Hordes of new residents flocking to Southwest Florida are driving demand for housing and other real estate. That demand is also fueling some high returns and huge deals.

Many of the priciest real estate sales of last year were based around investments in housing, and specifically in Lee County apartment complexes. The boom of multifamily is evident in the area with six of the top 10 sales of 2019 consisting of complexes changing hands for big numbers.

According to Stan Stouder, a founding partner of real estate firm CRE Consultants, this is no surprise. He said that in four out of the last five years, at least five of the top 10 sales have been multifamily transactions.

“There’s clearly a demand for multifamily,” he said. “Investors are looking for return on investment, and multifamily is very favorable right now. For the kind of return you get, the risk, as compared to investing in other items, is not as high.”

He said that investors can often count on the reliability of these properties due to the “real estate rudiments” in Southwest Florida being strong. He cited the consistent arrival of new residents from states that are “tax-burdensome,” the “organic growth” inside the state and favorable weather.

Paige Rausch, a real estate consultant with Aslan Realty Advisors, agreed that apartments are attractive investments for Southwest Florida buyers.

“It’s a stable return,” she said. She mentioned that newly developed complexes can often be attractive for investors, but large-scale purchases have also been seen recently for older apartment homes.

Rausch said that “C” complexes in “A” locations can be seen as a decent investment for investors that can update the units and bump up rent. She mentioned Iona Lakes Apartments in Fort Myers, which was purchased last year for $54 million after being bought for less than half of that in 2013. The complex was built in 1986, but it is in a prime location, she said. The housing units are surrounded by higher-end communities and homes and in close proximity to Sanibel Island and Fort Myers Beach.

“The reason you are seeing so much multifamily activity is because we are creating jobs fast, and we are growing the population fast,” said Gary Tasman, the CEO of Cushman and Wakefield in Fort Myers. “None of our markets, generally speaking, are in a state of oversupply. We are going to continue to see appreciating rents and appreciating sales value.”

Notable home sales edge out commercial in Naples area

While the No. 2 spot in Collier’s top 10 sales went to an apartment complex, the county does have something that Lee does not: Mammoth mansion sales. The luxury real estate market in the Fort Myers area does not reach nearly as high as the $20 million to $40 million homes and higher that break records in the Naples area. Due to this, three of the top 10 sales in Collier are single-family residential homes, while the Lee list is entirely made up of commercial sales.

“I think it is very telling that Collier County is different from almost any county across the country,” said Bill Earls, a John R. Wood agent that is involved in many of the high-end, luxury sales in the Naples area.

Earls said the difference between the counties makes sense, as the “titans of industry” that purchase these upscale mansions “come to Naples because of the lack of industrial, commercial activity that is here.”

“This is a place they want to call home,” he said.

He cited the appealing weather, the cleanliness of the area, the way the public amenities are maintained and the low crime rate as reasons that wealthy individuals gravitate to the area.

“Collier County is very easy living,” he said. “There’s Florida and then there’s Naples. And there’s none other like Naples in the state of Florida.”

What’s next?

According to Tasman, 2019 was one of the last years in a cycle that has been marked by the exchanging of already developed properties, rather than sales of land that has yet to be developed.

He said that this cycle represented the selling of “improved, stabilized assets to the investor market.” Now that the cycle is nearing its end, large-scale land acquisition and new development will start up again.

“What you are seeing this year is the completion of the last land cycle and the beginning of the land-sale cycle,” Tasman said.