Market Insight Florida Multifamily Report | Third Quarter 2018

CUSHMAN & WAKEFIELD FLORIDA MULTIFAMILY ADVISORY GROUP MARKET INSIGHT FLORIDA MULTIFAMILY REPORT | THIRD QUARTER 2018

The Cushman & Wakefield Florida Multifamily Research Team provides in-depth coverage of primary, secondary, and tertiary cities across the state. In addition to analyzing multifamily rent and sales trends, these reports examine employment data, job growth trends, key economic announcements, and development pipeline news.

IN THIS EDITION

► Miami ► Fort Lauderdale ► West Palm Beach ► Orlando ► Tampa ► Jacksonville

SELECTION OF RECENT TEAM TRANSACTIONS FLORIDA TEAM LEADERS

TEAM LEADER ROBERT GIVEN, VICE CHAIRMAN +1 954 377 0513 | [email protected]

SOUTH FLORIDA ZACHARY SACKLEY, EXEC. MANAGING DIRECTOR +1 954 377 0515 | [email protected]

TROY BALLARD, SENIOR DIRECTOR +1 954 377 0514 | [email protected]

CALUM WEAVER, EXEC. MANAGING DIR. (PCG) +1 954 377 0517 | [email protected] LUZANO THE PLACE AT DANIA BEACH 33 WEST Pompano Beach, FL Dania Beach, FL Davie, FL ERROL BLUMER, ASSOCIATE (LAND) +1 954 377 0499 | [email protected] 404 units / Built 2017 144 units / Built 2017 376 units / Built 2014 NEAL VICTOR, DIRECTOR +1 954 377 0518 | [email protected]

ORLANDO JAY BALLARD, SENIOR DIRECTOR +1 407 541 4406 | [email protected] KEN DELVILLAR, SENIOR DIRECTOR +1 407 541 4441 | [email protected]

TAMPA LUIS ELORZA, SENIOR DIRECTOR +1 813 204 5319 | [email protected] BRAD CAPAS, SENIOR DIRECTOR +1 813 204 5316 | [email protected] VISTA VERDE CANOPY VILLAS MOSIAC AT THE FORUM Miami, FL Orlando, FL Fort Myers, FL JACKSONVILLE 302 units / Built 1993 296 units / Built 1981 252 units / Built 2017 JULIE BOHN, DIRECTOR +1 904 859 2911 | [email protected]

Next Page MARKET INSIGHT Third Quarter 2018 MIAMI 1

MIAMI, FL ECONOMIC EXPANSION The following are select job announcements from the third quarter 2018:

EMPLOYMENT & UNEMPLOYMENT TRENDS Popeyes, the fast food chain, has plans to move their headquarters to Miami from Atlanta. Restaurants International, who bought The Miami Metro Division has contracted by approximately 5,000 jobs year a Popeyes in 2017 for $1.8 billion, has leased a 150,000-square-foot over year as of the third quarter 2018 due to a tightening job market. The building in Waterford to combine Popeyes’s operations with its metro’s unemployment rate has lowered over the last year to a rate of 3.6%. sister brands Burger King and U.S. Tim Hortons. Trade, Transportation, and Utilities continue be the largest industry sectors as approximately one quarter of the metro’s jobs are accounted for within Amazon’s new 885,000-square-foot fulfillment center in Opa- these three sectors. In the South Florida region, Miami is the international locka is nearing completion. According to the South Florida center for finance, trade, and tourism. PortMiami was ranked as the busiest a Business Journal, the average hourly wage is over $15 an hour. cruise port in the world. Per CoStar, moving forward, it is worth noting that Amazon is seeking to hire 1,000 full and part-time employees to job growth in Professional & Business Services and Education & Health work in the facility. Services have grown at a rate of more than 15% above its prerecession peak. This trend is estimated to impact household incomes as these industries Miami Freedom Park, David Beckham’s new stadioum, was represent two of the highest-paying sectors in Miami. In addition, due to approved by Commissioners on the November ballot. The vote will the high level of condo and apartment buildings, the aggregate number of a decide whether Beckham should be able to build a stadium, hotel, people working in construction has grown. office complex, and big park on Melreese Country Club, which is city owned. The new park is projected to create around 11,000 new jobs. MIAMI JOB GROWTH TRENDS Governor Rick Scott announced that the Miami area EMPLOYMENT IN THOUSANDS & JOB GROWTH (%) added 23,100 a new private-sector jobs in the past year, the third-highest number 1,355 3.5% of jobs among all Florida metros.

