Orlando’s Job Growth Allows Multifamily Sector to Continue Strong Performance

To those outside Orlando, the Central Florida metro of just over 2.3 million residents has long been a vacation destination with its major theme parks and top attractions including Walt Disney World, Universal Orlando, SeaWorld and the I-Drive corridor, home to the new Orlando Eye. In fact, Orlando welcomed over 66 million visitors who spent more than $60 billion in 2015, a new all-time local and U.S. travel industry high.

However, tourism is just one piece of the puzzle when it comes to Orlando’s emergence as a top target for multifamily investment. The metro is experiencing exceptional growth across multiple sectors of the economy, and in 2015, the Orlando MSA led the nation in employment gains, coming in at 4.6 percent. According to the U.S. Department of Labor, the metro added 52,200 new jobs. Of these new jobs, the highest percentage was in professional business services, medical, transportation and general services.

Shelton Granade, CBRE

Shelton Granade, CBRE

Looking forward, data from CBRE-Econometric Advisors projects that Orlando will lead the U.S. in employment growth over the next five years by a wide margin (2.3 percent compared to 0.8 percent for the nation overall). The rapid employment growth driven by numerous corporate relocations and expansions including Verizon, Mitsubishi-Hitachi, Darden Restaurants, Adventist (Florida Hospital) and others are fueling this trend. Orlando also currently boasts the second and seventh largest hospitals in the country by bed count (Florida Hospital and Orlando Health), and the largest single-site employer in the country, Walt Disney World.

Additionally, Orlando’s elected leadership is dedicated to facilitating growth through business incentives and infrastructure spending programs that will attract more top companies to Orlando. Based on recent data, nearly $8 billion in infrastructure projects are underway (or about to begin) around the metro area. This includes the $2.3 billion widening of I-4 (“I-4 Ultimate Improvement Project”), the extension of the SunRail commuter rail line to the north and south, the $1.2 billion South Terminal expansion at the Orlando International Airport and numerous other roadway enhancement projects throughout the city.

The infrastructure expansions are coming at the perfect time, as the booming job market has attracted many new residents to the Orlando area, increasing its population by 12 percent over the past six years. The U.S. Census Bureau recently singled-out the Orlando metro as the fastest-growing of the country’s 30 largest regions, adding over 60,000 new residents over a one-year period (ending July 2015).

The Orlando apartment market has benefited tremendously from these strong economic tailwinds. Despite macro fears abroad and worries of over-supply on a national level, multifamily fundamentals in Orlando remain robust and show no signs of slowing down any time soon. As of second-quarter 2016, the occupancy rate in the Orlando metro was 95.9 percent according to data firm Axiometrics. Meanwhile, effective rent growth came in at 6.6 percent on a year-over-year basis and the average market rent per unit stood at $1,061.

A metric many consider a key indicator of multifamily market health is the new-jobs-to-supply ratio (based on permitting activity). A positive number shows that employment gains are outpacing supply, which is favorable for the multi-housing sector in general. As of May 2016, Axiometrics data reported that Orlando had a new-jobs-to-supply ratio of 6.3, placing it ahead of similar Southeastern metros including Atlanta (6.0); Kansas City, Mo. (3.6); Charlotte, N.C. (3.4); and Nashville, Tenn. (2.6).


Orlando’s impressive statistics are helping to attract increased investment sales interest. Subsequently, transaction volume has also increased at a brisk pace. In 2015, sales of apartment communities exceeded $2.6 billion, a near doubling of the activity seen in 2014. At the halfway mark in 2016, there has been just over $1.2 billion in transaction volume, putting the market on pace to have another banner year.

So far in 2016, the market has already witnessed benchmark deals trading in the metro’s hottest submarkets. This includes the sale of the 248-unit Ivy Residences at Health Village, which sold in April for record pricing in this cycle of $53.5 million ($215,726 per unit). The Ivy was completed in 2015 and is located just north of the CBD at the Florida Hospital campus within walking distance of a SunRail commuter train station.

Redevelopment opportunities are also prevalent in the market for well-located assets near top demand drivers. The Park at Sutton Place, a 288-unit apartment complex built in 1986, is a prime example of a value-add opportunity located in the highly desirable and affluent Winter Park area of the Orlando metro. Sutton Place traded hands in June for $32.1 million, or $111,458 per unit.

As the trend of more jobs, people and infrastructure growth continues in Orlando, additional investors will begin to take notice of this dynamic environment. This bodes well for current owners of apartment communities and will create additional opportunities for developers and redevelopers to participate in this emerging market.

— By Shelton Granade, Vice Chairman of CBRE’s Central Florida Multi-Housing Group. This article originally appeared in the August issue of Southeast Real Estate Business.

Content Partners
‣ Bohler
‣ Lee & Associates
‣ NAI Global
‣ Walker & Dunlop

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