South Florida Multifamily 2018 Mid-Year Update
R EPORT
WEAVE SOUTH FLORIDA MULTIFAMILY 2018 MIDYEAR MARKET UPDATE
Cushman & Wakefield MULTIFAMILY INVESTMENT SOUTH FLORIDA TEAM A trusted advisor, with over $20 BILLION in apartment sales in South Florida.
APARTMENT SALES IN SOUTH FLORIDA # 1
MULTIFAMILY MARKET UPDATE SOUTH FLORIDA
SOUTH FLORIDA
MULTIFAMILY MARKET UPDATE
MID-YEAR 2018 MARKET UPDATE
SOUTH FLORIDA MULTIFAMILY MARKET BULLISH. VACANCIES AT RECORD LOWS DESPITE NEW SUPPLY. In the first half of 2018, there were 133 multifamily sales totaling a little over $2 billion in the South Florida multifamily market. This is a 5% and 50% decrease from the first half of 2017 and 2016 respectively. Although sale activity slowed, it still represents the third highest level of activity ever recorded in the first half of any year. Sale activity was relatively evenly split between A (36%) B (34.9%) and C (29.1%) properties – albeit Miami-Dade and Broward were heavily focused in B and C sales, whereas Palm Beach was largely in A sales. We expect Class A sales to remain strong as new construction gets completed resulting in merchant developers looking to sell once properties are stabilized. Price per unit and price per square foot sales decreased slightly in the first half of the year but were at the second highest levels recorded (see graph 1). Finding deals was the biggest challenge in the market, particularly value-add opportunities. This is a natural progression, as many of these deals traded multiple times during this real estate cycle. As a result, investors with capital to deploy were finding themselves facing a dearth of for-sale assets to target in this space. In contrast, institutional deal activity, which in general is geared towards newer product, has more runway in the next few years because the construction pipeline for this asset class remains robust. 58 market-rate properties are currently under construction in South Florida with approximately 18,215 new units. To analyze Private Capital deal volume from a property perspective, we defined the primary targets for this group as market-rate properties that were built in 1980 or earlier. Private Capital multifamily investment in South Florida accounted for 20% to 30% of this space in recent years. The dollar sales volume of properties built in 1980 or earlier declined from a 2016 six-month high of $735 million to $494 million in 2018, a decrease of 33%. A slow-down in sales volume in this space has not affected price – the average sale year-to-date of 1980 or earlier product is $123,000 per unit, up from previous high of $120,000 in 2017. Many of these properties were prime “value-add” opportunities which are increasingly tougher to find, with more buyers than sellers in the market. RENTAL DEMAND In the first half of 2018, South Florida witnessed a net absorption of 6,466 units, meaning more units were absorbed than the 3,572 units that were completed. An increasing population, demographic shifts and higher single-family home pricing were contributing towards strong rental demand. In the past five years South Florida’s population increased by 403,000 (6.9%) and 331,350 new jobs were added. During the same period, 46,565 new apartment units were built. This means one unit has been built for every 8.7 net new residents. Over the next five years, South Florida is expected to see a positive net migration of 8.9% or 555,000 people. Using the same ratio, the region would need over 64,000 new rentals to keep pace with the population growth for the next five years. Currently, there was 18,215 units under construction at the end of the second quarter. Another way to consider demand is looking at the amount of new household formations - the number of new households created each year. Household formations in South Florida are expected to increase to over 50,000 each year in the next five years. Let’s conservatively assume 40,000 new households per year and 60% enter homeownership and 40% as renters (consistent with current homeownership rates) that represents 16,000 new renters per year in South Florida. The homeownership rate in South Florida is 63.4%, near a 30-year low. Since 2013, median single-family home prices increased 61.2%, 61.8% and 72.2% in Miami-Dade, Broward, and Palm Beach Counties respectively, making ownership even tougher and rental demand even stronger. The median home value in Miami-Dade is now over $338,000, meaning a renter who could afford a 10% down payment on a median-priced home in Miami-Dade would have a mortgage over $2,000 — $619 more than the average Miami-Dade rental.
Cushman & Wakefield MULTIFAMILY INVESTMENT SOUTH FLORIDA TEAM The MARKET LEADER in the sale, marketing & financing of multifamily properties and land development in SOUTH FLORIDA .