1,350 3.0% 1,345 2.5% 1,340 2.0% 2016 2017 2018 FORECAST 1,335 1,330 1.5% U.S EMPLOYMENT (% Change) 1.7% 1.6% 1.6% 1,325 1.0% 1,320 0.5%

Employment (thousands) Employment 1,315 0.0% MSA EMPLOYMENT (% Change) 2.9% 2.2% -0.4% 1,310 1,305 -0.5% 1,300 -1.0% Q4 2017 Q1 2018 Q2 2018 Q3 2018 MSA UNEMPLOYMENT RATE (%) 5.4% 5.0% 3.8% Total Employment YOY % Job Change Source: Bureau Dept. of Labor Statistics Forecast is 12-month outlook

JOB GROWTH & UNEMPLOYMENT RATE OUTLOOK • The South Florida region remains a draw for those approaching retirement age as the population growth over the last five years for the -0.4 -70 55+ age segment is 16%. % YOY BPS YOY • According to Moody’s Analytics, local commercial development and transit hub growth has shifted Miami’s path of growth upward. Average Q3 employment Average Q3 unemployment • The metro is projected to surpass 1.25 million jobs by 2023 with an decreased by 5,300 jobs. decreased to 3.8%. unemployment rate of 5.1%.

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MULTIFAMILY TRENDS DEVELOPMENT / INVENTORY

The average effective year-over-year rent growth rate for third quarter The number of units under construction in the Miami multifamily market 2018 was 3.4%. Vacancy decreased by 20 basis points, displaying persisting is approximately 12,000 units. According to CoStar, total units under market resiliency. construction equal to 10% of the current inventory in Miami. Much of the new product is delivering in Downtown Miami with additional suburbs like Coral Gables/South Miami also getting a fair load of new inventory. Link at Douglas, which will be one of Miami’s largest developments ever, will +3.4 -20 include 1,421 apartments and 251,873 square feet of office, in addition to % YOY BPS YOY restaurant and retail space. Average effective rent Vacancy decreased to an DEMOGRAPHIC FUNDAMENTALS increased to $1,586. average of 3.7%. The Miami Metro Division is projected to add approximately 20,000 renter Source: AXIOMetrics households from 2018 to 2023. Both population growth and median household income are forecast to follow suit with positive growth over the next five years. HISTORICAL & FORECASTED METRO RENT GROWTH RATES 2000: 2,253,419 2010: 2,496,439 Over the last five years, rent growth in the Miami Metro Division has POPULATION surpassed national averages, growing at a rate of 25%. The historical five- 2017: 2,728,694 year growth rate highlights strong fundamentals due to increased housing 2022: 2,846,071 demand caused by the large influx of people moving to Florida and the 2000: n/a Miami region, which has been further enhanced by recent tax reform. PERCENT 2010: 44.2% Moving forward, the next five-year growth rate for the Miami Metro Division RENTER is forecasted to scale back to 15.6%, with national averages at 14.6%. 2017: 46.2% HOUSEHOLDS 2022: 47.1% MIAMI RENT GROWTH RATES 24.8% 2000: $36,067 25.0% 24.8% MEDIAN 25.0% 2010: $42,952 H I S T O R I C A L F O R E C A S T HOUSEHOLD H I S T O R I C A L F O R E C A S T $44,288 20.0% INCOME 2017: 20.0% 2022: $51,424 15.6% 15.0% 15.6% 15.0% 10.2% MULTIFAMILY FORECAST 10.0% 10.2% 10.0% The following are Cushman & Wakefield’s projections over the near term:

5.0% 3.4% 5.0% 1.9% 3.4% 0.9% 0.2% 0.1% 1.9% 0.0% 0.9% 0.1% 0.2% 0.0%Q4 '17 Q1 '18 Q2 '18 Q3 '18 1-Year 3-Year 5-Year 5-Year ChangeQ4 '17ChangeQ1 '18ChangeQ2 '18ChangeQ3 '18 Change1-YearChange3-YearChange5-Year Forecast5-Year -5.0% Change Change Change Change (YOY)Change Change Change Forecast (YOY) -5.0% PIPELINE % RENTS VACANCY Miami Metro United States GROWTH Miami Metro United States Source: AXIOMetrics Forecast is 12-month outlook

