Construction Surges for Apartment Units
There's a Run on Rentals in South Florida
Related's 250-unit, 26-story rental project is planned for downtown Fort Lauderdale.
Downtown Fort Lauderdale this year will see a surge of construction — the first of hundreds of apartment units developers have in the works. Apartment projects also are under way in suburban Broward and Palm Beach County.
"A lot of people are trying to get ramped up," says Steve Patterson, president and CEO of Related Development, an affiliate of Miami condo developer Jorge Perez's Related Group.
Rental projects have found receptive audiences among lenders and consumers. Condos are a tough sell to lenders, but "if you tell them you have an apartment deal, everybody wants to sit down with you," says Jack McCabe of real estate analysis firm McCabe Research & Consulting.
The supply of condos has been limited in Fort Lauderdale because the number of units allowed to be built in the city has been capped and the market also was less of a draw to international buyers and condo developers generally during the boom. Now demographics — Baby Boomers' offspring are in prime rental age and plenty of people can't get or don't want a mortgage — are stoking demand for apartments.
Related expects to break ground this year on a 250-unit, 26-story luxury rental project downtown on the New River and on a 390-unit luxury rental project on Federal Highway. The company also is building a 197-unit, luxury midrise rental project in Plantation and recently won approval of a 130-unit, 19-story oceanfront condo in Pompano Beach. In West Palm Beach, Related is trying to get approval to rezone a site to allow 506 units.
Related builds its apartments with an eye toward being able to convert them to condos, but "it's not necessarily our primary or only exit strategy," Patterson says. Related Group Vice President Patrick Campbell says there's a "strong market" for equity firms buying rental communities.
The activity comes as other developer-investors have moved into downtown. Cymbal Development of Miami bought a six-acre site out of bankruptcy court. It plans a mixed-use project. And a local investor plans to renovate the Las Olas Riverfront retail-entertainment project on the north bank.