For more information, contact: CALUM WEAVER EXECUTIVE MANAGING DIRECTOR +1 954 377 0517 direct +1 786 443 3105 mobile calum.weaver@cushwake.com
www.cushwakesouthfl.com/multifamily
MULTIFAMILY INVESTMENT SALES ANALYSIS | SOUTH FLORIDA GRAPH 1 :: South Florida Historical Price/Unit Versus Price/SF SOUTH FLORIDA HISTORICAL PRICE/UNIT VERSUS PRICE /SF
MU LT I FAM I LY I NVE S TMENT | SOUTH F LOR I DA T E AM
$260
$250,000
Miami-Dade
$240
$225,000
$220
Broward
$200,000
$200
Palm Beach
$175,000
$180
$160
$150,000
$140
$125,000
$120
Price Per SF
$100,000 Price per Unit
$100
$80
$75,000
$60
$50,000
$40
$25,000
$20
$0
$0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018 (YTD)
* $1MM+ multifamily sales
Average per Unit
Average Per SF
GRAPH 2 :: South Florida Historical Transaction Volume Versus Number of Transactions SOUTH FLORIDA HISTORICAL TRANSACTION VOLUME ERSUS NUMBER OF TRANSACTIONS
$5.5
375
Miami-Dade
$2.5 Dollar Volume Billions $3.0 $3.5 $4.0 $4.5 $5.0
Broward
300
Palm Beach
225
150
$2.0
Number of Transactions
$1.5
75
$1.0
$0.5
$0.0
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018 (YTD)
* $1MM+ multifamily sales Source: CoStar
Dollar Volume
Number of Transactions
RENTAL SUPPLY There were currently 18,215 units under construction at the midyear. For the most part, new rental supply was quickly absorbed. There are certain submarkets with several new buildings delivering in a short duration, causing slower lease-ups. Despite an abundant amount of cranes that cover the South Florida landscape, new construction barely keeps pace with demand. Consider these two facts: 1) since 2013 there were 46,565 units built in South Florida. Under construction
units only account for 28% of the units in the current development cycle. The new supply thus far has not adversely effected the market even though 72% of the new supply has already been delivered; and 2) Rental demand remains strong (see previous paragraph). New construction can be visualized by all the new cranes. Population/household formation is surpassing the supply but is not always as easily identifiable – unless you are in rush hour traffic. Due to higher construction and land
costs, new supply has almost exclusively been geared towards Class A+ product. Affordable or Class B and C supply remained drastically under served and continues to be a problem in South
Florida. RENTS
Rents continued to increase in 2018, and for an eighth year in a row, rents were at record levels in South Florida. In the past five years, effective rents increased by 24%, 23%, and 25% in Miami-Dade, Broward, and Palm Beach
3
counties respectively. Aside from demand/supply factors, economic factors were improving. South Florida’s unemployment rate was 4.3%, the lowest level in over 10 years. In the past year median salary’s increased by 3.4% in Miami-Dade, 3.1% in Broward and 3.8% in Palm Beach County. For only the second time in ten years, income levels grew at a higher percentage rate than rental rates. Stronger employment and income levels will help with affordability and bodes well for multifamily fundamentals. Rent growth slowed from previous years but we anticipate it will continue to range from 2%-4% in 2018 for several reasons: 1) New rental supply was hitting the market with higher rents which increases the average rent in the market; 2) The headroom between B/C properties versus Class A remained significant, and can be over $600 per month in certain submarkets. Value-add buyers were improving many B/C properties and increasing rents to fill the gap in pricing within the market; and 3) Increasing rental supply continued to be quickly absorbed with few concessions or rent decreases. VACANCY RATES Year-to-date vacancy rates decreased in all three South Florida counties. For example, Miami-Dade’s vacancy rate was 4.3%, down from 5.1% at the beginning of the year. Class B and C properties have the lowest vacancies ever recorded in South Florida. Class B & C vacancy was 4.2% down from 5.1% in 2017. Only Miami- Dade experienced lower vacancy before at 3.4% in 2005 and 2006. Broward (4.5%) and Palm Beach (5.6%) have record low vacancy rates whereas Miami is lower at 3.6% but slightly above the 3.4% from 2005. We expect vacancies to remain low, albeit certain submarkets may experience short-term higher vacancies as new supply comes online. CAP RATES/INTEREST RATES The effect on cap rates relative to further interest rate increases is the biggest potential threat to the current market. In the past year interest rates increased +/- 60 basis points and are now nearer to 5% than 4%. Previous interest rate hikes were offset by spread compressions and there is a case that this can still continue to an extent. Currently, spreads on 10-year, moderate to full leverage loans range from 155 basis points (bps) to 165bps
CAP RATES Class A: 4.25% - 4.75% Class B: 4.75% - 5.50% Class C: 5.50% - 6.75% through the agencies. By comparison, during the previous real estate cycle, credit spreads on 10-year CMBS loans were as low as 90bps to 100bps. There is still room to lower spreads to offset any marginal up-tick in interest rates. However, if we see another 60 basis point increase in rates it will effect cap rates and pricing. Focusing on income growth and NOI should be considered to alleviate any potential cap rate movement in the coming years. FINANCING The availability of all forms of debt financing continues to be as plentiful as ever in recent years, with lenders specifically favoring multifamily over most other asset classes. Agency financing spreads tightened but remain volatile, with agencies now able to compete with life companies for Class A, well-located deals. Fannie Mae, Freddie Mac, and HUD remain the de-facto lenders for Class B and C properties as well as those located in secondary and tertiary markets, with rates in the mid 4% range. As transaction cap rates on core properties have continued to decline, Life companies have shown caution in underwriting, reducing maximum available proceeds to 60-65% of purchase price from the 65-70% max Loan-to-Value (LTV) available six months ago. Agencies continue to offer financing up to 80% of purchase price where they are not cash flow constrained. The most active area of the debt market is transitional bridge financing, with several new entrants who will lend up to 85% of the total project capitalization (purchase price, capex & closing costs) for value add deals. These floating rate lenders are pricing as low as L+225 for 60% leverage, L+275 for 70%, L+325 for 75%, and L+400-450 for 80- 85% Loan-to-Cost (LTC) where available. All transitional deals are structured as 2-5 year terms and are generally interest only with limited to no prepayment penalties. For future rate movement, short term interest rates are expected to increase two more times this year (0.50% in total)
though investor consensus is waning that the Federal Reserve will be able to keep increasing rates steadily through 2019. The spread between the 2-Yr and 10-Yr has continued to narrow, resulting in a relatively flat yield curve, and continued flattening has resulted in less of a measurable impact of rate hikes on the 10 year treasury yield. For generational assets there has never been a better time to finance long-term (over 10 years) as the spread between the 10 and 20 year treasury is 12 basis points, and only 5 basis points of yield differentiate the 20 and 30 year treasury notes. FINAL THOUGHTS Multifamily investments remain the most desired and transacted property type in South Florida based on the strong market fundamentals and long-term positive outlook. 63% of global capital is being raised to target real estate assets in North America. South Florida, as a “gateway” region for global capital, is awash with money seeking acquisitions, with investors using shorter due diligence and non-refundable deposits to entice sellers. Debt markets remain open for business and still provide historically low interest rates. We expect strong sales in Class A properties. Value-add properties are hard to find and are well received if marketed correctly. Opportunities exist to acquire smaller properties within portfolios as competition is less fierce. Appreciation of values will continue although many investors are looking at 5-10 year holds versus the quick “in and out” buys of previous years. Keep an eye on Opportunity Zones. These zones were established in the federal Tax Cut and Jobs Act of 2017, and provide a tax incentive for investors who invest in property in these areas. Investors can defer capital gains taxes through investments in federally-established Opportunity Funds. Owning a property for at least 10 years in an Opportunity Zone can mean you pay no tax at all on any appreciation in your investment. Understanding where these opportunity zones are and structuring an acquisition accordingly may offer significant buying opportunities. Likewise, if you own a property in an opportunity zone, it may have become more valuable and attractive to investors. To help you better understand this, we will produce a “White-Paper” on this subject in the coming weeks.
