For-sale housing is bouncing back in South Florida--more than anyone could have imagined a few years back--and apartment development is robust. Still, Zillow chief economist Stan Humphries tells us conditions bode well for apartment demand, with a few caveats. Theres a lot of apartment supply coming on line in the next few years, but demand will continue to fall heavily on the rental side because a lot of people still have impaired credit, and the Gen Ys are still less than sanguine about buying a place to live, Stan says. (They need to save their money in case Apple comes out with something new.) Also, a lot of people are doubled-up in housing, and theyre slowing moving out--into apartments, usually.
One thing working against rental demand is that for-sale housing is still more affordable in South Florida than it has been historically. But that isnt a strong enough headwind to derail apartment demand. Besides, Stan says, even thats going to change as home prices go up and interest rates rise. Major apartment South Florida developers certainly seem optimistic about apartment demand, at least to judge by the steady pace of apartment projects breaking ground. Just last week, the Related Group turned dirt on the 382-unit Flagler Village in Fort Lauderdale (pictured). Not long before that, Related started work on the 249-unit New River Yacht Club, also in Fort Lauderdale.
South Florida multifamily developers might be happy with the demand for apartments in their home market, but it doesnt mean theyre neglecting opportunities in other places. Recently Fort Lauderdale-based Stiles partnered with Nashville-based Ray Hensler to develop a 312-unit apartment in Nashville, at 12th Ave and Laurel St in the Gulch redevelopment district. (Florida is great, but you need to go a little farther north for good Southern BBQ.) Stiles chief investment officer Rocco Ferrera tells us that Stile likes the deal because its a high-end product in a core urban location and high-barrier market.Its entirely consistent with the projects we have in our pipeline here in South Florida, he says.
