Fort Lauderdale’s Real Estate Market Remains Active Despite Rising Interest Rates

Fort Lauderdale’s Real Estate Market Shifts Amid High Interest Rates

Fort Lauderdale witnessed a remarkable series of multifamily real estate transactions in 2024, despite the pressures from rising interest rates. Key players in the local market have adapted their strategies, leading to significant sales across South Florida.

Cardone Capital Leads the Way

At the forefront of this year’s transactions is Cardone Capital, led by social media personality Grant Cardone. In a bold move, the company acquired three apartment properties in Broward County for a staggering total exceeding $500 million. This deal marks a notable comeback for Cardone in the South Florida real estate scene, as he had previously invested $744 million in a similar portfolio in 2021.

Details of the Major Purchase

Cardone Capital’s procurement included the Manor at Flagler Village in Fort Lauderdale, purchased for $149.5 million. This building features 382 units and was bought at a rate of $391,361 per apartment. Further expansions of Cardone’s portfolio included the Laurels at Jacaranda in Plantation and the Edge at Flagler Village, both properties adding significantly to his investments in the region.

Competition from Dermot Company

Trailing closely behind Cardone is Dermot Company, a New York-based firm that has been actively investing in South Florida since its debut in 2021. In October, Dermot acquired the Quaye at Wellington complex for $144.2 million, which breaks down to $412,000 per apartment. The complex consists of 350 units and is strategically situated on a 30.6-acre site.

Impact of Interest Rates

The backdrop of these substantial purchases is a multifamily real estate market grappling with the consequences of elevated interest rates. In 2023, despite the market activity, no single-asset sale surpassed the $200 million mark, and the highest asset transaction recorded this year was limited to $144 million—a reflection of the tightening financial landscape.

The Federal Reserve’s ongoing hikes, which included 11 increases of the benchmark rate, have made financing more expensive, limiting the buying power for many investors. Although recent rate cuts have been announced, the overall financing environment has remained challenging.

Additional Noteworthy Transactions

Other significant transactions this year included:

• Ares Management‘s acquisition of the Ceru building in Boca Raton for $139.7 million, equating to $491,858 per apartment.
• Pantzer Properties purchasing the Point at Lakeside in Doral for $139.3 million.
• KKR‘s acquisition of the Palmera complex in Doral as part of a broader portfolio purchase.
• If Church of Jesus Christ of Latter-day Saints acquired the Ellsworth building for $133 million.

A Market Resilient Despite Challenges

This cascade of transactions underscores a resilient market with players adapting to the challenges posed by high-interest rates. Companies are increasingly turning to alternative funding sources, such as federal agency loans or assuming existing mortgages, to maintain their competitive edge.

As 2024 unfolds, the South Florida multifamily market continues to evolve, showing potential for further developments and investments, illustrating the dynamics between interest rates, financing strategies, and investor activity.

Author: HERE Tallahassee