From luxury garden apartments and townhomes in the suburbs, to trendy condominiums and high-rise lofts in central business districts, new multifamily developments are in high demand. Trends show that more people are choosing to live in apartment communities, even if they can afford to purchase their own homes. These renters-by-choice are opting to live in downtown and high employment areas where they are closer to work and have all the amenities and convenience of urban living.

The Southeast as a whole is booming with multifamily projects. To provide an idea of what's going on in the region, five key markets have been highlighted, focusing on new developments and specific trends in each area.

Orlando

Metro Orlando is projected to be one of the nation's fastest growing regions through 2005 and, according to Marcus & Millichap, the area is projected to grow by 15 percent during that time. This is good news for Orlando's burgeoning multifamily market. In the last two years, the Orlando market has recorded unprecedented rates of absorption while continuing to experience strong construction. Occupancy hit a four-year low of 93 percent for 2000 even though the market absorbed 9,201 units, a record number in Orlando, according to Grubb & Ellis' 2001 Real Estate Forecast. "The market remains strong and occupancies are good. People are very optimistic because Orlando continues to generate strong new job growth," says Keith Ray, vice president of Grubb & Ellis.

Essex Builders Group, Inc., headquartered in Winter Park, Florida, has been very active in the market with at least three new construction starts. In Orange County, Essex will soon break ground on Lake Sherwood Terrace, a 20-acre, $16.5 million project. This 342-unit, three-story community will be completed by May 2002, according to Ed Storey, owner and CEO of Essex. Essex has also begun construction on a $17.5 million, 282-unit apartment community for Altman Development at Arbor Lakes in Sanford, and will soon begin construction on Indian Trace, a 736-unit, two-phase project approximately one mile from Seminole Town Center. "Indian Trace will be on 85 acres, but we're building on only half of that. The other half is wetland, a pristine preserve area that will be kept in its natural state. This will give it a more cozy environment," says Storey.

Post Properties has just finished leasing up Post Parkside, a 244-unit blend of new construction and adaptive re-use in the heart of downtown Orlando. Situated on Lake Eola, the community includes 121 high-rise luxury units that were formerly part of the historic Park Plaza hotel and 123 new units built next to the existing structure. The community had a total built-out cost of $31 million and also includes 30,000 square feet of commercial space leased to restaurants and community retailers.

Tarragon Development Corporation has just completed The Vintage on the Green, a 394-unit apartment complex in east Orlando that sits on 49 acres and a golf course, according to Robert Rohdie, president of Tarragon. Construction recently began on The Vintage at Lake Lotta, a two- and three-story, 199-unit, 12-acre luxury apartment community in Ocoee. Tarragon has also just broken ground on The Vintage at Lake Sherwood, a 304-unit community in Orange County.

LeCesse Development Corporation has three apartment communities that are either under construction or soon will be, according to President Sal Leccese. Construction has begun on The Grande Regency at Lake Lotus, and it will include 390 units and 32 two-story buildings in Altamonte Springs. This joint venture with Winter Park, Florida-based Del American Properties will be completed this month. Construction began this month on 280-unit Grande-Ville at River Place in Seminole County and will be completed in June 2002. GrandeVille on Delaney is a rehabilitation of 90 units in the old Cherokee Historic District in downtown Orlando. This upscale, infill property is under construction now and will be completed by the end of the year. "It would be impossible to put this kind of a structure in the downtown area today. In 1965, this was the place to live, and now it's going back to its roots," says Leccese.

Trammell Crow Residential has four new properties that are entering the market, according to Douglas Hoeksema, group managing partner at Trammell Crow. Recent completions include the Alexan Club at Maitland Center in Maitland. A combination of townhomes and garden apartments, it has 551 units and sits on 38 acres. Other recent completions in Orlando include 408 units at Alexan at World Gateway and 488 units at Alexan at Legacy Dunes near Disney/MGM Studios. Alexan at Metrowest, a combination of 510 townhomes and garden apartments, is slated for completion in November 2002 and will be located in MetroWest.

Raleigh

The Raleigh-Durham-Chapel Hill area is the most active multifamily market in North Carolina, according to Carolinas Real Data's 2001 Raleigh-Durham Apartment Report. Absorption reached an all-time high in the last six months of 2000, but supply still exceeded demand. In those six months, the area's vacancy rate increased from 7.2 percent to 8.1 percent, and it is expected to increase again this year to anywhere from 9 to 12 percent because of the large number of expected new apartment constructions.