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INVESTMENT ACTIVITY MOST ACTIVE MARKET PLAYERS

Apartment sales volumes in Miami totaled about $984 million in the year- TOP THREE MIAMI BUYERS - PAST 12 MONTHS ending third quarter 2018, which is down roughly 35% year-over-year. The metro ranked 36th among the nation in total dollar amount. The average RANK BUYER TOTAL VOLUME NO. PROPERTIES cap rate for this same period stood at 5.48%, down five basis points over 1 DWS Group Americas $149,000,000 1 the previous year. Miami’s cap rate ranked 28th nationally while the annual 2 BREIT $138,925,000 2 change was 60th among the top U.S. metros. Miami continues to be a 3 Morgan Stanley $100,000,000 1 thinly traded market. Especially compared to its Fort Lauderdale and West Palm Beach counterparts. TOP THREE MIAMI SELLERS - PAST 12 MONTHS

RANK SELLER TOTAL VOLUME NO. PROPERTIES HISTORICAL SALES VOLUME 1 Ares Management $194,925,000 3 $2,030$2,030 2 Gables Res./Clarion $149,000,000 1 3 CC Residential $138,925,000 2 $1,530 $1,530 Source: Real Capital Analytics

$1,030 $1,030 (in millions) PRICING & CAP RATES

$530 The average Class A and Class B price per unit has increased by 24% $530 year over year through the third quarter of 2018, and the price per unit for Class C product increased by approximately 9% on a per unit basis. $30 Cap rates for Class A product are currently under 4.5% with value-add $30 Class B and Class C product ranging from 4.6%-5.2%.

Transaction Volume Historic Average

Transaction Volume Historic Average $350,000

Source: Real Capital Analytics $300,000 $262,390

$250,000 $338,898 $310,447 $203,994 $297,452 $200,000 $269,335

NOTABLE SALES - THIRD QUARTER $150,000 $129,315 $125,454 $123,714 $120,017 $115,881 $100,403 PROPERTY YEAR UNITS SELLER BUYER PPU $100,000 $72,394 $63,287 CLASS A $50,000

Gables Aventura 2017 400 Gables RREEF $372,500 $0 $0 Residential 2014 2015 2016 2017 2018 CLASS B Class A Class B Class C 1993 302 Rilea Group Advenir $197,848 Vista Verde Source: Real Capital Analytics

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SUBMARKET OVERVIEW SELECT SUBMARKET NEWS

Downtown RENTS & VACANCY BY SUBMARKET • Zom’s 32-story Monarc at Met 3 luxury apartment has

Hialeah/Miami Lakes $1,434 2.00% been listed for sale, less than two years after it was completed. The building has 462 apartments, with 95% West Miami/Doral $1,878 3.70% of them now leased. The building opened in November Westchester/Kendall $1,505 3.90% 2016.

Homestead/South Dade County $1,113 2.60% Miami Coral Gables/South Miami $1,873 4.20% • Link at Douglas, a five-building mixed-use Northeast Miami $1,704 5.90% redevelopment project in Miami’s Coral Gables Miami Gardens $1,198 3.30% neighborhood, has increased the size of their massive

North Central Miami $1,013 0.90% $600 million project. This project, which will be one of Miami’s biggest projects ever, will include a 40-story Downtown Miami/South Beach $2,086 4.60% skyscraper and 1,421 apartments, along with office, retail, and restaurant space. Source: AXIOMetrics Miami Beach • The Miami Beach Convention Center is almost done, UNITS UNDER CONSTRUCTION BY SUBMARKET wrapping the main phase of its three-year, $620 million 6,000 renovation. The improvements include the addition of 263,000 square feet of space, 10 new meeting rooms

5,000 5,145 and LEED Silver certification, which is granted to environmentally friendly buildings.

4,000 Doral

3,000 • Trammell Crow Residential is planning to re-enter the 3,119 South Florida apartment with a new project in Doral. The project will have an eight-story community with 350 2,000 units, and 80,000 square feet of retail.

1,000 1,170 Sunny Isles 836 644 • The 56-story Residences by Armani Casa tower topped 289 349 400 397 0 off. The tower is built at 649 feet above ground, which, in the area, is the maximum height permitted. The total value of all condos as sellout is $1 billion. There are 306 condos being built.

