Last year brought many changes to the Orlando, Florida, multifamily market. The first half of the year was positive: concessions had begun to decrease, construction activity had slowed, more units were absorbed than were delivered and occupancy rates had slowly begun to rise. With the second half of 2001 came September 11, which had a strong impact on the Orlando multifamily market.

Other factors have also had a negative effect on the market. "The low interest rate environment, which has sparked an increase in homeownership, and the level of new construction activity in Class A apartments have had a significant impact on the occupancy rates for properties built since 1990," says Robert Miller, senior vice president, multi housing properties, with CB Richard Ellis in Orlando. Properties built prior to 1990 have shown higher and more stable occupancy rates than those built since 1990. The overall occupancy rate for the market fell to 92 percent, down from 93.2 percent at year-end 2000. Absorption dropped off during the second half of the year. Almost 6,000 units were absorbed during 2001; only 800 of these were absorbed in the second half.

Construction activity, which is concentrated in select markets, slowed overall, with nearly 6,800 new units delivered to the market during 2001 compared to almost 13,900 units the year before. The Orlando metropolitan statistical area now contains more than 132,000 units. The most active submarkets for new development include Sanford/Lake Mary, MetroWest/Kirkman, Kissimmee and Southwest Orlando. There are approximately 3,800 conventional and 2,300 tax-credit units currently under construction, according to Charles Wayne Consulting.

Notable new projects in the area include The Waverly on Lake Eola. ZOM developed this 230-unit, 22-story project, which was recently completed in downtown Orlando. This upscale urban multifamily property brings a unique downtown living experience to Orlando, says Miller. The Waverly is one of five new multifamily properties that have either been completed in the past couple of years or are currently under construction in the downtown area. Prior to these, there had been virtually no multifamily product in downtown Orlando. Post Properties was the first multifamily developer in the downtown area with renovations and additions to the 245-unit Post Parkside. Currently, downtown multifamily projects command some of the highest rents in Orlando, Miller adds.

Average rental rates rose during the year; however, when concessions are considered, the spread between quoted rents and effective rents grew throughout 2001. The average quoted rent in Orlando rose 3 percent last year. "The average net effective rent, which factors in concessions and is a more accurate reflection of the collected rent, rose 1.3 percent during the year," Miller clarifies. "Net effective rents were 4.4 percent below the quoted rent as of year-end 2001." Submarkets with minimal concessions include East Orlando/University and South Orlando. Communities in Lake Mary/Sanford, Southwest Orlando and MetroWest/Kirkman are offering high concessions.

"Last year the Orlando multifamily market saw decreasing occupancy rates, slowing rent growth, an increase in concessions and a slowdown of construction activity and absorption," Miller concludes. "However, history has shown that the Orlando multifamily market can, and we expect will, rise quickly."


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