Downtown Orlando’s tight rental market is likely to tighten further in the next year, even with new projects coming online, according to a new report.
Based on apartment complexes slated to open during the next year, Colliers International’s Orlando office forecast that even modest job growth would push the area’s vacancy rate, now about 5.8 percent, down to 5.2 percent and even to 4.9 percent in key areas.
The areas most likely to see vacancies shrink further include Windermere, Lake Nona, Winter Park and locations near both the theme parks and the University of Central Florida, said George Pjevach, director of multifamily services for Colliers’ Orlando office.
Not all parts of the market are tightening up. The Pine Hills and Parramore areas, for instance, have vacancy rates of 11.9 percent.
Colliers based its multifamily forecast on a job-modeling metric devised by three professors at the University of Houston. The model calls for one new apartment for every 8.9 jobs created in a market. Typically, apartment demand has been based more on historic trends than on anticipated job creation, said Greg Wilson, who represents apartment buyers and sellers for Colliers in Orlando.
Using employment projections from UCF’s Institute of Economic Competitiveness, Colliers expects the market to absorb the 2,500 rental units under construction in the Orlando area. In addition to those projects, another 5,000 units are in the planning stages.
According to UCF’s job forecast, the Orlando area could absorb about 12,000 new apartment units during the next four years: 2,662 units in 2013, based on 23,400 new jobs; 3,083 units in 2014, based on 27,100 new jobs; 3,311 units in 2015, based on 29,100 new jobs; and 2,912 units in 2016, based on 25,610 new jobs.
The biggest rush to develop apartment complexes has been in downtown Orlando.
Projects underway there include Pollack Shore’s SteelHouse, a 326-unit, $40 million complex on the northwest corner of Orange and Colonial; and GDC Properties’ NORA, a $28 million, mixed-use project scheduled to open with 246 units at Orange and Marks Street in the spring of 2014. The Novare Group has started work on the 23-story SkyHouse Orlando apartment building, expected to cost $63 million, at Livingston Street and Rosalind Avenue.
Plans also call for Craig Ustler’s 114-acre Health Village at Florida Hospital on North Orange Avenue, and the first phase of Rida Development’s Central Station, which is proposed as a $75 million mixed-use project with 284 apartments across from the Orange County courthouse on Orange Avenue.
Wilson said the downtown market continues to attract young professionals but added that he was somewhat skeptical about such tenants staying long-term in the central business-and-entertainment district.
Eventually, he said, they will want families, larger homes and backyards.