Source: Cushman & Wakefield and AXIOmetrics

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ECONOMIC EXPANSION FT. LAUDERDALE, FL The following are select job announcements from third quarter 2018:

Tambourine, a hospitality e-commerce company, is moving EMPLOYMENT & UNEMPLOYMENT TRENDS their headquarters in Fort Lauderdale to a larger space. The a new space is triple the square footage, and they plan to add The Fort Lauderdale Metro Division is projected to add over 1,500 jobs year another 60 employees during the coming year. over year as of the third quarter. The metro’s unemployment rate continues to remain as the lowest in the tri-county area at 3.3%. Fort Lauderdale is USL Cargo Services, a California-based company, is planning benefiting from substantial population growth which has helped maintain to open a new logistics center in Weston. USL has leased a job growth in the Education and Health Services sectors. The Construction/ a 232,000-square-foot building on Meridian Parkway, according Logging/Mining and Health Services/Education employment sectors had to South Florida Business Journal. They have planned to hire the strongest growth over the past year in the metro. According to CoStar, 70 to 80 employees to work in the new warehouse. Fort Lauderdale’s business costs are more than 10% lower than Miami’s, making it a more affordable alternative that still represents many of the Snovus Financial Corp., a Georgia-based financial services global-connection perks of occupying space in South Florida. company, is in the process of buying Florida Community Bank, the largest community bank in Florida, for $2.9 billion. a After the merger, Florida Community bank will operate under FORT LAUDERDALE JOB GROWTH TRENDS the Synovus brand, ranking Synovus among the five largest EMPLOYMENT IN THOUSANDS & JOB GROWTH (%) regional banks in the Southeast.

1,008 3.5%

1,006 KGH International Development, a division of K-group 3.0% a holdings, Inc., created Metropica Development to build a $1.5 1,004 2.5% billion mixed-use development on 65 acres in Sunrise. 1,002

2.0% 1,000 2016 2017 2018 FORECAST

998 1.5% U.S EMPLOYMENT (% Change) 1.7% 1.6% 1.6% 996 1.0% 994 Employment (thousands) Employment 0.5% 992 MSA EMPLOYMENT (% Change) 2.8% 2.7% 0.2%

990 0.0% Q4 2017 Q1 2018 Q2 2018 Q3 2018 Total Employment YOY % Job Change MSA UNEMPLOYMENT RATE (%) 4.7% 4.3% 3.3% Source: Bureau Dept. of Labor Statistics Forecast is 12-month outlook

JOB GROWTH & UNEMPLOYMENT RATE OUTLOOK • Per Moody’s Analytics, the Fort Lauderdale Metro Division is in the mid- expansion stage of the business cycle and forecasts slight regression in +0.2 -40 the short term. • Fort Lauderdale population growth in residents youner than 20 has % YOY BPS YOY grown .1% since 2010. This is expected to bolster the areas labor supply Average Q3 employment Average Q3 unemployment over the next few decades. increased by 1,500 jobs. decreased to 3.3%. • Per Moody’s, the metro is projected to reach nearly 899,000 jobs by 2023 with an unemployment rate of 4.5%.

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MULTIFAMILY TRENDS DEVELOPMENT / INVENTORY The number of units under construction in the Fort Lauderdale market is The average effective year-over-year rent growth rate for third quarter approximately 6,600 units. Per CoStar, the Fort Lauderdale apartment market 2018 was 3.0%. Vacancy decreased by 80 basis points, showing a consistent is poised to continue its streak of major supply additions that has lasted demand in multifamily housing. for several years. Much of the supply is concentrated in the downtown area and Pompano Beach/Deerfield Beach area. Two of the larger developments currently under construction, X Las Olas featuring 639 units and The Whitney featuring 386 units, are located in downtown Fort Lauderdale. +3.0 -80 % YOY BPS YOY DEMOGRAPHIC FUNDAMENTALS Average effective rent Vacancy decreased to an increased to $1,551. average of 4.6%. The Fort Lauderdale Metro Division is projected to add approximately 15,000 renter households from 2018 to 2023. Both population growth and median household income are forecast to follow suit with positive growth HISTORICAL & FORECASTED METRO RENT GROWTH RATES over the next five years. 2000: 1,619,996 Rent growth in the Fort Lauderdale metro has been a healthy 3.0% over the 2010: 1,748,068 last year. In the last two quarters, the metro has averaged 0.90% growth per POPULATION 2017: 1,898,025 quarter, with rents currently at $1,551 per unit. The three-year rent growth change for the metro was 7.6%, which was slightly ahead of the national 2022: 1,962,976 average of 6.7%. Over a five-year period, rent growth in Fort Lauderdale was 2000: n/a 22.8%, which is 500 basis points above national averages during the same PERCENT 2010: 33.4% time span. Looking forward, growth rates are forecast to scale back to 16.3% RENTER 2017: 36.5% in the metro over the next five years, with the national average at 14.2%. HOUSEHOLDS 2022: 36.9%

