The condo boom in Miami-Dade County crushed construction of rental apartments, and investors who purchased apartment buildings did so in order to convert them to condos. The county’s inventory of rentals plunged.
Once the bust began to clear, however, demand soared for rentals, vacancies plummeted and rents began to rise. With credit hard to come by, potential buyers became more interested in renting. “The younger generation coming up are not viewing home buying as a great investment anymore,” says Cris Sullivan, executive vice president of Atlanta-based rental developer and manager Gables Residential. “Also, because of the job market, people are still very sensitive. They want to be able to maintain a level of mobility.”
Gables Residential opened a luxury apartment development in Coral Gables this summer. Units at Gables Ponce are moving faster than the company had planned.
Developers are taking advantage of the rising demand, with both national and local players breaking ground on projects. Lenders are confident in the county’s rental market, says Gary Fitzgerald, a real estate banking executive with City National Bank, which is active in financing sales of existing apartments and new construction.
Institutional investors, who appreciate apartments’ steady income, are raising bids as they compete for a limited supply of rentals. Lenders, too, are competing to finance sales and construction.
Now, some new rental developments are being converted to condos, as that market continues to come back, says Jeffrey Margolis, a partner in the real estate practice at law firm Berger Singerman. He says demand for rentals is tapering as people are once again able to get mortgages. “I still think the rental market is very strong,” he says. “I just see the new projects not being rental projects.”