The fallout from the collapse of the Champlain Towers South in Surfside has spilled over into the apartment sector, as building inspectors crack down on rental properties for unsafe structures violations.
The June 24 collapse of the condominium killed 98 people and, while investigators haven’t determined the cause of the building’s sudden failure, it has sparked widespread concerns about the conditions of older buildings with deferred maintenance. Older condos have received much of the attention, as they are run by associations that sometimes don’t make repairs quickly, but even apartment buildings constructed several decades ago can have issues with structural problems that haven’t been addressed.
The 82-year-old apartment complex at 6881 Indian Creek Drive in Miami Beach and the 56-year-old apartment building at 1080 93rd St. in Bay Harbor Islands were among those that local officials ordered to be evacuated over unsafe structural issues in recent months.
In Miami-Dade and Broward counties, which have 40-year recertification programs for large buildings, inspectors have been more vigilant at uncovering safety issues. Both counties are considering changes to toughen the requirements of the recertification programs. In August, Boca Raton became the first city in Palm Beach County to approve a recertification program, which will start at 30 years. That means many older apartment buildings in South Florida will be under the microscope.
Dan Dratch, director of multifamily at commercial broker Franklin Street in Fort Lauderdale, said the recertification crackdown will impact apartment owners in a big way because city inspectors are taking the issue more seriously. Many of the pending apartment acquisition contracts he reviews include provisions that require the building to pass the 40-year reinspection before the deal closes. Buyers don’t want to run the risk that building inspections will require them to make major repairs or force them to declare the building uninhabitable for a time, he said.
Fortunately, there’s strong demand from investors and lenders for multifamily properties in South Florida, Dratch said. Owners of older buildings should have little problem refinancing them, even with added capital for repairs. If that doesn’t work, there are plenty of investors who are willing to acquire South Florida apartments and make renovations.
Typically, landlords are able to raise rents after renovating a building.
However, Dratch said that, in some cases, a buyer may decide to demolish the old apartments and build new ones, as there’s strong demand from renters for new buildings.
“This is where opportunistic buyers will show themselves,” he said. “We are seeing an influx of capital into South Florida, especially buyers coming from other areas like New York and California.”