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Is the apartment development boom at greater risk of a bust?
That was a big question at a recent real estate confab in Fort Myers, where Lee County is witnessing a surge in apartment construction.
For example, Lee County builders pulled permits for 722 apartments in September, up from 15 units in the same month in 2014, according to the Lee County Community Development Department.
“You've got to watch it,” warned Randy Anderson, chief economist of Los Angeles-based Griffin Capital, which manages $4.8 billion worth of commercial real estate. Anderson is well known in Florida as a former professor of real estate at the University of Central Florida and a frequent speaker to real estate groups statewide.
Speaking at a symposium hosted by the Real Estate Investment Society at Florida Gulf Coast University, Anderson says he has pulled back on the firm's apartment investments.
Anderson estimates the apartment market may be in the later stages of the development cycle. Although he's more cautious, he remains confident the growing supply of apartments will be met by rising demand if the current pace of construction continues. In particular, he says growing household formations and downsizing baby boomers fuel that demand.
“There's no doubt multifamily is strong,” Anderson says. “We finally are seeing close-to-normal construction.”
Of greater concern is senior housing, which Anderson says will see “massive overbuilding” in the next five years. “Eventually we'll get out over our skis on senior housing,” he cautions.
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