A Tale Of Two Miami Apartment Buyers
Bay Harbor Islands-based multifamily firm Atlantic Pacific Cos isn't too keen on buying in its own backyard as of late. In fact, it's been looking way north—to the Metro Atlanta region. At the same time, Miami-based Boardwalk Properties just bought a huge swath of small apartments throughout Miami Beach. This is a tale of two very distinct cities.
We spoke with Atlantic Pacific's Mark Briggs fresh from the firm's recent purchase of three suburban Atlanta value-add apartment projects, which rakes up 15 multifamily assets in the Georgia region in four years. “Quite frankly, we are not in heavy acquisition mode in South Florida,” Mark says. The issue: Finding true value-add when investors have been pricing up apartment complexes all over South Florida.
Atlantic Pacific has stepped into the development route in South Florida. It finished The Atlantic Doral (here) two years ago. And it's in the process of developing two other apartment projects: Atlantic Cypress Creek, a 420-unit Class-A project off State Road 7 in Lauderdale Lakes, and The Atlantic Delray Beach, a 346-unit project off Lake Ida Road.
Certainly, Miami and the surrounding areas have been a hot market for multifamily investors given stellar fundamentals, with vacancy rates now sub-5%. As the region has pumped out jobs, developers have been eager to fill the housing demand with new product. Last year alone, 3,700 units were delivered in Miami/Dade, according to a recent Marcus & Millichap report. But that pales to what's coming down the pike in 2016: an additional 5,500 new units.
Despite that, rents on the high end are still circling $2 per SF. And even with the new supply, Marcus & Millichap expects renters to pay an additional 2.4% in average monthly rents to $1,355 this year (albeit at a slower growth pace from 2015, when the rates were nearly 6%). The brokerage warns developers could outstrip demand for luxury units. But that could only spur new affordable housing projects in working-class areas such as Hialeah, “where stock has not been rebuilt following the loss of rentals to conversion last decade.”
One of those buyers of local apartments is Miami-based Boardwalk Properties, which just picked up a portfolio of 240 apartment units in South Beach for $59M, including such low-rise properties as 700 Euclid Ave (here), 1110 Pennsylvania Ave, 1025 Meridian Ave (below) and 1135 8th St. It was one of the largest single portfolio sales so far this year for the Miami Beach area.
Boardwalk's Adam Walker says the family firm has a long-term time horizon on these investments, with plans to renovate the properties on a unit-by-unit basis, including new exterior improvements, installing hurricane impact windows and doors, and landscaping. Of course, the goal will be to raise the rents, but Adam says there are no definitive plans on an amount nor timing of that. “We have good occupancy with written leases and we will work with each tenant individually as their leases expire,” he says. Hinshaw & Culbertson partner Neil S. Rollnick brokered the sale for Boardwalk.