MU LT I FAM I LY I NVE S TMENT | SOUTH F LOR I DA T E AM 4
MARKET FUNDAMENTALS SNAPSHOT
MU LT I FAM I LY I NVE S TMENT | SOUTH F LOR I DA T E AM
Miami-Dade
12 MONTH POPULATION GROWTH
12 MONTH MEDIAN SALARY INCREASE
12-MONTH MEDIAN HOME GROWTH RATE
UNEMPLOYMENT RATE
AVERAGE SALARY
MEDIAN HOME VALUE
YEAR POPULATION
2018(F) 2,788,000 1.3% 2017 2,752,000 1.3% 2016 2,730,000 1.4% 2015 2,693,000 0.9% 2014 2,669,000 1.0% 2013 2,642,000 1.2%
4.3% $49,658
4.5% 3.4% 5.1% 2.0%
$359,180 $338,621 $332,490 $330,475 $302,705 $257,329
6.1% 7.6% 9.8% 8.1% 8.8% 23.7%
4.8%
$47,519
5.4% $45,998
5.7% 6.3% 7.2%
$43,786 $42,914 $42,444
1.1% 1.1%
Broward
12 MONTH POPULATION GROWTH
12 MONTH MEDIAN SALARY INCREASE
12-MONTH MEDIAN HOME GROWTH RATE
UNEMPLOYMENT RATE
AVERAGE SALARY $58,297 $55,874 $56,871 $53,926 $52,127
MEDIAN HOME VALUE
YEAR POPULATION
2018(F) 1,968,000 1.7% 2017 1,936,000 1.0% 2016 1,929,000 1.7% 2015 1,896,000 1.4% 2014 1,870,000 1.4% 2013 1,844,000 1.4%
3.3% 3.9% 4.4% 4.5% 5.0%
4.3% 3.1% 5.5% 3.5% 2.8% 1.8%
$332,102 $316,693 $285,120 $261,912 $252,995 $240,960
4.9% 10.1% 8.9% 3.5% 5.0% 22.5%
5.8% $50,690
Palm Beach
12 MONTH POPULATION GROWTH
12 MONTH MEDIAN SALARY INCREASE
12-MONTH MEDIAN HOME GROWTH RATE
UNEMPLOYMENT RATE
AVERAGE SALARY $62,798 $59,764
MEDIAN HOME VALUE
YEAR POPULATION
2018(F) 1,509,000 2.6%
3.5% 4.1%
5.1% 3.8% 5.7% 4.3% 4.0% 1.4%
$357,392 $336,787 $298,620 $269,971 $255,195 $240,167
6.1% 9.4% 10.6% 5.8% 6.3% 21.3%
2017 1,471,000 2016 1,461,000 2015 1,423,000 2014 1,399,000 2013 1,376,000
1.2% 2.7% 1.7% 1.7% 1.3%
4.7% $60,086 4.3% $56,664 4.8% $54,206
6.1%
$52,060
*Data reported by BLS, Moodys and Alteryx Demographics
CONSTRUCTION 18,939 apartment units are currently under construction in SoFla. This is 5.3% of the current apartment inventory. HOUSING 63.4% home ownership rate in SoFla, still near a 30-year low. 61.2% | 61.8% | 72.2% median single-family home price increase in Miami-Dade, Broward, and Palm Beach Counties respectively since 2013. $316,693 median home value in Miami-Dade. $1,381 average asking rent in Miami-Dade.
POPULATION 403,000 SoFla Population Growth in past 5 years. 555,000 | 8.9% positive net migration over the next 5 years. EMPLOYMENT 331,350 new jobs added in the past five years, in SoFla. 4.8% Miami-Dade unemployment 3.9% Broward unemployment 4.1% Palm Beach unemployment 8.5 jobs for every apartment unit in SoFla.
INCOMES 3.4% median salary income increase in 2017.
