Multifamily Florida - Spring 2010 - (Page 15)

MARKETReport PH NE NC C BA SC Apartment Moves CB Richard Ellis Forecasts U.S. Apartment Market Improvement in 2010 Vacancy rates at U.S. apartments will decline in 2010, according to a new analysis from CBRE Econometric Advisors. CBRE EA’s updated forecast projects the vacancy rate dropping to an average of 6.8% in 2010, from an average of 7.4% in 2009, a 60 basis points improvement. The analysis also foresees less severe declines in effective rents in 2010 as compared to 2009 as rent discounts and concessions become less widespread. “We are seeing increased demand in many markets amid indications that the apartment market, while still seeing higher than normal vacancies, is stabilizing,” said Gleb Nechayev, economist, CBRE-EA. “2010 will be a year of differentiation, where the best income-producing properties — those distinguished by superior quality of construction and the right location — will be increasingly attractive to both occupiers and investors.” The 6.8% vacancy rate projected by CBRE Econometric Advisors is still 40 bps higher than the previous peak in 2003 when vacancy rate averaged 6.4% and 150 bps points higher than the long-term average vacancy rate of 5.3%. Nechayev adds, “Starting this year, we are likely to see more differentiation in property performance and pricing — not just across sectors and markets but across individual assets based on their quality and specific location. Liquidity shock and subsequent pricing correction affected all properties, including those with the strongest operating performance records and, in the case of new developments, those with the potential for such performance. “The relative attractiveness of such buildings to occupiers and investors should allow them to stay ahead of the rest even in the challenging years ahead; their values have probably bottomed out already, even as the broader market continues to adjust. Anecdotal evidence suggests that cap rates on the most highly sought-after assets have already come down in recent months.” NORTHEAST FLORIDA The wave of construction completed over the past three years will continue to affect property fundamentals in the Jacksonville market, SW according to the 2010 National Apartment Report by Marcus & Millichap. In 2009, the delivery of 2,000 units contributed to a 170 basis-point jump in vacancy. “Investment activity will pick up over the course of 2010 as buyers identify prospects and many owners either develop disposition strategies or seek to expand local portfolios,” says Matthew Fitzgerald, regional manager of Marcus & Millichap’s Jacksonville office. Following are some of the most significant aspects of the Jacksonville Apartment Research Report: • In 2010, employers will ease the pace of job cuts, as 3,000 positions are expected to be eliminated, a 0.5% decline. Last year, 19,000 jobs were shed. • Developers added 2,000 units in 2009 but will slow production to 1,000 units this year. • Supply growth and soft demand are expected to push up the vacancy rate 60 basis points in 2010 to 14.5%, after vacancy jumped 170 basis points last year. • Asking rents are forecast to fall 4.1% to $747 per month this year. Effective rents are projected to slip 5.3% to $693 per month. SE VIF Summer Oak LLC sold the 360-unit Summer Oak at St. Johns Apts. has sold for $12.4 million ($34,444 per unit), making it the largest apartment deal in Jacksonville so far this year.The Class C riverfront property at the base of the Mathews Bridge sold March 10 to a Canadian private investor under the name Summer Oak Group LLC. Walchle Lear Multifamily Advisors represented both the buyer and the seller in the deal. The 38 year-old property last sold in 2005 for $20.55 million, and was 88 percent occupied at the time of the sale. The 440-unit Falcon Lake Apts. on the Northside has gone back to the lender, KeyBank National Association, in a deed in lieu of foreclosure for $23 million, on December 31. KeyBank loaned the developer, Boca Raton-based Falcone Group LLC, $35.3 million in 2006. Construction was completed in 2008. MultifamilyFLORIDA l SPRING 2010 l 15

Table of Contents for the Digital Edition of Multifamily Florida - Spring 2010

Multifamily Florida - Spring 2010
FAA Calendar
President's Message
Legislative Update
FAA Legislative Days
NAA Capitol Conference
Market Report
In the News
Product/Service Council Directory
Index to Advertisers

Multifamily Florida - Spring 2010