Orlando, Fla.—Atlanta-based real estate company Cortland Partners recently entered the Florida market with the $40 million purchase of Harbor at Lake Howell, a 408-unit, garden-style community in Orlando. MHN talks to John Builder, director of investments for Cortland Partners, about why taking on Florida is key strategic move for the development company.
MHN: Cortland recently purchased its first community in Florida. What are some current benefits of the Florida market for multifamily?
Builder: Job growth rates in Florida, particularly in Orlando, have been some of the best in the country. Further, the long-term demographics in Florida are strong—as the region has recovered from the Great Recession, in-migration has returned to pre-recession levels, which ranked as some of the highest in the nation. We are in a particularly advantageous position in markets such as Orlando, whose young population and job base drive a propensity to rent that is higher on average than in the nation as a whole.
MHN: Are you seeing any challenges there?
Builder: In the Orlando market, we are seeing a stock of available, inexpensive housing for first-time homebuyers and we are seeing clients choosing to become homeowners. Further, while the development pipeline is currently at a level that should result in continued NOI growth, more projects entering the planning stages could become a concern. However, Cortland is not only highly competitive in product offering and customer service, but also offers a great value, so we will continue to distinguish ourselves in the market.
MHN: Why is Florida a key component for Cortland’s expansion plans?
Builder: Florida is a high-growth market and, institutionally, a favored investment market, so liquidity is high.
MHN: What is Cortland’s general acquisition strategy? What does the firm look for in properties?
Builder: Cortland looks for well-located properties with opportunities to add value. Levering our history as a development company, we are able to create significant value in the acquisition space, as we approach each asset seeking to best position the product offering in the marketplace, regardless of the current product or business plan. We remain focused on what apartment communities can be, rather than on what they are. Nearly all apartment communities developed prior to the 2008 recession are likely undershooting the desires of today’s more discerning clientele.
The downturn of 2008 impacted all demographic groups. Younger Americans have fewer employment opportunities, and career advancement has slowed while older Americans are having to delay retirement and have seen their nest eggs erode. All of these factors are causing an entire generation to shift from a dream of home ownership to the simplicity and affordability of renting. As a result, every day our clientele is more mature, more educated, and has higher disposable income than the renters of past generations.
As such, they demand a higher-quality rental option that feels like a nice home, rather than a standard-issue apartment. As a development company, Cortland has the full integration of interior design, architectural services and development expertise to reposition an existing asset to more appropriately fit the needs of the clientele in today’s competitive market.
MHN: Is there anything you’d like to add?
Builder: Cortland was founded as a development company, so development is one of our core competencies. In addition to acquisition opportunities, we are actively developing approximately $150 million of current projects and continue to seek opportunities for development in top-tier locations that meet our underwriting criteria. With our focus on unique, high-end product and a customer-driven operating platform, we will provide some of the best apartment homes in Florida.