FORT LAUDERDALE RENT GROWTH RATES 2000: $41,999 MEDIAN 2010: $49,971 25.0%25.0% 22.8%22.8% HOUSEHOLD H I S T O R I C A L 2017: $53,836 H I S T O R I C A L F O R FE OC RA ES CT A S T INCOME 20.0%20.0% 2022: $63,264

16.3%16.3% 15.0% 15.0% MULTIFAMILY FORECAST

10.0%10.0% 7.6% 7.6% The following are Cushman & Wakefield’s projections over the near term:

5.0% 5.0% 3.0%3.0% 1.50%1.50% 1.30% -0.20%-0.20% 1.30% 0.50%0.50% 0.0%0.0% Q4 '17Q4 '17Q1 '18Q1 '18Q2 '18Q2 '18Q3 '18Q3 '18 1-Year1-Year3-Year3-Year5-Year5-Year 5-Year5-Year ChangeChangeChangeChangeChangeChangeChangeChange ChangeChangeChangeChangeChangeChange ForecastForecast (YOY) -5.0%-5.0% (YOY) PIPELINE % Fort LauderdaleFort Lauderdale Metro Metro UnitedUnited States States RENTS VACANCY GROWTH Source: AXIOMetrics Forecast is 12-month outlook

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INVESTMENT ACTIVITY MOST ACTIVE MARKET PLAYERS

Over the course of 2016, sales volume in Fort Lauderdale reached $2.5 TOP FIVE FTL BUYERS - PAST 12 MONTHS billion, its highest level in 10 years. The metro had less activity in 2017 but still saw over 1.5 billion in trades. Apartment sales volume in the Fort RANK BUYER TOTAL VOLUME NO. PROPERTIES Lauderdale MSA totaled about $977 million in the year-ending third 1 Carroll Organization $216,100,000 3 quarter 2018, down 38% year-over-year. As a result, the metro ranked 37th 2 KKR $152,100,000 2 in the U.S. for total sales volume. The market just saw its highest price per 3 American Landmark $118,000,000 2 unit sale of the year with the closing of Sheridan Village in Pembroke Pines of just over $306,000 per unit. 4 Praedium Group $94,100,000 1 5 Bell Partners $91,800,000 1

TOP FIVE FTL SELLERS - PAST 12 MONTHS

RANK SELLER TOTAL VOLUME NO. PROPERTIES HISTORICAL SALES VOLUME Starwood Capital $195,600,000 3 $2,530 1 2 Lone Star $152,100,000 2 $2,030 3 Fairfield Residential $128,100,000 2 4 ZOM/UBS $94,100,000 1 $1,530 5 AVR Realty $91,800,000 1

$1,030 Source: Real Capital Analytics (in millions) $530 PRICING & CAP RATES The average Class A price per unit is currently $265,000. This is $30 approximately $5,000 more per door than the average for 2017. The Class B market is also seeing a continued increase from previous years, currently at $200,400 per unit. Class C is currently at $94,700. Cap rates in the Transaction Volume Historic Average Fort Lauderdale market are modestly higher than that of Miami as Class A Source: Real Capital Analytics product are currently providing an FY1 cap rate above 4.7%, with value add Class B and Class C product between 4.7%-5.5%.

$300,000

NOTABLE SALES - THIRD QUARTER $250,000 $289,564 $200,438 $200,438

PROPERTY YEAR UNITS SELLER BUYER PPU $200,000 $186,414 $265,031 $265,031 $178,507 $178,507 $252,587 $254,808

CLASS A $155,080 $150,000 Luzano 2017 304 ZOM/UBS Praedium Group $232,921 $104,478 $104,478 $95,745 $95,745 $94,742 $94,742 CLASS B $100,000 $173,564 $79,201 $74,883 $74,883 $71,928 Water’s Edge 1986 320 Fairfield Resi- Priderock $203,125 dential Capital $50,000 2014 2015 2016 2017 2018 Class A Class B Class C Source: Real Capital Analytics

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SUBMARKET OVERVIEW SELECT SUBMARKET NEWS

RENTS & VACANCY BY SUBMARKET Downtown • Next Las Olas apartment tower was approved by the Pompano Beach/Deerfield Beach $1,348 3.70% Federal Aviation Administration to bild at 344 feet Margate/Coconut Creek/North above ground, 350 feet about sea level. The project will $1,539 4.70% Lauderdale include 374 apartments and 548 parking spaces. The

Coral Springs $1,630 4.70% development costs are expected to be $133 million, with construction starting in fourth quarter 2018. Sunrise/Lauderhill $1,333 5.50% Plantation Plantation/Davie/Weston $1,736 5.10% • Parkstone Capital is moving forward with plans to build a Pembroke Pines/Miramar $1,661 4.50% 248-unit apartment complex in Plantation, after recently receiving site plan approval from the Plantation City. Hollywood $1,429 3.20% Wood Stone Plantation will offer 248 units.

