Apartment market coming back in Fort Myers/Naples area Occupancy is up, but no big apartment boom yetOctober 18, 2012 8:56 am
Apartment complexes in the Fort Myers/Naples area increased their occupancy rate faster than any other metro area in Florida, according to a survey by ALN Apartment Data Inc.
The high occupancy and a lack of multifamily construction for the past five years point toward a renewal of the dormant apartment building construction industry, authorities said.
Occupancy rose from 90 percent to 93.6 percent, a 4 percent increase, from July 2011 to July 2012, says the report from Carrollton, Texas-based ALN, which tracks apartment complex data in six Southern states. In second place was Melbourne, with a 2.5 percent increase from 89.5 to 91.7 percent.
“At 93 percent you’re close to complete occupancy and we’re seeing renewed interest by multifamily developments who are looking at land that’s properly zoned and especially student housing,” said commercial real estate agent Jim Garinger of Colliers Arnold Southwest Florida.
Commercial real estate agent Jonathan Richards of CBRE said newer complexes are performing even more strongly than the ALN average. “If a property’s built after 2000, it’s probably 95 or 96 percent plus.”
Still, he said, “there are some headwinds” that are preventing apartment complex construction in this area for the time being. Rents are low, impact fees are high and “It’s just tough to get financing.”
Terry Wayland, president of Fort Myers-based Incore Residential, a third-party manager for 5,000 apartment units in Florida, said this is a healthy market with growing occupancy but that ALN’s numbers don’t reflect a sharp divide that exists between the Naples and Fort Myers areas.
Naples suffered during the rental market crash that started in 2006 but much less so than Fort Myers, he said.
Hardest hit of all, Wayland said, was the Winkler Avenue corridor in Fort Myers where many complexes had been emptied out in preparation for planned conversion to condominiums.
When those plans failed and the complexes went back to rentals, occupancy plummeted, he said. “There was a time when there wasn’t a property on Winkler with more than 70 percent occupancy and an average of 65.”
Now, however, “The market has improved considerably” and his properties in Fort Myers are running 85 to 90 percent on average.
Theron Patrick, a data analyst with ALN, said rental rates are still relatively low around the country despite increasing occupancy because landlords until recently were wary of losing tenets if they raised prices.
“It took a good two years of rising occupancy rates before people became comfortable raising prices,” he said.
Eventually, Patrick said, “When a market’s really healthy, rents are going up and the markets can stabilize.”
As for new construction, he said that “the banks are still a little gun-shy.” There isn’t much interest yet in new construction anywhere in Florida although in Austin and Houston in Texas, “There are a lot of people who want to break ground in 2013.”
Garinger said the underlying trend in Southwest Florida’s apartment market is that “we’re returning to what I’d term the ‘new normal’ where people are actually making decisions to buy apartment properties according to the real fundamentals” of price and lease rates rather than as speculation that prices will rise in the short term. The time of buying distressed multifamily buildings at fire sale prices has come and gone, he said.
“Those assets sold at low per-unit costs, as low as $12,000 per unit up to the mid-20s, and those have not been available in our market for the last 12 months or so.”
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