CoStar Insights

Three Most-Active Multifamily Submarkets in Orlando

by Brian Alford | Aug 04, 2017

Market in Midst of Historic Apt. Building Boom

The Orlando apartment market is in the midst of a massive new supply wave, with more than 16,000 units added since 2014 and nearly 15,000 more expected by the end of 2018. The five-year stretch from 2014-2018 will represent the largest expansion of the multifamily rental market in Orlando’s history. 

With one of the highest population growths of any metro in the nation, a booming job market and lower than average homeownership rates, Orlando enjoys very high multifamily demand levels. Additionally, the metro boasts a high proportion of prime renters (20-34 year olds), thanks in large part to the University of Central Florida (approximately 65,000 students) and the region's large leisure and hospitality industry. 

Though the new development has been dispersed across the entire Orlando metro, nearly half of new multifamily supply is concentrated in three submarkets - Central Orlando, Lake Nona and Osceola County -- with much of that new construction occurring along major infrastructure projects, such as the I-4 Ultimate Improvement Project. 


Central Submarket Offer Walkability and Office-Using Jobs

The Central (Orlando) submarket is particularly a draw to the prime renting cohort due to its relative walkability and the high number of office-using jobs. One of the market's most notable new development projects is located here - the $430 million Creative Village. The long-awaited first phase recently broke ground and will include the UCF Downtown campus expansion. When completed in 2019, the new campus is expected to immediately bring in nearly 8,000 new students. 

Lake Nona: Instant City

Lake Nona is a little bit of a different story. A submarket that was largely cow fields a decade ago, this area has experienced explosive growth, primarily from $2.5 billion in life/sciences development that has taken place here in the last 10 years, largely centered around Lake Nona Medical City. 

Lake Nona's apartment units mostly consists of new, high-end stock and cater to affluent residents with high-paying jobs. Since this demographic can easily afford home ownership, there has been some concerns among apartment investors of oversupply. Lake Nona has established new records in single-family home sales in each of the past three years and has also ranked in the top-10 in the nation. 

Even so, the submarket is expected to reap plenty of future renter demand from several high-profile projects underway, including the USTA National Campus, KPMG’s $430 million training campus and Amazon’s approximately 855,000-square-foot fulfillment center. 

Osceola County: Where 'Cast Members' Live

The Osceola County apartment submarket is largely driven by the leisure and hospitality sector, due to its proximity to the area's major theme parks such as Disney World and Universal Studios. 

Historically, the submarket mostly consisted of workforce housing due to this sector’s lower average wages. However, this has changed in recent years, as Osceola County has begun to make a name for itself for tech manufacturing. Perhaps the most notable example is the recently-opened Florida Advanced Manufacturing Research Center, a $75 million smart-sensor facility expected to bring thousands of high-income jobs over the next few years. 

Accordingly, luxury multifamily construction has taken off in the submarket, with nearly 1,500 units currently underway. 

Despite the unprecedented levels of new construction, Orlando's apartment vacancy rate remains near a historically-low level and annual rent growth is amongst the strongest in the nation. With little in the way of geographical constraints, oversupply is always a concern. However, Orlando’s booming population and job growth should keep the market attractive to both future renters and developers. 

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