Rehab existing rental stock to overcome South Florida’s huge affordable housing deficit, developers say

A good approach to improving the serious deficit of affordable and workforce housing in South Florida is to rehab existing apartments, developer Joel Altman and others said during a panel on Thursday.

Altman, CEO and chairman of Boca Raton-based the Altman Companies, and a group of other developers and experts in Fort Lauderdale stressed the need to build or rehabilitate more rental apartments in Broward’s biggest city, in Miami and in West Palm Beach. Doing so is necessary to ensure sustained, balanced economic expansion, they said.

“There’s already a rental shortage” in the region, Altman told nearly 250 real estate professionals at the Bisnow event.

The shortfall of affordable and workforce apartments means that most workers live many miles away from their jobs, spend hours commuting and often spend more than 50 percent of their incomes on rent and transportation.

Citing figures from research done by Hoyt Advisory Services, Altman said that the country will need about 4.6 million new apartments by 2030 – or about 345,000 per year, and that current construction is well below that level.

“Rental apartments are the most favorable real estate investment,” he said, as sectors like retail, hotels and office buildings have become less attractive.

Angelo Bianco, managing partner at Boca Raton-based Crocker Partners, a real estate investment and management firm, offered an unorthodox idea for increasing the stock of affordable apartments. Developers generally control development of these properties to keep rents steady. “Why not overdevelop rentals,” he said. “Renters would save and everyone would move here,” Bianco said. “It would be good for most people. Not for developers.”

While sanguine about the economic outlook for Fort Lauderdale, panelists also underscored trends and problems the city must deal with.

Since the financial crisis, there has been a clear and steady move away from home ownership and toward rental apartments across age groups, said Greg West, president and chief development officer of Orlando-based ZOM Living.

“Home ownership was around 70 percent, now is in the low 60s and may settle in the high 50s,” West said. Huge numbers of people are gravitating to cities looking for live-work-play communities.

Major roadblocks to new development include high land costs in the already built-out Broward, the reluctance of banks to approve more development loans and stiff regulatory demands in the wake of Dodd-Frank and excess municipal regulation and costs.

Municipalities need to allow greater density in new urban developments, and should consider waiving impact fees and other costs for affordable housing, developers said.

On sea level rise, Fort Lauderdale city manager Lee Feldman said the city is “the Venice of the Americas.” With seven miles of coastline and 165 miles of canals and other waterways, the low-lying metro is increasingly vulnerable to the rising seas. The city in planning on investing $200 million in public works over the next 10 years and $1 billion over the next 50 years.

Other issues the panelists cited were improving public transportation, sea level rise, and Broward County’s oversight on new development in Fort Lauderdale. The county, they said, has the final say over what projects the city can advance and over-regulates affordable housing. “The county is dad, the city is the kid and developers are the kid’s friends,” Feldman said. “Developers need certainty.”