Q&A: Central Florida’s Multifamily Growth Engine
BTI Partners CEO Noah Breakstone on what's attracting developers to the region, metro Tampa's market dynamics and a marquee waterfront project.
Multifamily continues to be the main growth sector for Tampa’s real estate industry. As BTI Partners CEO Noah Breakstone recently pointed out, more than 7,200 units are under construction in the metro and another 37,133 units are in the planning and permitting stages, according to Yardi Matrix data. Absorption is expected to keep up with supply, as the area’s population growth continues.
In an interview with Multi-Housing News, Breakstone discussed why developers are shifting their attention from South Florida to Central Florida and provided an update on BTI Partners’ Marina Pointe, part of the 52-acre Westshore Marina District project in Tampa.
What do markets like Orlando and Tampa have to offer, compared to other markets in Florida?
Breakstone: These cities have very strong market fundamentals fueling their continued, real estate boom. We have tracked this market trend for a while, and it is why we continue to invest in Tampa/St. Petersburg and Orlando. In addition to Westshore Marina District in Tampa, we are currently developing The Grove Resort & Water Park, a highly amenitized luxury vacation home community less than five miles from Walt Disney World in Orlando.
We are also the master developer of Posner Park in Davenport, which is located about an hour from Tampa and minutes away from Orlando’s major attractions. And under contract, we are currently set to close on approximately 1,500 acres of land south of downtown Orlando in which we envision a master planned community of 5,000 residences and 100 plus acres for a retail town center.
Due to Central Florida’s rapid growth, Orlando is in the top five and Tampa/St. Petersburg is in the top ten U.S. cities favorable for real estate investment, according to the ULI’s 2019 Emerging Trends in Real Estate survey. Orlando and Tampa have benefited from strong annual net migration over the past five years, according to the survey. The 2019 employment growth rate is projected to be well above the national rate for both Orlando and Tampa/St. Petersburg. The key drivers (job growth, population growth and affordability) make Central Florida a winner.
Many developers are shifting their attention from South Florida—especially Miami—to Central Florida. What attracts them to this area? What is driving multifamily demand?
Breakstone: Limited supply has caused land values to skyrocket and has significantly increased the cost of living in South Florida. While international migration continues to drive the population of Miami higher, domestic migration to South Florida has been negative for the past several years and is projected to be negative for the foreseeable future. Rising home values coupled with below average salaries are pushing many families to relocate to more affordable areas.
Unlike South Florida, Central Florida has land available for development and is leading the nation in terms of population and job growth rates, all of which make housing more affordable. Also, it is interesting to note that Orlando is the most visited city in the nation, receiving 75 million visitors in 2018. Developers are always looking for markets that have land available and strong demand drivers, which are the fuel to new opportunities.
What can you tell us about absorption of new supply in Tampa in the past year? How do you see this going forward?
Breakstone: Absorption has been robust. The general area where we are building Westshore Marina District in, is recording the fastest rent growth at 7.7 percent year-over-year, according to the most recent Yardi Matrix’s Tampa Multifamily report.
READ ALSO: Tampa Multifamily Report – Spring 2019
When it comes to condo absorption, the demand is also strong. Since we launched sales of Marina Pointe last year, we have steadily increased sales prices because the condos have been selling faster than we had anticipated. The advantage of selling condos in Florida is that we are seeing a lot of buyers from the Northeast who are planning their relocation to cities like Tampa. Some of them are moving to Tampa to retire and enjoy what Tampa has to offer. Others are buying condos to move their lives to Tampa to save in taxes, especially after the massive tax overhaul and improve their quality of life by enjoying our great weather instead of having to shovel snow.
What your expectations going forward in this late-cycle economy?
Breakstone: Tampa is one of the top U.S. markets in terms of job and population growth. As long as those fundamentals remain in place, the multifamily sector should do well. So far, we don’t see signs of an economic slowdown in this market. What we do expect to see in the near future is a normalization of home values, where sale prices won’t escalate as fast as they have been escalating in recent years. Once that happens, we will see more home sales across the board.
Please tell us more about your Marina Pointe project. What is the current status of the development?
Breakstone: Marina Pointe is a luxury condominium development with three high-rise towers, townhomes, penthouse residences and a 150-slip full-service marina with prices ranging from $700,000 to over $2 million. Marina Pointe is one component of the 52-acre Westshore Marina District, a luxury mixed-use waterfront community in South Tampa.
BTI Partners, the developer of Marina Pointe and the master developer of Westshore Marina District, has begun construction of the deep-water marina and will commence vertical construction of Marina Pointe later this year. Designed by world-renowned architect Kobi Karp, Marina Pointe underlines the new level of sophistication that the Tampa luxury condo market is expecting to see.
Westshore Marina District also includes a retail town center, restaurants, walking trails and parks overlooking the yacht marina. Residents are beginning to move into the District with communities being built by The Related Group, Bainbridge and WCI. BTI Partners plans to deliver the retail component in the summer of 2020.
How will Westshore Marina District impact Tampa Bay?
Breakstone: When we entered the Tampa Bay market, we had a vision to build a vibrant mixed-use, waterfront and marina community that had practical live-work-play elements. This new contemporary vision has now turned into reality.
We have already signed leases with an exciting number of retailers, including Duckweed Urban Market, Cru Cellars, DRNK & QWENCH, Salon Color Bar and Crave.