5
MIAMI-DADE MULTIFAMILY MARKET SUMMARY
$450M
$7,150,000
$191
$174,904
2018 Sales (YTD)
YTD Average Sale Price
YTD Average Sale PSF
YTD Average Sale per Unit
$1,381
95.7%
2,259
165,649
Average Rent Per Unit
Occupancy Rate
Annual Unit Net Absorption Inventory of Rentable Units
MU LT I FAM I LY I NVE S TMENT | SOUTH F LOR I DA T E AM 6 YEAR $ SALES VOLUME 2018 (YTD) $449,587,572 2017 $1,535,279,700 2016 $1,542,190,878 2015 $943,350,888 2014 $633,298,232 2013 $502,280,394 2012 $611,235,041 2011 $206,978,638 2010 $180,065,978 2009 $175,262,078 0 1,000 2,000 3,000 4,000 5,000 6,000 2009 2010
ASKING RENT PSF
ASKING RENT GROWTH
EFFECTIVE RENT GROWTH
# OF SALES
TOTAL # OF UNITS
ASKING RENT
EFFECTIVE RENT
EFFECTIVE RENT PSF
NET ABSORP
NEW UNITS
VACANCY
63 165,649 $1,381 $1.62 1.5% $1,363
$1.60
1.9% 4.3% 2,259 990
133 164,659 $1,361 $1.59 2.6% $1,338
$1.57
2.1% 5.1% 3,612 4,534
152 160,425 $1,327 $1.56 3.6% $1,310
$1.53
2.9% 4.9% 3,946 5,392
158 155,182 $1,281 $1.50 7.9% $1,273
$1.50
7.7% 4.5% 3,114 3,771
190 151,909 $1,187 $1.41 6.5% $1,182
$1.40
6.4% 4.5% 2,883 3,670
116 148,780 $1,115
$1.33 5.5% $1,111
$1.33
5.8% 4.4% 2,294 1,903
101
147,130 $1,057 $1.27 4.0% $1,050 $1.26
4.0% 4.9% 1,198 1,894
76 145,784 $1,016 $1.22 2.0% $1,010
$1.22
2.0% 4.9% 288 1,578
50 145,096 $996
$1.21 1.4% $990
$1.20
1.5% 4.8% 2,028 905
39 144,321 $982
$1.19 -2.8% $975
$1.18
-2.8% 5.7% 2,067 2,088
Miami-Dade Apartments Under Construction 30 apartment buildings totaling 9,837 units under construction in Miami-Dade BUILDING Lazul Quadro
# OF UNITS
EXPECTED COMPLETION
CITY
Soleste Blue Lagoon
Miami
330
2019
N MIami Beach
354
2019
Villas de las Palmas
Hialeah
226
2018
Miami
198
2019
Modera Edgewater
Miami
297
2019
Miami-Dade Deliveries Versus Absorption
2011
2012
2013
2014
2015
2016
2017
2018 (YTD)
Net Absorption (Units)
Deliveries (Units)
MIAMI-DADE MULTIFAMILY MARKET SUMMARY* CONTINUED
MU LT I FAM I LY I NVE S TMENT | SOUTH F LOR I DA T E AM
ASKING RENT GROWTH
EFFECTIVE RENT GROWTH
ASKING RENT
ASKING RENT PSF
EFFECTIVE RENT
EFFECTIVE RENT PSF
NET ABSORPTION
DELIVERED UNITS
SUBMARKET
UNITS
VACANCY
3,351
$1,727
$1.71
1.6% $1,718
$1.71
1.4% 6.3% 48
-
Aventura
10,151
$1,301
$1.96
0.4% $1,293
$1.95
2.5% 6.0% 69
-
Bal Harbor/South Beach
10,702 $1,406 $1.94
1.9% $1,364
$1.88
0.6% 6.1% 34
38
Brickell/Downtown
2,801
$1,418
$1.99
1.5% $1,410
$1.98
3.8% 6.3% 3
-
Coconut Grove
6,321
$2,029 $2.37
2.8% $1,974
$2.30
4.4% 9.1% 321
173
Coral Gables
21,982 $1,264 $1.47
1.9% $1,253
$1.46
2.2% 1.9% 265
226
Hialeah/Miami Lakes
20,825 $1,006 $1.14
1.5% $999
$1.14
1.0% 3.1% 218
262
Homestead/South Dade
13,996 $1,617
$1.77
-0.1% $1,591
$1.74
-0.3% 6.8% 239
150
Kendall
33,910 $1,089 $1.33
2.2% $1,084
$1.32
2.5% 3.5% 246
141
Miami Gardens/Opa Locka
18,807 $1,670 $1.77
1.0% $1,637
$1.74
2.3% 5.7% 619
-
Miami Springs/Doral
18,573 $1,188 $1.49
1.6% $1,175
$1.48
2.3% 5.2% 88
-
North Miami Beach
Outlying Miami-Dade County
853
$1,488 $1.25
2.8% $1,486
$1.24
6.2% 3.3% 100
-
3,377 $1,290 $1.68
2.0% $1,277
$1.67
3.3% 2.4% 9
-
Westchester/Tamiami
165,649 $1,381 $1.62
1.5% $1,363
$1.60
1.9% 4.3% 2,259 990
TOTAL/AVERAGE
• In the first six months of 2018, there were 63 apartment sales totaling $450 million with an average price of $174,904 per unit or $191 per square foot.
• For a tenth year in a row, average asking and effective rents were at record levels. • Year-to-date, average asking rents grew by 1.5%. This was below the record 7.9% rent increase in 2015.
• Vacancies are at record lows. Some submarkets might experience short term vacancy increases in the coming months with new supply.
• There are 9,837 units forecasted for delivery to market. This represents only 5.9% of the current inventory in the market.
• Year-to-date net absorption was over 2,250 units, newly completed units totaled 990 units resulting in lower vacancies.
• By year-end 2018 median salary income in Miami-Dade is expected to increase by +/- 4.3%, one of the biggest increases since 2006. • The population grew by 146,000 in the past five years.
