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Real estate investors in Florida know that the market has seen a steadily increasing return to normalcy since it bottomed out in 2010. Asset classes of all types have been undergoing a resurgence as the market continues to correct itself. With investing outpacing development though, investors are seeing access to viable properties tightening up. Investors need to become more creative when finding deals and stay ahead of new trends arising.

David Beshears, head appraiser and owner of Beshears & Associates, has been appraising properties in Florida for over 20 years and he is very knowledgeable about the self storage market. John Miller, senior appraiser and realtor for Beshears & Associates, specializes in multifamily asset classes, having completed over 200 multifamily appraisals since 2008. This episode, David and John discuss where Florida markets are at, particularly in the multifamily and self storage market.

Multifamily

• 4% vacancy in Tampa area markets
• Uptick in rental rates across sub-markets
• High occupancy rates causing higher appreciation in Class B and C properties
• Class A properties new builds at $2/sqf (Central Tampa Sub-market: Hyde Park, Westshore, Downtown Tampa, Davis Islands)
• 3300 units entitled to construction; 2200 scheduled for 2016 completion
• Class A super properties arising in suburban markets (Riverview)
  • Luxury trend in new developments (zero-entry pools, state-of-the-art amenities)
• No new builds for Class B and C properties
• Cap Rates (Tampa): Class A: 4.5-5.25%; Class B: 5.25-5.75%; Class C: 6.5-9%
• Value-add opportunities still available with focus on interior of units

Self Storage

• Traditionally lag behind multifamily cap rates by 150-200 basis points
• Self storage market similar to multifamily market
• Subject to overbuilding in 3rd tier markets
• 12% of market owned by institutional investors
• Value-add opportunity for private investors
  • Online/web presence
  • Upgrade security and lighting
• Cap rates: Class A: 5-7%; Class B: 7-9%; Class C: 9% and up
• Major markets in need of new development
  • Opportunity for developers if they can find land
  • 2-3 acres at $5-8/sqf is ideal

Beshears & Associates offers a newsletter providing an overview on a variety of asset classes in Florida, including the multifamily and self storage market. To check out their newsletter and to find out about the other services they offer, visit their website at www.beshears.net