Drucker & Falk has several communities in the works. Madison Glen, a mixed-use property in West Raleigh with 120 two- and three-story units, will soon be completed. Amelia Village, an affordable apartment community of 320 units, is scheduled for completion this summer in Clayton, just outside of Raleigh. "This is the first apartment community to go up in this town, and the officials are really excited," says Kellie Falk-Tillett, vice president of Drucker & Falk. The company's most unusual development is a warehouse conversion to loft apartments in downtown Durham called West Village, the first project of its kind. Offering 44 different floor plans with one to four bedrooms, this 243-unit complex will also have retail and office space.

Wood Partners is nearing completion on a 284-unit, three-story luxury apartment community called Autumn River in northern Raleigh, and construction has just begun on Alta Trace, a mixture of townhome and luxury garden apartments totaling 370 units in Durham just outside of Research Triangle Park. JPI is currently working on Phase I of Jefferson at Cary Towne, a 354-unit luxury apartment community located on Cary Towne Boulevard in west Raleigh. The projected completion date of Phase I is January 2002, and Phase II is scheduled to begin in January 2002 as well.

Northern Virginia/ Washington, D.C.

Northern Virginia continues to be a leader in the nation's multifamily market. According to Delta Associtates' 4th Quarter 2000 Report, the vacancy rates for garden apartments is at 1.1 percent, and rent growth accelerated 14.4 percent. Despite increased competition, actively marketing projects are experiencing solid absorption, and large numbers of planned projects continue to be in the pipeline. The technology submarkets of Reston/Herndon and East Loudoun County have 6,629 units in the pipeline. Alexandria has 3,520 units, with projects heavily concentrated near the region's employment centers, according to Delta Associates.

Timothy Smith, senior vice president of Berwin, Pennsylvania-based LCOR, says, "Northern Virginia is a strong market, as strong now as it has ever been. People have a real desire to live in high density development, so there's a real trend toward urban living here." One of LCOR's newest developments, The Warwick House in Crystal City/Pentagon City, is now in the second phase and will be completed in June 2002.

This 212-unit project is a joint venture with Northwestern Mutual Life Insurance Company in Minneapolis. The Henry Adams House, a 211-unit, 11-story high-rise apartment complex in the Woodley Park area of Washington, D.C., has been under construction since December 1999 and will start leasing this summer.

The Bozzuto Group has three new projects in the pipeline, according to Tom Bozzuto, CEO. Phase II of Regents Park near the Vienna, Virginia, Metro station was just completed with 200 units and is 86 percent leased. In Loudoun County, The Arbors at Broadlands, a four-story, 250-unit garden-style apartment community, is currently under way. Construction will begin late this year on another 453-unit project in Loudoun County in Brambleton.

Trammell Crow Residential will soon be delivering 339 units at Alexan Ryans Corner in the Ashburn area of Loudoun County and 218 units at The Townes of Herndon Center in Herndon, Virginia, according to Chip Bay, city partner. Trammell Crow also has five other projects planned for this year. "We've got 2,100 units that will start this year. We believe the D.C. market, especially Northern Virginia, is very strong, and we're seeing a great deal of interest in what we're doing," says Bay.

Charles E. Smith Residential Realty has finished three projects in the last year totaling 1,233 units. The company's new development, Alban Towers, is a 220-unit redevelopment of a historic landmark across from the National Cathedral in Washington, D.C., that is slated to open this spring.

Atlanta

Atlanta continues to have a good rate of employment growth and occupancies remain at 95.5 percent for garden properties. However, with a fear of recession on the horizon, trends seem to be pointing toward a slowdown in this growth, says Dale Henson of Dale Henson Associates, Inc. If this happens, the market will see an overall drop in occupancy, he notes.

Kevin Geiger, senior vice president at CB Richard Ellis, also sees a slow-down in new construction, but for different reasons. "It's very difficult to re-zone land for multifamily use in Atlanta, so it makes a great deal of the land unbuildable," says Geiger. He says that this is due to so many zoning restrictions and a tree ordinance in Dekalb County that restricts builders from cutting down old trees.

Gables Residential has three properties planned for completion in early 2002: Gables Paces at the intersection of Northside Drive and Howel Mill Road, Gables Montclaer on Clairmont Road and Gables Metropolitan in the Perimeter Center area. Phase I of Gables Metropolitan was recently completed.