Fort Lauderdale $1,673 4.30% Hollywood Source: AXIOMetrics • Parc Place, a mixed-use project from MG3 Development group, is now moving forward after more than a decade in the making. The three-acre project was approved by UNITS UNDER CONSTRUCTION BY SUBMARKET the Hollywood City Commission, which will include 433 apartments, retail space and a parking garage. 4,500

4,000 4,191 Tamarac 3,500 • KM Developers has obtained a construction loan for the 3,000 first phase of its Tamarac Village mixed-use project. The 2,500 project was approved for 401 apartments, 35,000 square 2,000 feet of commercial/retail space, and 1,124 parking spaces.

1,500 The construction loan will fund the first phase, which is slated for 221 apartments. 1,000

500 765 810 599 Deerfield Beach 264 0 0 0 0 • Lennar Corp. broke ground recently on its Veleiros at Crystal Lake, the first new master-planned community in Deerfield Beach in more than 25 years. Veleiros at Crystal Lake will include 290 one-story and two-story single-family homes with prices starting in the low $300,000’s as well as 125 townhomes starting from the upper $200,000’s, with three- to-four bedrooms, two-to-three bathrooms and attached garages.

Source: Cushman & Wakefield and AXIOmetrics

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ECONOMIC EXPANSION WEST PALM BEACH, FL The following are select job announcements from the third quarter 2018: All Aboard Florida, a Coral Gables based company, has received approval to issue $1.75 billion in federal tax-exempt EMPLOYMENT & UNEMPLOYMENT TRENDS a bonds for its Brightline’s rail extension between Orlando and West Palm Beach. The rail is expected to be completed in 2021. The West Palm Beach Metro Division is projected to have added approximately 1,000 jobs year-over-year as of the third quarter 2018. Cresset Wealth Advisors, a Chicago-based startup wealth advisory Additionally, the metro posted an unemployment rate of 3.5% as the metro’s firm, is planning to hire several dozen technology specialists and economy continues to grow. Historically, West Palm Beach has been a a wealth advisors for its new West Palm Beach office. service-oriented economy due to the abundance of wealthy retirees that populate the metro. According to CoStar, this trend is expected to continue Palm Beach experienced an uptick in sales in the third quarter and expand further as the aging of the population over the next 30 years compared to the same period in 2017. Residential closings rose will position the West Palm Beach Leisure & Hospitality industries in a prime 7.4% to 7,749 for a total of $3.1 billion (nearly 15% leap from position to capitalize on the significant trend. Per CoStar, the government, a last year). The median price for single-family homes rose to information, and general service sectors are three industries that have seen $345,000, a 3.3% increase in the last year. noteworthy employment gains of late. Gulfstream Aerospace Corp announced that it will increase services a to customers and add employees to its West Palm Beach site with WEST PALM BEACH JOB GROWTH TRENDS construction of a new service center at Palm Beach International EMPLOYMENT IN THOUSANDS & JOB GROWTH (%) Airport. The company will build a 115,000-square-foot facility which will increase offices, back shops and a 75,000-square-foot hanger. 706 1.6% The growth is expected to create about 50 jobs. 704 1.4%

702 1.2% 2016 2017 2018 FORECAST 700 1.0%

698 0.8% U.S EMPLOYMENT (% Change) 1.7% 1.6% 1.6%

696 0.6% Employment (thousands) Employment 694 0.4% MSA EMPLOYMENT (% Change) 3.8% 2.8% 0.1%

692 0.2%

690 0.0% MSA UNEMPLOYMENT RATE (%) 4.5% 4.0% 3.5% Q4 2017 Q1 2018 Q2 2018 Q3 2018 Forecast is 12-month outlook Total Employment YOY % Job Change Source: Bureau Dept. of Labor Statistics abor Statistics

JOB GROWTH & UNEMPLOYMENT RATE OUTLOOK • According to Forbes, West Palm Beach is ranked in the top 50 Best Place for Business and Careers. +0.1 -40 • According to Moody’s, West Palm is expected to experience steady population growth which will augment demand for jobs in construction, % YOY BPS YOY healthcare and retail. Average Q3 employment Average Q3 unemployment • Per Moody’s, the metro is projected to be 674,000 jobs mark by 2023 increased by 1,000 jobs. decreased to 3.5%. with an unemployment rate of 4.4%.

