As more “for sale” signs are replaced with “for rent” signs, owners, developers and potential investors must be creative if they want to maintain rental rates and fill their units.
In preparation for an upcoming seminar on leasing trends, Peter Zalewski, a principal with the Bal Harbour-based real estate consultancy Condo Vultures, gathered information on the submarkets in Miami-Dade, Broward and Palm Beach counties. The statistics include some interesting conclusions. For example, furnished apartments can be leased for 25 cents more per square foot than similar but unfurnished apartments.
“Something like furnishing the condos and apartments will help the buyer get to the double-digit cap rate sooner because they can charge more in rent,” Zalewski said.
Zalewski will address these principles and others in a Condo Vultures seminar scheduled for June 16. A panel discussion focusing on South Florida rental rate trends will be followed by a networking session and question and answer period.
“We’re expecting a lot of investors who are interested in double-digit cap rates,” Zalewski said. “These people are numbers based; they’re not speculators.”
Panel participants include:
James Donnelly, president and chief executive of the Castle Group association, a property management and services company based in Plantation.
Raul Valdes-Fauli, Miami-Dade County president of CNL Bank, who will talk about fractured condo lending.
Jack McCabe, McCabe Research & Consulting, who will give an overall analysis of the market.
Alan Ojeda, developer of One Broadway, a new high-rise rental tower in Miami’s Brickell Avenue area.
Double-digit cap rates, a measure of the ratio between the total income a property yields and the original price of the property, are seen as the dividing line for success in a battered rental market.
At the height of the real estate boom, when condos were being sold to converters, the cap rates were in the 2 to 4 percent range. Now, Zalewski and McCabe believe getting into the double digits isn’t out of the realm of possibility. While rents are predicted to drop because of the increase in inventory, condos that were previously for sale and now are for rent can be rented at higher rates than the rest of the rental market.
“People might be willing to pay high rents for those new condos while the older apartment complexes are going to have to lower the rent in a desperate attempt to fill the units,” McCabe said.
The seminar will be held at the Doubletree Grand Hotel in Greater downtown Miami on June 16 from 5:30pm to 8pm. For more information visit www.condovultures.com.