Apartment development has slowed and shifted significantly across the state.
“Flight to safety” is a common strategy for investors and we are seeing that from developers as they move to the safety of larger MSAs with stronger rent support and job growth.
Tertiary markets are unfortunately taking the biggest hit, but here in Florida, they still have some life in them as the work-from-home movement and migration trends continue to support development.
Macro forces including a 20% increase in the 10-year U.S. Treasury in September, inflationary pressures and a large number of residential deliveries are creating waves of worry that will take time to dissipate as we move into this next stage of our bull market.
Most deals today are being shopped “off-market” because owners are concerned that their asset’s valuation will be dragged down by the tough market and perception of needing to sell.
There are deals out there that must sell, or the banks will take them over. The deals that are doing the best are from groups that understand the fundamentals of the business and have been focused on the operations of their assets, making sure their tenants feel appreciated as they see their disposable income disappear.
Over the next couple of quarters, we will see deals exchange hands. Some will be because they are forced, and others will be because they are preparing for the opportunity.
You can only buy low when you have cash.
Cameron Hooper is First Vice President at Matthews Real Estate Investment Services in Jacksonville.