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MULTIFAMILY TRENDS DEVELOPMENT / INVENTORY

The average effective year-over-year rent growth rate increased by 2.5% The number of units under construction in the West Palm Beach Multifamily as of the third quarter of 2018. Vacancy decreased by 40 basis points, Market is approximately 1,650 units. With more than 2,000 units coming online showing a consistent demand in multifamily housing. in 201y, submarkets such as Boynton Beach, Boca Raton and Delray Beach having seen the majority of the multifamily construction in 2017. Developers seem to be moving away from the garden-style properties with most assets underway being midrise. As more retirees move south to Florida, developers continue to keep building. While West Palm is the main urban center, the +2.5 -40 suburban town of Boca Raton is getting equal attention. Boca Raton delivered more properties and more units than all other submarkets over the last three % YOY BPS YOY years. One of the largest anticipated projects in Palm Beach is Town Southern, Average effective rent Vacancy has remained a 392-unit garden style development in Wellington. increased to $1,540. at 5.6%. DEMOGRAPHIC FUNDAMENTALS

HISTORICAL & FORECASTED METRO RENT GROWTH RATES The West Palm Beach Metro Division is projected to add approximately 10,000 renter households from 2018 to 2023. Both population growth and Rent growth in the West Palm Beach metro during the third quarter of 2018 median household income are forecast to follow suit with positive growth continued its positive trend from the last quarter. During the first half of over the next five years. 2000: 1,127,627 the year, the metro has averaged 1.05% in rent growth with the year over 2010: 1,320,132 year increase nearing 2.7%. Over the last three years West Palm Beach POPULATION has averaged increased by 10.2%, which is 1.9% higher than the growth 2017: 1,437,453 experienced nationwide. Looking forward, the metro’s rent growth is 2022: 1,530,643 forecast to increase by 15.7% over the next five years, while nationwide rents 2000: n/a are projected to increase by 14.2% during the same time span. PERCENT 2010: 28.6% RENTER 2017: 30.9% WEST PALM BEACH RENT GROWTH RATES HOUSEHOLDS 2022: 31.0% 26.5% 27.0% 2000: $45,001 H I S T O R I C A L MEDIAN F O R E C A S T 2010: $50,630 22.0% HOUSEHOLD $54,001 INCOME 2017: 17.0% 15.7% 2022: $63,294

12.0% 10.2% MULTIFAMILY FORECAST

7.0% The following are Cushman & Wakefield’s projections over the near term:

1.40% 2.0% -0.30% 0.70% 0.60%

2.7% Q4 '17 Q1 '18 Q2 '18 Q3 '18 1-Year 3-Year 5-Year 5-Year -3.0% Change Change Change Change Change Change Change Forecast (YOY)

West Palm Beach Metro United States PIPELINE % Source: AXIOMetrics RENTS VACANCY GROWTH Forecast is 12-month outlook

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INVESTMENT ACTIVITY MOST ACTIVE MARKET PLAYERS TOP FIVE WPB BUYERS - PAST 12 MONTHS Investors seeking quality assets are moving to Palm Beach County. The multifamily market in 2016 saw the highest inventory turnover RANK BUYER TOTAL VOLUME NO. PROPERTIES in a decade. While there was less activity in 2017, sales volume still 1 Avalon Bay $210,800,000 2 approached near the billion-dollar mark. Last year also saw a new 2 Carroll Organization/PGIM $176,100,000 3 high in sales price per unit with some deals selling for over $300,000 per unit. Some notable sales in Palm Beach include Alexander and 3 GID $152,500,000 2 Alexander Lofts in Downtown West Palm Beach. The 290-unit project 4 Stockbridge $120,000,000 1 sold to Avalon Bay in October for just north of $350,000 per unit. Boca 5 Heitman $112,000,000 1 Raton continues to see activity as well with the sale of Allure at Boca for about $327,000 per unit. Allure at Boca is less than a mile away from TOP FIVE WPB SELLERS - PAST 12 MONTHS 850 Boca which sold for a record price in 2017. RANK SELLER TOTAL VOLUME NO. PROPERTIES 1 Goldman Sachs/Greystar $176,100,000 3 HISTORICAL SALES VOLUME $2,030 2 CC Residential/Praedium $138,000,000 1

