The Orlando area is on track to eclipse $1 billion in apartment sales this year, even without a condo-conversion craze. Sales in the metropolitan area through Oct. 31 totaled about $865 million, said Shelton Granade. first vice president of the multi-housing group for the commercial brokerage CB Richard Ellis. The brokerage giant's Orlando office has represented the seller in $532 million worth of apartment sales this year, by far the largest amount for any one brokerage locally that handles deals involving apartments with at least 100 units.
The $1 billion projection is big, but it's also just a typical year's worth of apartment sales for the four-county metro area, Granade said. "That's returning to a more average year," he said during a telephone interview Tuesday from his office on South Orange Avenue.
The previous two years were exceptional years locally for apartment sales, driven by the rush to convert complexes to condominiums. Orlando was one of the hottest condo-conversion markets in the country; buyers snapped up $3 billion worth of apartments in 2006 and $2.5 billion in 2005, according to CB Richard Ellis' comprehensive market survey. "It definitely got out of hand," Granade said of the conversion boom, as buyers bought apartments and quickly converted them to condo units to try to turn a quick profit. Now, apartment supply and demand are getting closer to being in balance, he said. "This year, people are buying for investment and operations, not conversions."
Granade and his team of three other apartment brokers together handled the 17 transactions that totaled $532 million in sales -- about 5,600 apartment units in all. The overall market in Orange, Seminole, Osceola and Lake counties consists of roughly 135,000 units, Granade said, which includes a "shadow market" of condo conversions that have reverted to rentals. "We're getting a better handle on that," Granade said of the shadow market, in terms of how many apartments-turned-condos are now being rented out. The local market was hit with a "slug" of about 5,000 such units late last year, he said. At first it was hard to estimate their number, though there were so many that they depressed rents. "We're still trying to work through that," Granade said, "but the balance is a lot better."
The apartment complexes sold so far this year run the gamut, he said, from older communities built in the 1970s to complexes barely a few years old and still in near-pristine condition. Complexes that need work are known in the trade as "value-add opportunities," because their market value can be considerably higher depending on the amount of refurbishment a particular owner is willing to finance.
New apartments that need little or no significant work are sometimes referred to by local pros as "AA institutional assets," in that they are "the best of the best," Granade said. There is no formal grade-letter system for apartment complexes, but the "AA asset" phrase is commonly used to denote the equivalent of a Class A property in commercial office space -- the newest buildings in the best locations.
CB Richard Ellis, based in Los Angeles, has about a half-dozen commercial-brokerage competitors in Central Florida, in terms of apartment and other multi-unit sales and acquisitions. The company's two main competitors in the sector locally are Apartment Realty Advisors, a South Florida-based brokerage, and Cushman & Wakefield, the global industry leader based in New York. Cushman & Wakefield was acquired in 2006 by a holding company for a family in Italy that controls automaker Fiat SpA and is entering big markets such as China..
Apartment Realty Advisors, known as ARA, recently opened its first full-service office in the Orlando area, in Winter Park, a reflecti
Source: OrlandoSentinel.com