Multifamily Investment TrendsThe Orlando MSA’s rental demand has been fueled by robust employment and household gains, which recently landed it as the #1 ranked multifamily market in the country in Marcus & Millichap’s 2020 National Multifamily Index. During the past four quarters the metro registered the second highest rate of job growth in the nation. Orlando also led the nation in household formation in the same 12-month period, and many are choosing to rent as rising residential prices prevent more people from owning a home.

Orlando’s post-recession economy has enjoyed solid growth, and the market has shown some diversification away from its tourism-heavy economy over the past decade. Robust economic growth, a growing population – both in terms of young adults and retirees – and lots of in-migration to the market has helped fuel healthy demand for multifamily product and, in turn, market performance.

Rent GrowthThe market saw another stellar year of effective rent growth at 6.1% percent YOY, which topped the 5.7 percent surge in 2018. The average effective rent soared above $1,300 for the first time, settling in at $1,309 per month at year end. Rent performance has slowed in Class A and B units, but has strengthened in Class C units in recent quarters. Slowing growth in middle-market performance might indicate that Class A units are poaching some demand from Class B units.

ORLANDO

Employment DriversOrlando has one of the hottest job markets in the nation, enticing more than 1,000 new residents to the region each week. During the past five years, employers created more than 46,000 jobs per year on average which has expanded the local economy by an average of 3.9 percent per year. In Orlando’s tourism-centric economy, the Leisure and Hospitality sector accounted for about 20 percent of the employment base which is double the national average and the 2nd highest concentration in the country behind Las Vegas. The nearby Space Coast also produces an outsized proportion of high tech, high-wage engineering jobs with companies in the aerospace manufacturing and defense contractors enjoying a steady stream of both private and government contracts year after year.

Lockheed Martin, Orlando’s largest defense contractor, was awarded a $988 million contract from the U.S. Air Force which will create the need to fill 500 positions at its Missiles & Fire Control campus adding to the existing 5,000 employees already at that facility.

Universal Orlando Resort is building a new 187,000 square foot headquarters for its Universal Creative division and will eventually house 450 employees. The $350 million facility will be built next to Universal’s future Epic Universe theme park which is scheduled to open in 2023.

Plano, TX-based Frito Lay, a subsidiary of PepsiCo, is planning to build a 286,000 square foot, $130 million fulfillment center on 75 acres in Osceola County across from the new Poinciana SunRail. The new high-tech warehouse is expected to employ 200 people.

Walt Disney World opened up a Star Wars theme park in August 2019 at Disney’s Hollywood Studios. The $1 billion expansion has supported 7,000 new jobs since the project began in 2016. The park is expected to have a roughly $600 million economic impact on the local economy.

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Occupancy Quarterly SnapshotWith consistently strong demand amid elevated levels of supply, occupancy in Orlando has hovered around 96 to 97 percent for the past five years. In Q4 2019, occupancy registered at 95.9 percent which was down 0.2 points YOY but has remained solid across all multifamily product classes. Occupancy has been particularly tight in Class C assets and, in fact, Orlando registered the highest Class C occupancy rate in the country last year at 98.5 percent. Constant waves of new supply present a headwind to occupancy in certain submarkets but solid demand drivers will likely keep the occupancy around 95 to 96 percent going forward.

ORLANDOQ1 2020 MARKET SNAPSHOT

OCCUPANCYOverall 95.9%

2000s+ 95.3%

1990s 96.5%

1980s 96.0%

1970s or Older 96.6%

AVERAGE RENT PER UNIT PER SF

Overall $1,284 $1.32

2000s+ $1,426 $1.37

1990s $1,190 $1.22

1980s $1,161 $1.34

1970s or Older $1,080 $1.28

YEAR-OVER-YEAR (YOY) RENT GROWTHOverall 2.0%

2000s+ 1.8%

1990s 2.5%

1980s 1.2%

1970s or Older 3.4%

EMPLOYMENTUnemployment Rate 2.5%

Jobs Added (Q1 2020 T12) 36,700

“Orlando property has been white-hot from an apartment economic perspective and consequently cap rates have become compressed to all-time lows which has forced investors to seek out yield in outer Central Florida markets.”

