What Does 2014 Hold for South Florida’s Multifamily Market?
GlobeSt.com
By Jennifer LeClaire
MIAMI—Continental Real Estate’s (CREC) Peter Mekras has his hands all over selling and capitalizing multifamily communities, as well as land for development, in South Florida. He’s also got his finger on the pulse of what submarkets are the hottest.
GlobeSt.com caught up with Mekras to get insight into those submarkets, as well as some stories about some of the most complex multifamily projects he’s financed his year. Be sure to read part one of this exclusive interview, Should Foreign Investors Pick Multifamily Over Condos?, if you missed it.
GlobeSt.com: Which Florida submarkets are most active for multi-family investment and what factors are contributing to the high level of activity?
Mekras: Many of the most active submarkets are in South Florida, including Doral, Coral Gables, and the Dadeland/Kendall Submarkets. Around Dadeland Mall and in Coral Gables, there are several class A apartment communities, just completed, under construction or on the verge of breaking ground. These are going to be the first new rental projects to rise in these communities in about a decade. Places like Doral, Coral Gables, and Kendall will always be in high demand among renters because they are some of the region’s largest employment hubs.
GlobeSt.com: Tell us about some of the most complex multi-family projects you have financed this year.
Mekras: I recently refinanced a 200-unit apartment building in Miami’s urban core, which was completed in 2009 during the height of the recession. My client developed the project at an attractive basis when property values were depressed. As the economy improved, the value of this property soared.
The challenge in getting the financing was getting lenders to understand that the appreciation of the property had outpaced replacement cost. Helping lenders understand how the value had changed was key because it determined how much my client could borrow.
GlobeSt.com: What does 2014 have in store for the multifamily market in South Florida?
Mekras: We are going to see a lot more class A communities. Most developers of this product are merchant building, so they should become available for purchase. We are back in the development cycle. This trend will accelerate going into 2015. This is good news for investors who haven’t seen trophy quality properties since before the recession available for acquisition.
As an example, only one trophy asset has sold to an investor over the last decade in Coral Gables. The need for quality rental units in Florida will only grow over the next several years. We are playing catch up with pent-up demand stemming from new household formation. Over the last five years, rental apartment developers weren’t building much beyond subsidized tax credit properties.
GlobeSt.com: What does 2014 have in store for the multifamily market in South Florida?
Mekras: We are going to see a lot more class A communities. Most developers of this product are merchant building, so they should become available for purchase. We are back in the development cycle. This trend will accelerate going into 2015. This is good news for investors who haven’t seen trophy quality properties since before the recession available for acquisition.
As an example, only one trophy asset has sold to an investor over the last decade in Coral Gables. The need for quality rental units in Florida will only grow over the next several years. We are playing catch up with pent-up demand stemming from new household formation. Over the last five years, rental apartment developers weren’t building much beyond subsidized tax credit properties.
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