By Calum Weaver, Executive Managing Director, Multifamily Captial Markets
In the first nine months of 2016, there were 202 multifamily sales totaling over $2.4 billion in South Florida. This is the highest ever sale dollar volume in South Florida for the first nine months of any year. As we enter the last quarter of 2016, it will be interesting to see if 2015’s record sale activity of over $3.3 billion will be broken.
My prediction last year was that we would not break the record again in 2016 and I am sticking with that statement. The South Florida multifamily market continues to exhibit strong fundamentals; however, a lack of viable investment opportunities may contribute to fewer investment sales in the coming months. This is due to three reasons 1) Many owner’s are happy to hold assets and enjoy strong cash-on-cash returns, 2) Some owners pricing expectations are too high, 3) Other owners that wanted to sell have already done so.
Excellent market fundamentals is the key driver of sales. In previous market updates, I have explained in detail the drivers for the strong fundamentals. In case you forgot, I have summarized some of these on page 4. The biggest question by many investors is how far are we into the current multifamily cycle and how long will it continue? Many “experts” like to provide a baseball analogy of which inning we are entering in the “cycle.” Such a parallel has limitations. Firstly, this assumes at some point the game is over, everything gets wiped out and we start again. This will not happen. The market will evolve, possibly with some bumps along the way, but we are not setting ourselves up for another major correction or a nine innings equivalent. Secondly, being a Brit, I’m a soccer aficionado, so I prefer to use a different analogy: South Florida is an international marketplace where players from around the world compete for the ball (a property). The ball is moving forward albeit at different angles. Some players are more active than others and there have been no serious injuries. Extra time or penalties have not occurred. Plenty of goals have been scored and more will follow. The season never really finishes – it slows down in the summer and then keeps going again.
Yeah, I’m stretching a little here with the analogy; however unless you are a supporter of the English national team, which consistently underperforms, you should remain optimistic of the South Florida marketplace. So enough of poor sporting analogies…. let’s look at the facts.
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Calum Weaver joined Cushman & Wakefield in 2016 as a Senior Managing Director for the Capital Markets division and co-leads the Multifamily Investment Properties team which exclusively focuses on the marketing and disposition of multifamily properties on behalf of private or non-institutional owners in South Florida. In the past three years he has successfully sold 90 multifamily properties totaling more than $800 million in South Florida on behalf of his clients.
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