- Andrew Birr

In 2019, Orlando was the most visited city in the country with over 75 million visitors.

“Last year, our team closed numerous Class B and C deals in Lake County, Ocala and Gainesville, and have deals under contract in The Villages, the Space Coast and Polk County.”

- Ryan Wooden

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2019 - SIGNIFICANT MARKET TRANSACTIONSProperty Name City Year Built Units Close Date Sale Price $/Unit $/SF

2010s Vintage

Town Trelago Maitland 2019 350 Dec 2019 $105,000,000.00 $300,000.00 $294.27

Broadstone Winter Park Winter Park 2018 268 July 2019 $84,450,000.00 $315,111.94 $315.11

Lakewalk at Hamlin Winter Garden 2018 316 July 2019 $80,125,000.00 $253,560.13 $236.61

Blackstone Orlando 2015 355 Apr 2019 $77,745,000.00 $219,000.00 $225.79

The HUB on Campus Orlando 2018 229 July 2019 $77,300,000.00 $219,000.00 $225.55

2000s Vintage

Northbridge at Millenia Lake Orlando 2005 607 Oct 2019 $104,000,000.00 $171,334.43 $136.03

ARIUM Windermere Ocoee 2001 447 Dec 2019 $97,100,000.00 $217,225.95 $198.45

Fountains Waterford Lakes Orlando 2001 400 Sept 2019 $77,000,000.00 $192,500.00 $195.02

Village at Lake Lily Maitland 2009 455 June 2019 $59,800,000.00 $131,428.57 $124.38

ARIUM Alfaya Trail Oviedo 2006 253 Dec 2019 $59,000,000.00 $233,201.58 $212.64

1990s Vintage

Amara at Metrowest Orlando 1997 411 June 2019 $72,800,000.00 $177,128.95 $142.50

Lake Tivoli Kissimmee 1990 384 June 2019 $67,000,000.00 $174,479.17 $206.26

University Park Orlando 1997 356 May 2019 $63,250,000.00 $177,668.54 $188.30

ARIUM Maitland Summit Orlando 1998 272 Dec 2019 $55,200,000.00 $202,941.18 $187.37

Willow Key Orlando 1999 384 Mar 2019 $54,286,625.00 $141,371.42 $127.12

1980s Vintage

Heather Glen Orlando 1987 396 Jan 2019 $64,750,000.00 $163,510.10 $188.94

Island Club Orlando 1989 472 Feb 2019 $64,000,000.00 $135,593.22 $149.86

Central Parkway Altamonte Springs 1986 340 Dec 2019 $62,000,000.00 $182,352.94 $189.98

The Bentley at Maitland Orlando 1986 324 July 2019 $51,825,000.00 $159,953.70 $200.48

Marbella Lake Orlando 1985 200 Dec 2019 $26,000,000.00 $130,000.00 $149.19

1970s Vintage or Older

LIV at Winter Park Winter Park 1973 278 Oct 2019 $49,000,000.00 $176,258.99 $217.44

Aria Beach Orlando 1971 360 Apr 2019 $48,690,000.00 $135,250.00 $146.39

Latitude 28 Altamonte Springs 1972 354 Oct 2019 $47,400,000.00 $133,898.31 $362.65

Mirador At Woodside Kissimmee 1973 208 Nov 2019 $25,300,000.00 $121,634.62 $113.07

Country Place Orlando 1973 200 Mar 2019 $23,500,000.00 $117,500.00 $213.64

Market Summary 2019 2018 % Change

Overall Market Sales Volume $3,191,000 $2,680,000 19.10%

Overall $/Unit Market Average $179,523 $149,071 20.43%

2010s Vintage $228,122 $213,529 6.83%

2000s $173,756 $121,929 42.51%

1990s $163,178 $137,728 18.48%

1980s $134,596 $124,994 7.68%

1970s or Older $129,671 $73,814 75.67%

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Q1 2020 - ORLANDO DEVELOPMENT PIPELINE MAP

PLACEHOLDER MAP