*Data as of July-2018, apartment sales of 10 units or more, in excess of $1MM in pricing, excluding all condo sales Source: CoStar
7
BROWARD MULTIFAMILY MARKET SUMMARY
$640M
$17,250,000 YTD Average Sale Price
$175
$179,652
2018 Sales (YTD)
YTD Average Sale PSF
YTD Average Sale per Unit
$1,465
94.7%
2,476
122,609
Average Rent Per Unit
Occupancy Rate
Annual Unit Net Absorption Inventory of Rentable Units
MU LT I FAM I LY I NVE S TMENT | SOUTH F LOR I DA T E AM 8 YEAR $ SALES VOLUME 2018 (YTD) $637,763,313 2017 2016 2015 2014 $731,689,336 2013 2012 $782,427,017 2011 $420,311,582 2010 2009 $149,843,728 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 2009 2010
ASKING RENT PSF
ASKING RENT GROWTH
EFFECTIVE RENT GROWTH
# OF SALES
TOTAL # OF UNITS
ASKING RENT
EFFECTIVE RENT
EFFECTIVE RENT PSF
NET ABSORP
NEW UNITS
VACANCY
37 122,609 $1,465 $1.51 1.9% $1,451
$1.50
2.3% 5.3% 2,476 1,133
$1,574,858,130 76 121,476 $1,438 $1.49 3.5% $1,419
$1.47
3.4% 6.5% 3,010 3,814
$2,385,610,508 103 117,899 $1,390 $1.44 2.7% $1,372
$1.42
1.8% 6.2% 1,252 3,380
$1,620,810,057 97 114,555 $1,354 $1.40 8.1% $1,348
$1.40
8.0% 4.5% 2,467 2,369
77 112,227 $1,253 $1.30 5.6% $1,248
$1.29
5.9% 4.8% 4,097 4,283
$684,063,801 62 108,028 $1,187 $1.23 4.4% $1,179
$1.22
4.6% 4.8% 2,696 2,194
59 105,932 $1,137 $1.18 4.4% $1,127
$1.17
4.2% 5.5% 1,321
1,019
31
105,206 $1,089 $1.13 2.1% $1,082
$1.12
2.1% 6.1% 498 725
$475,644,800 17 104,622 $1,067 $1.11
1.6% $1,060
$1.10
1.7% 6.1% 2,146 952
29 103,762 $1,050 $1.09 -3.7% $1,042
$1.09
-3.7% 7.4% 1,862 2,410
Broward Apartments Under Construction 21 apartment buildings totaling 6,191 units under construction in Broward BUILDING
# OF UNITS
EXPECTED COMPLETION
CITY
790 E Broward
Fort Lauderdale
329
2019
AMLI Plantation
Plantation
286
2018
Morgan on 3rd
Fort Lauderdale
357
2018
Village at Crystal Lakes
Deerfield Beach
125
2018
280
2018
Altis Pembroke Gardens
Pembroke Pines
Broward Deliveries Versus Absorption
2011
2012
2013
2014
2015
2016
2017
2018 (YTD)
Net Absorption (Units)
Deliveries (Units)
BROWARD MULTIFAMILY MARKET SUMMARY* CONTINUED
MU LT I FAM I LY I NVE S TMENT | SOUTH F LOR I DA T E AM
ASKING RENT GROWTH
EFFECTIVE RENT GROWTH
ASKING RENT
ASKING RENT PSF
EFFECTIVE RENT
EFFECTIVE RENT PSF
NET ABSORPTION
DELIVERED UNITS
SUBMARKET
UNITS
VACANCY
21,977 $1,489
$1.43
1.7% $1,477
$1.42
2.7% 5.0% 221
15
Coral Springs
16,832 $1,648
$1.86
1.3% $1,608
$1.81
0.8% 8.0% 549
316
Fort Lauderdale
12,320 $1,292
$1.51
1.3% $1,275
$1.49
0.4% 8.9% 105
592
Hollywood/Dania Beach
5,338 $1,198
$1.39
1.3% $1,188
$1.38
0.9% 4.1% 18
-
Miramar/Hallandale Beach
13,887 $1,202
$1.36
2.7% $1,196
$1.35
3.6% 4.5% 253
-
Oakland Park/Lauderhill
Pembroke Pines/West Miramar
10,037 $1,780
$1.63
0.0% $1,768
$1.62
0.4% 5.2% 339
-
17,785 $1,537
$1.50
2.8% $1,529
$1.49
3.3% 5.0% 215
-
Plantation/Sunrise
Pompano Beach/Deerfield Beach
15,329 $1,253
$1.37
1.5% $1,243
$1.36
1.6% 4.3% 330
210
9,104 $1,621
$1.61
4.2% $1,611
$1.60
5.3% 4.9% 446
-
Weston_Davie
122,609 $1,465 $1.51
1.9% $1,451 $1.50
2.3% 5.3% 2,476 1,133
TOTAL/AVERAGE
• In the first six months of 2018, there were 37 apartment sales totaling $638 million with an average price of $179,652 per unit or $175 per square foot.
• For a tenth year in a row, average asking and effective rents were at record levels. Year-to- date, average asking rents grew by 1.9%. This was below the record 8.1% rent increase in 2015.
• Vacancies decreased year-to-date to 5.3% from 6.5%.
• There are 6,191 units forecasted for delivery to market. This represents only 5.0% of the current inventory in the market.
• Year-to-date there were 1,343 more units absorbed than delivered in Broward. This is another indication of increasing demand and outpacing supply which keeps vacancies low.
• By year-end 2018 median salary income in Broward is expected to increase by +/- 4.3%, one of the biggest increases since 2006. • Population has grew by 124,000 in the past five years.
*Data as of July-2018, apartment sales of 10 units or more, in excess of $1MM in pricing, excluding all condo sales Source: CoStar
9
PALM BEACH MULTIFAMILY MARKET SUMMARY
$930M
$28,200,000 YTD Average Sale Price
$170
$198,770
2018 Sales (YTD)
YTD Average Sale PSF
YTD Average Sale per Unit
$1,506
92.9%
1,731
71,702
Average Rent Per Unit
Occupancy Rate
Annual Unit Net Absorption Inventory of Rentable Units
MU LT I FAM I LY I NVE S TMENT | SOUTH F LOR I DA T E AM 10 YEAR $ SALES VOLUME 2017 2016 2015 2014 $505,418,189 2013 2012 $380,142,139 2011 2010 2009 $117,216,794 0 500 1,000 1,500 2,000 2,500 3,000 3,500 2009 2010
ASKING RENT PSF
ASKING RENT GROWTH
EFFECTIVE RENT GROWTH
# OF SALES
TOTAL # OF UNITS
ASKING RENT
EFFECTIVE RENT
EFFECTIVE RENT PSF
NET ABSORP
NEW UNITS
VACANCY
2018 (YTD) $931,039,098 33 71,702 $1,506 $1.48 1.6% $1,486
$1.46
2.1% 7.1% 1,731
1,449
$1,184,468,480 38 70,256 $1,483 $1.45 2.3% $1,456
$1.43
1.7% 7.6% 1,424 2,329
$1,542,773,544 50 68,620 $1,450 $1.42 3.6% $1,431
$1.40
2.9% 7.5% 1,017 1,925
$886,276,202 49 66,875 $1,399 $1.37 9.6% $1,391
$1.37
9.3% 6.6% 1,604 2,174
36 64,717 $1,277 $1.26 6.0% $1,273
$1.25
6.5% 6.0% 1,679 1,846
$325,992,035 23 63,030 $1,205 $1.19
4.5% $1,195
$1.18
5.0% 6.1% 2,956 2,981
20 60,059 $1,153 $1.13
5.5% $1,138
$1.12
4.9% 6.5% 1,089 481
$275,895,600 13 59,591
$1,093 $1.08 2.8% $1,085
$1.07
2.8% 7.6% 568 716
$262,035,358 12 58,910 $1,063 $1.06 1.6% $1,055
$1.05
1.6% 7.6% 1,075 465
9 58,490 $1,046 $1.04 -2.5% $1,038
$1.03
-2.5% 8.8% 542 673
Palm Beach Apartments Under Construction 11 apartment buildings totaling 2,911 units under construction in Palm Beach BUILDING Alta at Cortina Central Gardens The Alexander Azola West Palm
# OF UNITS
EXPECTED COMPLETION
CITY
Boynton Beach
324
2019
West Palm Beach 179
2019 2018 2018 2018
P B Gardens
124
West Palm Beach 205 West Palm Beach 290
Brightline Station Apts.
