SOUTHEAST SNAPSHOT, APRIL 2005

Orlando Multifamily Market

Currently, condominium conversion is the most significant trend enveloping the Orlando, Florida, multifamily submarket. Developers and converters for these projects will continue to acquire sites across the region, even in non-infill markets. At this time, approximately 15 conversion endeavors are planned for the Orlando area, including Lincoln at Delaney Square, Echelon at Cheney Place, Barclay Place and the Hamptons at Metrowest. In effect, combined with the low number of multifamily permits expected over the next year, the supply of new Class A product will remain low. The rental range for Class A properties has increased from $0.85 per square foot to more than $1.30 per square foot. In addition, occupancy rates for Class A properties have remained strong at 95 percent. These rates are expected to remain high, and concessions are expected to remain low. Due to relatively low land costs, rising population and job growth, all aspects of development currently are being undertaken in the region, effectively holding back an influx of new developers to the area.

Two new developments in the area are the mixed-use projects at 55 West on the Esplanade and in Orlando’s historic Thornton Park district. The latter development is a 16-story mixed-use community featuring a 28,800-square-foot Publix, 5,000 square feet of Class A retail space, 10,000 square feet of office space and more than 300 residential condominiums. Both developments are close to being sold out. Even though the condominium conversion trend is so widely popular, competition between conversions and new developments is usually minimal due to higher quality construction in the newer projects.

Other than the downtown area, new development is breaking ground in Ocoee and along State Route 417 (Florida Greenway). By providing easy access to downtown with their proximity to major highway systems such as S.R. 417 and the East-West Expressway and avoiding Interstate 4, these areas are seeing rapid development growth, and will continue to do so over the next year and in the future. Mostly Class A product is being produced due to expensive land prices; in addition, new income restricted or tax credit developments have taken place during the past year.

More than 40,000 jobs are expected to be added in 2005, and Orlando’s multifamily market is seeing high demand. Therefore, occupancies will remain high and rental rates will continue to increase, especially since unit delivery has slowed and conversions have reduced the overall supply of residences.

— Kevin Judd, senior vice president, Apartment Realty Advisors — Southeast Region

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