month according to MPF/Torto Wheaton
• As the homes and condos of more individuals and families go into foreclosure, those people will enter the rental market thus increasing demand for rental units
• Purchases of single family homes will continue to decrease, which will in turn keep traditional renters in apartment communities
• The condo conversion shadow market will be stabilized and leased by 3rd Qtr 2008
• Concessions are likely to remain prevalent early in the year, but will probably lessen further in the 2nd and 3rd Quarter of 2008.
• Orlando is poised for strong rent growth in the latter part of 2008 and early 2009
• Demand for rental units will continue to exceed the supply of new units under construction
• Although there is tremendous demand for new apartment development, we anticipate a minimal amount of new apartment properties being built due to a lack of available land, high impact fees, and a cautious lending environment
• Cap rates are expected to remain low the 1st half of ‘08 but may increase after mid year
• Owners of properties with favorable assumable debt will be more active sellers as many private investors find it more challenging to find highly leveraged new debt
• Bank owned sales of assets intended for condo conversion will increase in ‘08
For more information regarding the MarketView, please contact:
Shelton D. Granade, First Vice President
CB Richard Ellis – Central Florida Multi-Housing Group
189 S. Orange Avenue, Suite 1900, Orlando, FL 32801
T. 407.839.3103 • F. 407.404.5001
shelton.granade@cbre.com
Luke Wickham, Director of Operations
CB Richard Ellis – Central Florida Multi-Housing Group
189 S. Orange Avenue, Suite 1900, Orlando, FL 32801
T. 407.839.3130 • F. 407.404.5001
Luke.wickham@cbre.com
Shelton D. Granade, First Vice President
CB Richard Ellis – Central Florida Multi-Housing Group
189 S. Orange Avenue, Suite 1900, Orlando, FL 32801
T. 407.839.3103 • F. 407.404.5001
shelton.granade@cbre.com
Luke Wickham, Director of Operations
CB Richard Ellis – Central Florida Multi-Housing Group
189 S. Orange Avenue, Suite 1900, Orlando, FL 32801
T. 407.839.3130 • F. 407.404.5001
Luke.wickham@cbre.com
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