Palm Beach Deliveries Versus Absorption
2011
2012
2013
2014
2015
2016
2017
2018 (YTD)
Net Absorption (Units)
Deliveries (Units)
PALM BEACH MULTIFAMILY MARKET SUMMARY* CONTINUED
MU LT I FAM I LY I NVE S TMENT | SOUTH F LOR I DA T E AM
ASKING RENT GROWTH
EFFECTIVE RENT GROWTH
ASKING RENT
ASKING RENT PSF
EFFECTIVE RENT
EFFECTIVE RENT PSF
NET ABSORPTION
DELIVERED UNITS
SUBMARKET
UNITS
VACANCY
2,155 $715
$0.90
1.5% $711
$0.90
1.6% 6.2% 14
-
Belle Glade
13,837 $1,827
$1.75
2.2% $1,795
$1.72
2.5% 8.0% 322
-
Boca Raton
11,420 $1,439
$1.38
2.2% $1,417
$1.35
2.3% 11.0% 488
817
Boynton Beach
5,747 $1,675
$1.53
1.3% $1,644
$1.51
2.8% 6.3% 276
34
Delray Beach
7,331
$1,125
$1.20
2.0% $1,122
$1.19
2.9% 3.6% 51
-
Greenacres
Outlying Palm Beach County Palm Beach Gardens/ Jupiter Royal Palm Beach/ Wellington
193
$676
$1.07
0.8% $674
$1.07
0.8% 3.2% 0
-
7,887 $1,579
$1.45
-0.1% $1,567
$1.44
0.0% 7.9% 136
353
6,672 $1,490
$1.36
0.8% $1,475
$1.35
0.8% 7.0% 193
245
16,460 $1,340
$1.41
1.7% $1,326
$1.40
2.6% 5.9% 251
-
West Palm Beach
71,702 $1,506 $1.48
1.6% $1,486 $1.46
2.1% 7.1% 1,731
1,449
TOTAL/AVERAGE
• In the first six months of 2018, there were 33 apartment sales totaling $931 million with an average price of $198,770 per unit or $170 per square foot.
• For a tenth year in a row, average asking and effective rents were at record levels. Year-to- date, average asking rents grew by 1.6%. This was below the record 9.6% rent increase from 2015.
• Vacancies decreased to 7.1% from a six year high of 7.6%.
• There are 2,911 units forecasted for delivery to market. This represents only 4.1% of the current inventory in the market.
• Year-to-date net absorption was almost 1,750 units. Net absorption outpaced deliveries by almost 300 units contributing to lower vacancy rates.
• By year-end 2018, median salary income in Palm Beach is expected to increase by +/- 5.1%, significantly above 2016 levels of 3.8%. Population grew by 133,000 in the past five years.
*Data as of July-2018, apartment sales of 10 units or more, in excess of $1MM in pricing, excluding all condo sales Source: CoStar
11
RECENT SOUTH FLORIDA CUSHMAN & WAKEFIELD MULTIFAMILY SALES
#1 in Multifamily Sales :: Over $20 billion Sold in South Florida
TARPON HARBOUR
ROYAL OAKS
BLUE LAKE VILLAS
MU LT I FAM I LY I NVE S TMENT | SOUTH F LOR I DA T E AM 12 Sold 2017 | 66 Units Naples, Florida NAPLES PORTFOLIO Sold 2017 | 57 Units North Miami, Florida HOLLY HOUSE Sold 2017 | 192 Units Coconut Creek, Florida WATERVIEW Sold 2018 | 43 Units Miami, Florida BOUTIQUE Available | 205 Units Miami, Florida AVENTURA OAKS Sold 2018 | 27 Units Miami Beach, Florida 250 COLLINS
C
Sold 2018 | 69 Units Hollywood, Florida
Sold 2018 | 226 Units Pembroke Park, Florida 5 5 0 9 T H S T R E E T MIAMI BEACH
Available | 106 Units Marathon, Florida
52,133 square foot value-add opportunity in heart of South Beach
PALM ISLANDS
VIZCAYA LAKES
550 9 ST
CAPITAL MARKETS | MULTIFAMILY GROUP
Sold 2018 | 402 Units Pompano Beach, Florida
Sold 2018 | 125 Units Boynton Beach, Florida
Sold 2018 | 196 beds Miami Beach, Florida
LITTLE TORCH COTTAGES
RIVERWALK POINTE
AMARAY LAS OLAS
Sold 2017 | 104 Units Jupiter, Florida
Sold 2017 | 48 Units Little Torch Key, Florida
Sold 2017 | 254 Units Ft Lauderdale, Florida
WATERMARKE
COTTAGE COVE
SOLESTE CLUB PRADO
Sold 2017 | 402 Units Miami, Florida
Sold 2017 | 468 Units Miami, Florida
Sold 2017 | 196 Units Coral Gables, Florida
CARIBBEAN ISLE VILLAS
MONTEVERDE
200 SOUTH MIAMI AVENUE
Sold 2017 | 78 Units Homestead,Florida
Sold 2017 | 118 Units Boynton Beach, Florida
Sold 2017 | 1.22 Acres | 1,221 Units Miami, Florida
POINT AT NAPLES
PRIVE EDGEWATER
MONTAGE
Sold 2016 | 248 Units Naples, Florida
Sold 2017 | up to 279 units Miami, Florida
Sold 2017| 240 Units Pembroke Pines, Florida
RECENT SOUTH FLORIDA CUSHMAN & WAKEFIELD SALES #1 in Multifamily Sales :: Over $20 billion Sold in South Florida
MU LT I FAM I LY I NVE S TMENT | SOUTH F LOR I DA T E AM
ALTA MIRA
THE ASHLAR
ALTIS AT KENDALL
SERRAMAR
