Realtors discuss outlook for Fla.’s real estate markets



ORLANDO, Fla. – Dec. 8, 2011 – An improving state economy, population growth and stronger demand are creating opportunities in the state’s residential, commercial and land markets, according to three experienced Realtors in Florida.



“To succeed in 2012, you need to think about how trends in the national economy tie into your local market,” said Clark Toole, president and chief operations officer (COO) of Coldwell Banker Residential Real Estate Inc. in Florida. Speaking on the state’s residential market, Toole said, “Florida is such a diverse state, both geographically and culturally, that you really need to do your homework.”



Toole was one of three expert practitioners who spoke at Florida Realtors® 2012 Real Estate and Economic Forecast Conference in Orlando earlier this week.



Cynthia Shelton, 2009 president of Florida Realtors and a director at Colliers International in Orlando, discussed the commercial market, and Dean Saunders, accredited land consultant and broker-owner of Coldwell Banker Commercial Saunders Real Estate in Lakeland, covered the market for land and undeveloped property.



Toole said that key trends affecting the Florida residential market include strong demand from international buyers, a growing population – 348 people a day net growth in 2010-11 – and an upswing in employment.



Reviewing Florida’s housing market, Toole said that inventories of for-sale homes have fallen to 7.4 months on a statewide average, and just 5.4 months for listings priced under $250,000. He added that lender-owned properties (REOs or “real estate owned”) now constitute about 6 percent of inventory, but 40 percent of sales. Short sales, where the market value of the home is below the mortgage loan value, make up about 31 percent of current inventory and 18 percent of sales.



Toole added that property management and leasing will be an increasingly important segment of the market in 2012, reaching $11 billion or more, due to the large numbers of investor buyers and “dark” multifamily buildings with few owners.



Turning to the state’s commercial markets, Shelton said investors are increasingly interested in buying office, retail and industrial properties. Vacancy rates, while high, have stabilized, along with rental rates. “Core assets (essential to businesses) are selling and lenders – including the life insurance companies – are lending again,” she said.



Shelton added that lenders are getting more realistic regarding the pricing needed to dispose of their distressed commercial properties. “There are great opportunities for Realtors to find owner-users with the funds to purchase buildings they have been renting,” she said.



Looking ahead to 2012, Shelton said she expects more tenants to come into the Florida commercial markets, helping to stabilize conditions. “I think Florida has bright days ahead, as more people seek to own investment real estate in our market.”



Saunders said the state’s land market is also highly diverse, ranging from cropland, pastures and timberland to transitional and infill land located in suburban and urban locations. “Land has both an investment angle and a romantic angle,” he said. “You can own it, walk on it and enjoy it.”



Overall, Florida has about 34.7 million acres of land, with only 3 million acres now developed, he said. Local, state and federal governments own about 10 million acres.



“As real estate professionals, you have to understand how the various types of land are affected by global trends and local market conditions,” Saunders said. “For example, the price of a citrus grove is closely tied to the commodity market, and a lot of investors are now active in that sector on a national level.” However, Florida has seen a 34 percent decrease in its citrus acreage in the last six years, he added.



For the next few years, Saunders expects little demand for transitional land on the edge of the state’s cities. “There is a lot of existing commercial space that needs to be absorbed first,” he said. “There is pent-up demand for residential lots, but when that demand will be released is a big question.”



In the 2012 land market, Saunders said the biggest opportunities are likely to occur in the agricultural sector, as institutional investors purchase productive cropland to diversify their portfolios. “Take a look at alternative energy producers, as well,” he added. “They may be interested in buying acreage to support their biomass energy facilities.”



© 2011 Florida Realtors®