Thanks to three favorable trends that show no sign of reversing anytime soon, South Florida remains a hot spot for multifamily commercial real estate investors. An abundance of cash, South Florida’s appeal to international investors and the basic principles of supply and demand add up to good news for the multifamily sector.
Cash is King
While the economy gradually shows signs of improvement, banks still are not actively financing semi-stable properties, so cash remains king. In the past year at Berger Commercial Realty Corp., 95 percent of the deals we brokered have been all cash, whether the buyers have been domestic or international.
As the financial climate continues to be unstable in Venezuela under Hugo Chavez, many Venezuelans look to secure their capital by investing in multifamily properties in the U.S. and more specifically in Florida. Multifamily properties are attractive to international buyers because this sector is not management or capital intensive. International buyers are familiar with the system of month-to-month or yearly tenants, which is the same in South America. The value is there, too, with buyers now able to purchase these properties at approximately 50 percent of replacement cost. According to the latest international report by the National Association of Realtors, 88 percent of Venezuelans who bought property in Florida paid cash.
Moving forward, there will be a lot less product for sale in the multifamily market as the inventory of distressed multifamily properties shrinks. Approximately 62 new multifamily development projects are planned in Miami-Dade , Broward, and Palm Beach counties, but with institutional financing going only to the best projects and most qualified developers, it is likely that fewer than half of these projects will reach construction in the near term. That translates into stable rental rates and solid value for existing multifamily properties.
By: Steve Hyatt
Senior Vice President
Berger Commercial Realty Corp.
Berger Commercial Realty Corp. Senior Vice President Steve Hyatt is responsible for investment sales, land brokerage, and acquisition/disposition services for both corporate clients and private investors. Hyatt, who has been with Berger Commercial Realty Corp. for three years and active in commercial real estate in South Florida for 28 years, has strong market knowledge and executive level contacts in the real estate, banking and automotive industries.