Multi-Housing News - August 2009 - (Page 34)

market forecast Cloudy in the Sunshine State Are there opportunities in a market with rising unemployment, falling vacancies and an enormous shadow market? By Erika Schnitzer, Associate Editor With an ever-increasing population of Echo Boomers looking to rent, coupled with the lack of new homebuyers, the demand for apartments in Florida should, technically, be at an all-time high. Of course, today’s economic climate has contributed to declines in both occupancy and rent rates in all markets, but the Sunshine State’s unique fundamentals serve to add even more flame to the fire. Two of the largest job markets in the state are construction and tourism, both of which have effectively come to a halt. As of the end of June 2009, the unemployment rate was 10.6 percent, seasonally adjusted—the national average was 9.5 percent— according to the Bureau of Labor Statistics, and the demand for housing has trickled down significantly. When the economy started to flounder, the market thought it would be prime for renters—but this hasn’t happened. The glut in the for-sale market has driven much of the apartment renter pool into single-family homes and/or converted condos, says Steve Patterson, CEO of ZOM Inc., which owns, manages and develops multifamily communities throughout the state What caused such excess? Much of the condo supply had been pre-sold to speculators; now, “values are less than half, so speculators say they are better off walking from their deposit than to close, so the developer still owns and funds the operations. Since there is no market to sell individual units, they go for bulk sales,” explains James Donnelly, CEO and president of The Castle Group, a Plantation, Fla.-based property services firm. Compounding this problem, South Florida is facing another quandary. Some condo owners have stopped paying their fees, leaving the remaining residents with an increased share of expenses, while ZOM Inc.’s The Paramount on Lake Eola in Orlando was originally a 16-story, 306-unit mixed-use luxury condominium, including 45,000 sq. ft. of retail space and 10,000 sq. ft. of office space. Today, because of market conditions, the condo is being leased. 34 August 2009 | Multi-Housing News

Table of Contents for the Digital Edition of Multi-Housing News - August 2009

Multi-Housing News - August 2009
Contents
From the Editor
Executive Insight: David Hendrickson, JLL
Market Pulse
Operations
Finance: Green Lenders
Property Management: Mentoring
Development & Design: Green
Profile: AMLI
Market Report: Florida
Kitchen & Bath: Saving Water
Products: Paints & Finishes
Technology: Resident Screening
Perspective: Leasing Practices

Multi-Housing News - August 2009