Franklin Street Real Estate Services’ Deme Mekras says the biggest problem in the South Florida multifamily market is finding willing sellers.
Multifamily investors in South Florida used to scoop up properties left and right, but the deals are getting harder to come by. So says Dem Mekras, regional managing partner at Franklin Street Real Estate Services.
Mekras will be on hand at RealShare Apartments East at the Fontainebleau Miami Beach on Tuesday and Wednesday to share the major indicators behind deal trends in their markets. In the meantime, he talked about one of the biggest challenges facing investors in the region.
What are the major drivers behind the deals in our market?
There are many, but to name the majors: (1) We are in the U.S. the most stable economy in the world; (2) We are in Florida, one of the only eight or nine states with no state income tax; (3) We are Miami, the gateway to Latin America and an ever more prolific center of multiculturalism; (4) South Florida has natural restrictions to development and finite land that buoys the values of existing properties and adds to the cost of new ones, for example, values are insulated and, (5) Last but certainly not least, we have great weather most of the year!
Are buyers and sellers, lenders and borrowers, on the same page?
Yes, for the most part. The challenge these days is actually finding a seller. With the market having returned and firing on at least seven out of eight cylinders, it’s easier for the property owners to make the “hold” decision. While rents and values keep going up, owners are reluctant to get off the train that seems to be heading straight for blue sky.
What challenges do you see for multifamily in the local market?
Finding sellers with real motivations to sell beyond pure price is one of our biggest challenges. Now that equity positions are healthier and cash flow are consistent, the key is answering the common question, “So if I sell, sure I get a big number for my property, but what do I do with all the money?”
The answer is specific and unique to each investors’ personal situation, goals and aversions. There is no one-size-fits-all answer to this challenge in the private client world.
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