Sold 2016 | 480 Units Miramar, Florida
Sold 2016 | 240 units Miami, Florida
Sold 2016 | 321 Units Kendall, Florida
Sold 2016 | 302 Units Ft Lauderdale, Florida
SOUTH BEACH COLLECTION
Sold 2016 | 155 Units Palm Beach County, Florida PALM BEACH COLLECTION
PARK PLAZA
ACQUA BELLA
Sold 2016 | 240 Units Miami Beach, Florida
Sold 2016 | 252 Units Ft Lauderdale, Florida
Sold | 55 Units Dania Beach, Florida
RIVERSIDE TOWER
DEAN'S GOLD
25 BRICKELL BAY CONDO
4101 LAGUNA
Sold 2015 | 1.588 Acres Miami, Florida
Sold 2015 | 2.02 Acres North Miami Beach, Florida
Sold 2015 | 61 Units Miami, Florida
Sold 2015 | .99 Acres Coral Gables, Florida
730 NE 128TH ST
FLAGLER VIEW
VERANDA
LUNA AT HOLLYWOOD
Sold 2015 | 1925 | 18 Units Miami, Florida
Sold 2015 | 16 Units North Miami, Florida
Sold 2015 | 240 Units Homestead, Florida
Sold 2015 | 1968 | 145 Units Hollywood, Florida
PARAGON PLANTATION
ESSEX HOUSE
427 ANASTASIA AVE
SUNSET HARBOUR
Sold 2015 | 1969 | 156 Units West Palm Beach, Florida
Sold 2014 | 1997 | 74 Units Plantation, Florida
Sold 2015 | 1963 | 24 Units Coral Gables, Florida
Sold 2015 | 10 Units Hollywood, Florida
SIDONIA & SANTILLANE
EMERALD PLACE
BAY HARBOR ISLAND II
PALM CLUB
Sold 2014 | Varies | 36 Units Coral Gables, Florida
Sold 2014 | 1985 | 300 Units Hollywood, Florida
Sold 2014 | 1950’s | 70 Units Bay Harbor Island, Florida
Sold 2014 | 1993 | 160 Units Lake Worth, Florida
13
FOR SALE OPPORTUNITIES To view more deals please visit: http://www.cushwakesouthfl.com/multifamily/ 925-965 MARSEILLE DRIVE Miami Beach, FL 925-965 MARSEILLE DRIVE, 33141 925-965 MARSEI LE DRIVE Miami Beach, FL 925-965 MARSEILLE DRIVE, 33141
A Renovated Community in Miami Beach A Renovated Co munity in Miami Beach
A Fully Renovated Miami Beach Waterfront Community
An 84-unit Value-Add Multifamily Opportunity in the heart of Broward
11 UNITS
1 UNITS
MU LT I FAM I LY I NVE S TMENT | SOUTH F LOR I DA T E AM 14 RIVIERA HILLS NOMIA LAND ORCHID GROVE PRIVATE CAPITAL GROUP PERRY SYNANIDIS SENIOR FINANCIAL ANALYST +1 954 377 0521 perry.synanidis@cushwake.com PRIVATE CAPITAL GROUP
1940 YEAR BUILT 550 AVG UNIT SF 6,052 RENTABLE SF
1940 YEAR BUILT 50 AVG UNIT SF 6,052 RENTABLE SF
925-965 MARSEILLE DRIVE
A Fully Renovated Community in Bay Harbor Islands
10 Ultra High-end Condos in the Heart of Boca Raton
$2.09 AVG MKT RENT/SF $1,150 AVG MKT RENT Miami Beach, FL 7130 RUE VERSAILLES, 33141 $2,100,000 LISTING PRICE $2.09 AVG MKT RENT/SF $ ,150 AVG MKT RENT Miami Beach, FL 7130 RU VERSAILLES, 33141 $2,1 , 0 L STING PRICE
7130 RUE VERSAILLES 7130 RUE VERSAI LES
BAY HARBOR COLLECTION
5 PALMS
54 Luxury Townhomes, below replacement costs with upside. 28 Units Fully Approved & Shovel Ready in Surfside 28 Units Fully Approved & Shovel Ready in Surfside
A 205-unit Value-Add Multifamily Opportunity near Aventura
PROPERTY DETAIL
PROPERTY DETAIL
± 0.65 ACRES
± 0.65 ACRES
± 28,369 TOTAL LAND SF
± 28,369 OTAL LAND SF
AVENTURA OAKS
APPROVED PROJECT 28 Units
APPROVED PROJECT 28 Units
1.88 Acres at corner of NE 135 th St and NE 6 th Ave North Miami
A +/- 1.22 acre waterfront land-lease opportunity on Miami Beach
Surfside, FL 8800 COLLINS AVENUE, 33154 65 Res. Units | 75 Hotel Rooms ALLOWED DENSITY Multifamily, Townhouse, Hotel ALLOWABLE USES 65 Res. Units | 75 Hotel Rooms ALLOWED DENSITY Multifamily, Townhouse, Hotel ALLOWABLE USES Surfside, FL 8800 COLLINS AVENUE, 33154
88 HUNDRED COLLINS 8 HUNDRED CO LINS
INDIAN CREEK
CONTACT THE SOUTH FLORIDA MULTIFAMILY TEAM CONTAC THE SOUTH FLORIDA MULTIFAMILY TEAM
INSTITUTIONAL GROUP
INSTI UTIONAL GROUP
DEBT, EQUITY & STRUCTURED FINANCE DEBT, EQUITY & STRUCTURED FI ANCE
ROBERT GIVEN VICE CHAIRMAN +1 954 377 0513 robert.given@cushwake.com ROBERT GIVEN VICE CHAIRMAN +1 954 377 0513 robert.given@cushwake.com
CALUM WEAVER (LEAD) EXECUTIVE MANAGING DIRECTOR +1 954 377 0517 calum.weaver@cushwake.com CALUM WEAVER (LEAD) XECUTIVE M NAGING DIRECTOR +1 954 377 0517 calum.weaver@cushwake.com
