By: Dan Fischer | Published November 5, 2020 | MyTampaBayBroker
Continuing with positive trends that we’ve seen over the last few months in rural real estate prices and apartment renter collection and occupancy rates, now suburban multifamily properties have seen an increase in demand.
The multifamily property sector began 2020 on a tear that followed in the footsteps of record demand and prices in both the local Florida market and nationally. Once the coronavirus hit mainland US, most commercial property owners and buyers went into tree-stand mode, by just waiting and watching to see how things would shake out. After lowered supply and demand in the second quarter, the third quarter and beyond has showed a bounce back in activity and price.
“The multifamily sector showed resilience, with pricing up modestly in the most recent quarter, and from pre-pandemic levels,” said Nancy Muscatello, a CoStar managing consultant.
“Similar to the changes we’ve seen in terms of tenant demand, suburban multifamily product appears to be driving recent price growth, while pricing has retrenched in the downtown areas of the primary markets,” she said.
More rural areas of Florida and other states around the country such as in Texas, Arizona, and Colorado have seen double digit residential real estate price increases (we’ve covered this movement in the past here). Multifamily property investors seem to be valuing this shift as they have begun bidding up prices on properties for sale in these more spacious markets.
While the multifamily story has been heroic in Florida and other high demand markets around the country, not all commercial sectors have followed suit. As Mark Heschmeyer of Costar News writes, “…multifamily led price growth among all six property-type indices, (with) losses continued to plague the retail and hospitality sectors that have been hurt much more directly by a weakened economy, along with restrictions on travel and social gatherings.”
Figure 1 provided by Costar Group
Local Tampa Bay real estate brokers are reporting slightly lowered rental rates over the last couple of weeks, in contrast to the rising rental rate momentum that was observed in the beginning of the third quarter (MTBB covered this here). As tenants move out, property managers and leasing offices are encountering some difficulty in receiving the same rental rate that was previously in place. While this is a negative price movement, we are still looking at positive trends overall when considering current events.
There’s no doubt that residential and commercial real estate futures look bright in Florida. Investor’s continue to show demand for placing capital into multifamily investment products. With national and international investors turning to the safe haven and solid returns of US based multifamily investments, “the sector is also expected to attract heightened interest as the U.S. Securities and Exchange Commission passed new rules Monday that allow developers to raise more funds on crowdfunding platforms from a broader pool of prospective investors. The SEC is also proposing to loosen restrictions around who can make commissions for bringing real estate crowdfunding deals to investors, which is expected to provide an incentive for even more activity”, as Marissa Luck of Costar News notes.
With investors becoming accustomed to life at home and searching for deals virtually, we are bound to see an increase in demand and capital to chase good deals, especially in the Tampa Bay market.
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