Rental Developments in Fort Lauderdale and future affects on condominium values. (Get comfortable, this is a long one)

Since my post about New River Village III I've been fielding a number of emails about the other rental complex's currently under development near Downtown.  A number of my clients are investors so naturally they want to know how these new rental developments in Fort Lauderdale will impact their values.  I'm going to take you through some complex's that are currently going up in Downtown Fort Lauderdale.  It's tough to miss these!

The Pearl at Flagler VillageHenry Square

  • Address: 495 N Federal Highway
  • 331 Residential Units
  • 7 stories
  • It appears the building will have retail space, however, I cannot find a square footage estimate
  • Estimated project completion Summer 2014
  • Morgan Group is the developer
  • Website for The Pearl at Flagler Village has not been established yet
  • The low down: Morgan owns properties in North Florida.  A typical Morgan build is luxurious, technologically advanced, and aestetically eye popping.  Of all the developments going up I'm most curious to see how this one looks upon completion.

Henry Square at Flagler Village

  • Address: 525 NE 5th Terrace
  • 382 Residential Units
  • 6 stories
  • 25,000 square feet of retail space (wow that's a lot)
  • Estimated project completion Summer of 2014
  • Related Group is the developer
  • Website for Henry Square at Flagler Village
  • The low down: 30 Studio's, 105 one bedrooms, 50 one bedrooms+ den, 177 two bedrooms, and 28 three bedrooms.

New River Yacht Club

  • Address: 400 SW 1st Avenue
  • 249 Residential Rental Units
  • 26 Stories High
  • 4,000 square feet of retail space
  • Estimated project completion Spring of 2014
  • A Related Group Project
  • Website for New River Yacht Club
  • The low down: Rumor is their aiming for the luxury rental market.  Expect rental rates to be on the higher side.

Elan 16fortyPaseo Del Mar

  • Address: 1600 E Sunrise Blvd
  • 261 Residential Units
  • 10 stories at the highest point of the complex which will have a varying number of floors
  • 2,300 square feet or retail
  • Estimated project completion 2014
  • Greystar is the developer
  • Website for Elan 16forty hasn't been established yet
  • The low down: Apartments will range from 686 to 1,599 square feet.  They are targeting the luxury renter.  A dog park and 6,000 square foot gym should really make this building something nice.  The building was originally named Paseo Del Mar but was sold off by the original developer to Greystar.

Marina Lofts

  • Address: 400 SW 3rd Ave
  • 856 Residential Rental Units when all three phases are complete
  • 28-30 stories high.  The number isn't set in stone, from what I understand, as their are density requirements as each phase is built.
  • Near as I can tell their appears to be 29,000 square feet or retail and restaurant space planned for Marina Lofts
  • Estimated project completion I would estimate in 2015 as they haven't broken ground yet
  • Asi Cymbal is the developer
  • Website for Marina Lofts
  • The low down:  The project is designed to have smaller living spaces, at reasonable rent levels.  This building shouldn't be in competition with those complex's that are seeking luxury renters.  Building is also slated to be very dog friendly.

New River Village III

  • Address:  510 SE 5th Avenue
  • 209 Residential Rental Units
  • 15 stories high
  • 2,245 square feet of restaurant space on the first floor, no retail spaces planned
  • Estimated project completion hasn't been disclosed
  • American Land Ventures is the developer
  • Website for New River Village III hasn't been established yet
  • The low down: In my previous post I speculated that these would be condo units.  I was able to speak to a representative at American Land Ventures last week and she told me they were not going to be condo's.  This will be operated as a rental complex.

So let's total up some numbers.

2,288.  Astonishing.  If you total the numbers of new residential rental units listed above, you'll get 2,288.  That's 2,288 new units that are under construction right now with completion dates that are quickly approaching.  That's 2,288 more choices potential renters will have in the Downtown Fort Lauderdale area versus today.  That's a huge, huge, huge number.

