M Patrick Carroll spoke on the South Florida Multifamily real estate market this past July. Addressing attendees at the South Florida Deal Flow and Investment Strategies Summit sponsored by BisNow, M Patrick Carroll saw a positive recent past, general trends, and a potential deceleration in the sector.
Carroll Knows South Florida Real Estate
While there are many successful real estate investors and developers in South Florida, M Patrick Carroll is one of the foremost experts in the region’s multifamily housing sector. The founder of CARROLL, he manages more than 30,000 multifamily units spread across complexes in the region and the Southeast at large. These have been accumulated over a long career.
Although Carroll has holdings throughout the Southeast, many of his holdings are concentrated around Miami (where the event was held) and the rest of South Florida.
Growth in Recent Years
Carroll noted the growth that has occurred in South Florida’s multifamily housing. The regional sector has recovered from the 2008 downturn according to Carroll, and it’s even seen an improvement since the recession. Most recently, 2020-2021 has been a capstone period seeing unprecedented growth. The sector has seen more investment over the past year than it’s ever had in another 12-month period.
Such growth is obviously great for investors, as current investors see their properties’ values increase and new investors can capitalize on fast acceleration. The prices have created a high capitalization rate in the past year, along with high raw property value increases, and opportunities to raise rents as housing values went up across the board.
Shifting Trends Among the General Population
With regard to multifamily housing, real estate professional M Patrick Carroll noted two general trends that are impacting multifamily housing and likely will continue to in the next few years. While the Covid-19 pandemic might have accelerated these trends, it isn’t the only (or sometimes even main) underlying factor.
First, there is a growing reversal from the urbanization that’s occurred over the past decade. Many people have moved into cities since the Great Recession of 2008, seeking nearby work opportunities and the many amenities that come with urban life.
The trend is shifting to favor suburbia over downtown areas, however. More people are now moving out of cities and into suburbs, being attracted by the affordable housing costs and open spaces that many suburbs offer. People still usually want short commutes, and some suburbs are close enough to cities or have enough job opportunities in them to offer this as well.
Second, the rapid growth of remote and hybrid work setups is allowing people to work from home much more often. This is a great perk for many, but it requires a certain amount of technological infrastructure.
Third, M Patrick Carroll explained that the market can’t keep going up the way it has been. The multifamily housing sector will undoubtedly see a declaration.
Real Estate Investors Must Adapt
These trends aren’t a short-term change but will play out over several years. Investors in multifamily real estate must adapt, both by considering suburban opportunities and investing in technology that allows for remote work.