Commercial construction firms, which suffered during the Great Recession, have a savior this year: New apartment complexes.
Developers have announced and/or started $482 million worth of construction work on 3,593 new apartments in 12 new local complexes just since mid-year, most of which are slated for delivery between late 2013 and early 2014.
That’s more than double the 1,500 slated for completion this year, but falls short of the 5,000-6,000 units the Orlando area historically has absorbed annually.
Still, it’s an example of the local market catching up from the condo boom-and-bust years, when more than 20,000 apartment units were bought to convert to condos and only half of those came back later as rentals.
“We still have a net loss in terms of supply,” said Shelton Granade Jr., executive vice president of CBRE Inc.’s Central Florida multi-housing group. “Deliveries have been very low, so demand is very strong.”
Adding to the demand for more apartments are victims of the mortgage meltdown, which resulted in people losing their homes — either through foreclosure or because they were so far underwater that they gave the deed back to the lender.
As a result, Orlando watched the area’s apartment occupancy rate grow from a recession-era low of 90.4 percent in 2009 to 94.2 percent this year. That compares with the pre-recession occupancy rate high of 97.2 percent in 2005, said CBRE Inc.
Average monthly rents rose from $764.15 in 2003 to $898.09 in 2006 before falling to $837.76 in 2010. Average monthly rents grew to $893.62 this year.
And because of those strong fundamentals and growing demand, banks and lenders now are more willing to provide loans for multifamily construction projects.