Likely impact on existing condominiums

Rental rates in Downtown Fort Lauderdale will be affected by, if not shaped by, these new buildings.  One word that keeps coming up in all of these new developments is, luxury.  Let's cut to the heart of it, they're going to charge a lot of money for monthly rent.  If you own a unit in The Waverly, Nu River, Strada 315, or Symphony Condominiums, I believe you will see a pullback in rental rates.  Those buildings will be in direct competition with the new construction buildings.  Buildings on the extreme high end (WaterGarden, Las Olas Grand, Las Olas River House) will likely not be impacted.  The new buildings won't be able to charge the same rental rates as we see in the ultra high end buildings.  Fort Lauderdale Beach will also not be impacted heavily.  People rent on Fort Lauderdale Beach for the beach more than anything else.

So which buildings will likely benefit from these new construction rental developments in Fort Lauderdale?  Again speaking to rental rates, the likely benefactors would be any unit charging below $2,400 in monthly rent for a two bedroom.  From what I've seen, Marina Lofts aside, most of these buildings are going to be pushing rents over $2,400 a month for two bedrooms.  Sole would be the largest benefactor in my opinion.  Sole typically charges less rent than the buildings mentioned in the preceding paragraph.  Second to Sole I would say Las Olas by the River will benefit.  Rental rates in Las Olas by the River are also below market rate compared to the surrounding buildings.

Whose property values will likely suffer from, or benefit from these new developments?  As the old cliche says, the million dollar question.  Spend some time with me and you'll hear me say "you need to get away from the noise".  I'm a contrarian by nature I guess.  I'm also a pessimist of sorts.  Here's the thing, while most people are focusing on the damaging consequences of all these new buildings, I see tremendous opportunity.  I think you need to look at what's not being built, new condominium complex's that offer fractional ownership!  Yes these new complex's will alter rents that owners are able to charge as renters will now have tons of options across price points.  Unit owners may see less monthly return on their investment if the rental income line drops.  However, I think we're missing the bigger picture.  Those willing to pay thousands in monthly rent will come to their senses and decide they're throwing way too much money away.  It's supply and demand.  If the condominium supply does not rise, but the demand for ownership does, you'll see an increase in overall unit prices.

So after all of this what's my advice to investors, prospective buyers, and current owners?

Investors, focus on what these new buildings are not.  They're not loft spaces, they're not townhomes, they're not low priced rentals.  There's tremendous demand for loft spaces in Fort Lauderdale.  Rental rates in Avenue Lofts, Mill Lofts, Foundry Lofts, and NOLA Lofts should not be impacted by the new developments.  Some tenants will realize for $2500 a month they can rent a tri level townhouse.  Some will do that rather than live in a smaller new rental unit.   Finally, multi family housing and lower priced condominiums, in choice areas, remain an incredibly stable investment.  You just need to stay away from the noise to succeed in this market.

Consequences to prospective buyers are relatively simple.  More rental options, more competitive home buying market.  Buyers in the $400,000 level and below will continue to find limited options unless we construct more inventory.  I would look towards the townhouse and loft space markets as well.  Lower monthly fee's and a unique product make these options very viable at lower pricing levels.  Some buyers may decide to wait out home buying if rental rates fall due to the completion of the new developments.

Current owners are a case by case basis.  Rental rates have sky rocketed in the last three years.  This has helped some unit owners get closer to a cash flow neutral situation monthly.  Others continue to take massive losses and pay out of pocket monthly.  If you're a unit owner that is either breaking even, or can handle the monthly cash loss, I would hold right now.  I think your property value will get a nice bump once these buildings are constructed and prospective unit owners (buyers) replace tenants.  If you're treading water and a pull back in rent would hurt you, then you need to consider selling before the summer of 2014.  Should rents pull back to previous levels and your cushion is erased, its better to sell than default on your loan.  Again, each person is unique, and each situation is unique.

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I work as a Realtor in Southeast Fort Lauderdale. If you’re interested in buying or selling a home, condominium, or townhouse (townhome) in: Rio Vista, Victoria Park, Downtown Fort Lauderdale, Fort Lauderdale Beach, Harbor Beach, Lauderdale Harbors, Sailboat Bend, Tarpon River, Croissant Park, Collee Hammock, Seven Isles, Nurmi Isles, Idlewyld, or Las Olas Isles, please feel free to contact me at (786)443-7203 or through my email caseyprindle@gmail.com. I am a Realtor that works on Saturdays to accommodate those with busy schedules.
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Written By Casey Prindle

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