Rob Stern authored a guest column for the April 1, 2022 issue of Tampa Bay Business Journal discussing the outlook for the multifamily real estate market in Florida.
“For all of 2021, and most of 2022, we determined that the multifamily real estate market and landscape throughout Florida were both bright and promising,” Stern wrote. “Our optimism arose from the fact that our clients were wise enough to have invested in real estate located in Florida where population and job growth combined with a business friendly environment.”
However, the influx of capital into the market has had its consequences, such as the compression of capitalization rates and out-of-state money pricing local investors out of the market. Still, the highly active multifamily market has fared better than other sectors in the current landscape. Skyrocketing single-family home prices have actually benefited the multifamily market by driving families to apartment complexes, leading Tampa to post the second highest spike in apartment rents since last January (following only New York City). Office space continues to face challenges as more businesses plan to maintain some level of remote working, and the retail sector is going through distress due to the massive increase in online shopping and immediate delivery services of meals and goods.
Despite these trends and recent surveys showing that sentiment toward commercial real estate investment is dropping and prices are flattening, Stern cites his experience through many real estate cycles that Florida real estate tends to fare better than other markets in economic uncertainty. “I have learned that Florida is typically last into a real estate recession and the first one out,” he said. “Local Florida positive factors like population and job growth in a business friendly environment have muted recessions and overcome negative macro-economic factors.”
The impact of several outside factors remain to be seen – such as the war in Ukraine, tightening monetary policy and rising interest rates – and we will need more time and data to see whether the market is in for a smooth ride that continues upward or a bumpy ride that drops dramatically. “Stay tuned as we hope this is the ‘new normal’ instead of the bursting of another cyclical bubble,” Stern concluded.
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