ROBERT KAPLAN EXECUTIVE MANAGING DIRECTOR +1 305 533 2860 robert.kaplan@cushwake.com ROBERT KAPLAN XECUTIVE M NAGING DIRECTOR +1 305 533 2860 robert.k plan@cushwake.com
PERRY SYNAN DIS SENIOR FI ANCIAL NALYST +1 954 377 0521 perr .sy anidis@cushwake.com
CHRIS LENTZ SENIOR DIRECTOR +1 305 533 2865 chris.lentz@cushwake.com
CHRIS LENTZ SENIOR DIRECTOR +1 305 533 2865 chris.lentz@cushwake.com
ZACHARY SACKLEY EXECUTIVE MANAGING DIRECTOR +1 954 332 2391 zachary.sackley@cushwake.com ZACHARY SACKLEY XECUTIVE M NAGING DIRECTOR +1 954 332 2391 zachary.sackley@cushwake.com
TROY BALLARD MANAGING DIRECTOR +1 954 377 0514 troy.ballard@cushwake.com TROY BALLARD M NAGING DIRECTOR +1 954 377 0514 troy.b llard@cushwake.com
TEAM CREDENTIALS
MU LT I FAM I LY I NVE S TMENT | SOUTH F LOR I DA T E AM
250,000+ APARTMENT UNITS SOLD IN SOUTH FLORIDA
#1 IN APARTMENT SALES IN SOUTH FLORIDA
$20B+ SOUTH FLORIDA MULTIFAMILY SALES
AWARD WINNING MARKETING
MORE OFFERS HIGHER PRICING
GLOBAL CAPITAL REACH
CONTACT INFORMATION
CALUM WEAVER Executive Managing Director T 954 377 0517 calum.weaver@cushwake.com
MULTIFAMILY INVESTMENT TEAM CONTACTS
TROY BALLARD Senior Director
ZACHARY SACKLEY Executive Managing Director
ROBERT GIVEN Vice Chairman
NEAL VICTOR Director
PERRY SYNANIDIS Sr. Financial Analyst
JAMES QUINN Sr. Financial Analyst
CASSANDRA SKEVIS Marketing Specialist
ELIZABETH ROGERIO Sr. Brokerage Coordinator
ANN-MAKIR MAGLOIRE Brokerage Coordinator
ERROL BLUMER Associate
CATHERINE DEARING Marketing Specialist
TEDDY MOSQUERA Financial Analyst
ROBERT KAPLAN Executive Managing Director Equity, Debt & Structured Finance
CHRIS LENTZ Senior Director Equity, Debt & Structured Finance
MARK RUTHERFORD Analyst Equity, Debt & Structured Finance
©2018 Cushman & Wakefield, Inc. NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IS MADE TO THE ACCURACY OR COMPLETENESS OF THE INFORMATION CONTAINED HEREIN, AND SAME IS SUBMITTED SUBJECT TO ERRORS, OMISSIONS, CHANGE OF PRICE, RENTAL OR OTHER CONDITIONS, WITHDRAWAL WITHOUT NOTICE, AND TO ANY SPECIAL LIST- ING CONDITIONS IMPOSED BY THE PROPERTY OWNER(S). AS APPLICABLE, WE MAKE NO REPRESENTATION AS TO THE CONDITION OF THE PROPERTY (OR PROPERTIES) IN QUESTION.
15
MULTIFAMILY INVESTMENT PROPERTIES MULTIFAMILY MARKET UPDATE MIDYEAR 2018 MARKET UPDATE SOUTH FLORIDA
E X P E R I E N C E W H E N I T M AT T E R S When it comes to apartment sales volume, our team is the acknowledged market leader, with more than $20 billion in completed sales transactions in South Florida. What we value most is our reputation as the go-to choice of sophisticated owners “when it matters.”
Hiring Cushman & Wakefield - the market leader - means that you are hiring the
firm with the most far reaching capital access and experience.
MULTIFAMILY: IT'S WHAT WE DO. TheCushman&WakefieldMultifamilyTeamspecializes in the sale and financing of multifamily properties on behalf of private investors in South Florida. Simply stated, we sell more apartment buildings in South Florida than anyone else. Why does this matter? Our experience provides clients unparalleled market knowledge, access to buyers, resources, leverage, credibility and market coverage . With local offices in Downtown Miami, Ft Lauderdale, Boca Raton and West Palm Beach, our multifamily team consists of 15 members that have unrivaled qualifications amassing over $20 billion in multifamily sales, representing over 900 apartments and 250,000 units in South Florida.
PRIVATE CAPITAL MEETS INSTITUTIONAL SERVICE. Whether you have a $1 million or $100 million property, each client receives the same quality of service, marketing exposure and deliverable results. Our clients are typically individuals and partnerships who have their own capital at risk for the purpose of building personal wealth. LOCAL EXPERTISE, WORLDWIDE EXPOSURE. With 43,000 employees in over 250 offices in more than 60 countries, the Cushman &Wakefield platform provides global access to the most local, national and international investors in the industry.
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