Luxury homebuilder positions itself to capitalize on growing apartment market
Company: Best known as a luxury homebuilder, Stock Development recognized a void in new, upscale apartment communities in Southwest Florida. The company put Keith Gelder in charge of addressing the need.
Stock Luxury Apartment Living now has three communities in varying stages of development from Naples to Sarasota.
“It was really a need we recognized from a supply-and-demand standpoint,” says Gelder. “We looked at existing housing stock in Fort Myers and Naples and found little new supply that provided an opportunity to develop new product with modern amenities, higher-end finishes and a luxury product.”
Industry: The region has been overlooked by apartment developers, says Gelder, in large part because of market size. Fort Myers-Naples, he says, isn’t regarded as even a secondary market for multifamily development.
“We’re pretty small relative to primary markets like Tampa, Orlando, Fort Lauderdale and Miami,” says Gelder. “The multifamily market is dominated by institutional developers and investors, and most of the investment capital flows to the primary markets first, then to the secondary markets.”
Gelder says that results in an affordability crisis, creating the need for desirable rental properties in otherwise higher-priced real estate markets such as Naples, Fort Myers and Sarasota. There is plenty of room for growth.
“We have jumped into multifamily construction as have many others,” Gelder says. “We have been ahead of the curve, but we are catching up from a supply-and-demand standpoint. Since there as been so little rental developed over the last 10 years, a backlog has developed and we’re just starting to bring the rental market back.”
Threats: The rising costs of development impacting the homebuilding side of Stock Development have a similar impact on its multifamily division. “Land costs are escalating and material costs have escalated as have labor, and there is a lot of activity in the market right now,” says Gelder. “In the end, the developers have to bear all that expense and still find a way to make a profit.”
Rising interest rates likely will have an adverse impact on homebuilders, Gelder adds, but may help boost the multifamily rental market. “The apartment sector as a whole may get a little lift from that because it may force some entry-level buyers out of the market, but on the investment side you have to consider how it might affect cap rates for apartment complex sales.”