"The Atlanta market has been healthy for the last 4 to 5 years. We're waiting to see what 2001 and 2002 will bring. Job growth is tapering off, and I think we might see a slight drop in occupancy and a decrease in rental rate growth," says Joe Wilbur, vice president at Gables.

Atlanta-based Southeast Capital Partners has five communities under construction, according to Jay Clark, president. Brickstone Heights and Borghese Villas are both planned townhomes; Brookwood Place will be a combination of townhomes and condominiums on Peachtree Road in the Brookwood area; Borghese will offer 64 new condos on Northside Parkway near West Paces Ferry; and the 24-story Museum Tower will offer 162 units adjacent to Centennial Olympic Park.

Archstone Communities is planning to deliver three new communities in the Atlanta area, according to Rob Seldin, vice president. "Atlanta has led the nation in job growth and new household creation for the last decade," he says. "With a relatively high median income and a low cost of living, this highly educated and young population creates a need for these multifamily units."

Post Properties has two apartment communities in the works. Post Biltmore is adjacent to Atlanta's historic Biltmore Hotel in Midtown. "Midtown Atlanta is becoming a national model for urban revitalization," says John Williams, chairman and CEO of Post. "Post Biltmore will be an important part of creating a thriving, mixed-use district," he says. Post Peachtree, located at 2626 Peachtree Road in Atlanta's Buckhead district, will be Post's first high-rise development in Atlanta. The first units for both Biltmore and Peachtree will be available in the fourth quarter of this year, with completion of each expected in 2002.

Batson-Cook will deliver The Phoenix on Peachtree, a 27-story, 69-unit, luxury condominium tower at 2881 Peachtree Road in Buckhead, in 2002. Distinguished by a "green design," The Phoenix will feature elevated garden areas, minimal land disturbance and the protection of existing, mature trees on site.

South Florida

Despite so many new deliveries to the market, South Florida's vacancy rates have dropped and should continue this year to close to 7 percent, according to David Luther, research manager at Marcus & Millichap. "Overall, in the U.S., everyone is forecasting slower growth this year. So you'll see a slowdown in employment growth, which should help the market to remain steady," says Luther. "There will be no overbuilding concerns because lenders will be more cautious with the economy slowing down. This will help keep apartment construction in check."

Trends in South Florida continue toward a 24/7 type of urban living, according to Jay Massirman, senior vice president at CB Richard Ellis Institutional Group. "People want to be closer to the cities and downtown areas," says Massirman. "This is where the upscale renters-by-choice choose to live -- close to employment, entertainment and the cultural aspects of the city. Two years ago it was pioneering to build in downtown Miami, and now it is the center of the bullseye. Now we're seeing this trend move to the balance of the state to places like Jacksonville, Tampa, Clearwater and St. Petersburg."

American Land Housing Group is working on more than three new developments in South Florida according to its president, Granville Tracy. The Strand will be a 275-unit, 15-story high-rise in the central business district of West Palm Beach, and it will house 16,000-17,000 square feet of retail. Tracy plans to start delivering units in the next 18 months. Hacienda Cove, which is almost complete, will be comprised of 306 units of townhomes and garden apartments in Fort Lauderdale. Cove at Scotia Plantation will have 240 townhomes and mid-rise units in Palm Beach County and will be delivering units in the next few months.

Charles E. Smith Residential Realty recently acquired Harbour House, a 804-unit high-rise in Bal Harbour, and plans to reposition it similar to the on-going programs at the company's other Southeast Florida properties like The Mirador in South Beach.

Wood Partners is developing 216 luxury apartment units at Alta Chase on SouthWest 8th Street just north of Woolbright Road in Boynton Beach, Florida, according to Jason McArthur, director.

Dallas-based JPI recently opened 198 apartment units on the east side of U.S. Highway 41 in Bonita Springs, just north of Naples. Jefferson on the Imperial River will cover approximately 27 acres and is expected to be completed in June. Jefferson on Camino Real in Boca Raton is scheduled to open in June also, and will feature a row of townhomes over flats directly fronting Camino Real and Southeast 9th Avenue. Behind the townhomes will be a 203-unit, nine-story mid-rise tower. "With easy access to US 1, I-95 and A1A, residents will enjoy freedom to visit a variety of destinations just minutes from their residence. The ocean is less the one mile east on Camino Real," says David Ward, divisional resident and managing partner of the Southern Division. The expected completion date for the community is March 2002.


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