$2,030 3 HG Management $120,000,000 1 4 Gables Res./Clarion $112,000,000 1 $1,530

$1,530 5 Debartolo/Electra $97,200,000 1

Source: Real Capital Analytics $1,030 $1,030 (in millions) PRICING & CAP RATES $530 $530 As of the third quarter, the average Class A price per unit is $292,500. Class B per unit sales have increased from the average for 2017 by over 20% currently at approximately $212,000 per unit. There were no Class C sales $30 $30 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD in 2017 but the current price per unit for the class at $173,400 per unit is 2018 a $25,000 increase from the average recorded back in 2016. Similarly to Transaction Volume Historic Average Transaction Volume Historic Average Miami, cap rates for Class A product are currently under 5.0% with value- add Class B and Class C product between the 4.7%-5.2% range. Source: Real Capital Analytics $350,000

$300,000

$250,000 NOTABLE SALES - THIRD QUARTER $342,249 $212,115 $200,000 $292,536 $174,913 $173,407 PROPERTY YEAR UNITS SELLER BUYER PPU $167,443 $155,985 $154,075

$150,000 $253,092

CLASS A $119,706 $218,329 $97,896 $100,000 $209,748

Allure at Boca 2017 282 GID Tate Capital $326,667 $71,138 CLASS B $50,000 $0 Vizcaya Lakes 2007 125 Morguard Compson $154,000 $0 Associates 2014 2015 2016 2017 2018 Class A Class B Class C Source: Real Capital Analytics

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SUBMARKET OVERVIEW SELECT SUBMARKET NEWS RENTS & VACANCY BY SUBMARKET West Palm Beach • Locally based Two Roads Development is planning to build North Palm Beach County $1,598 6.10% a 24-story condominium tower in West Palm Beach. The property is located near the waterfront on South Flagler Drive. The units would average over 4,500 square feet.

West Palm Beach $1,372 5.60% The 308,000-square-foot building, named 1309 South Flager, will have a total of 42 units with amenity spaces encompassing the first three floors.

Lake Worth/Greenacres/Wellington $1,287 3.60% • Canadian developer Great Gulf is launching plans for a 25-story luxury condo tower in West Palm Beach. Sales for , an 83-unit development planned for 1515 South Boynton Beach/Delray Beach $1,599 6.30% La Clara Flagler Drive, will officially launch in the first quarter of 2019. Great Gulf paid $24 million for a 2.5-acre waterfront site.

Boca Raton $1,842 6.10% Boca Raton • Giles Capital Group, Rosemurgy Properties and Schmier Source: AXIOMetrics Property Group recently purchased the last piece of prime vacant land west of Boca Raton for nearly $38 million. The property located at Glades Road and 95th Avenue is slated for a $200 million, mixed-use project. Plans for the 38-acre site UNITS UNDER CONSTRUCTION BY SUBMARKET include a movie theater, 456 apartment units and retail space. 700 The apartments are scheduled for completion in early 2020.

600 605 Delray Beach 500 • A group of developers including 13th Floor Investments 400 and Key International are planning to submit a proposal 392 300 for a master-planned community in Delray Beach. The development, to be located off of Congress Avenue, would 270 261 200 include 524 apartment units in seven buildings, 123 condos in four buildings, 112 rental townhomes, 70,000 square feet 100 124 of office space, 100,000 square feet of retail and restaurant 0 space and a 1.8-acre park with community pool and clubhouse.

Lake Worth • Locally based Priderock Capital Partners sold Casa Brera Apartments to New Jersey-based Raia Properties in July 2018. The Lake Worth property was built in 2013 and features 206 units, some of which are classified as workforce housing. Raia Properties paid $44 million or about $216,0 00 per unit.

Source: Cushman & Wakefield and AXIOmetrics

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ORLANDO, FL

EMPLOYMENT & UNEMPLOYMENT TRENDS ECONOMIC EXPANSION The following are select job announcements from the third quarter 2018: The Orlando MSA has been among the national leaders in economic and job growth in recent years. Over the last five years, the employment base has increased almost 4.0% annually, or roughly 45,000 jobs per year. The Construction on Amazon’s $132M fulfillment center is 49,200 jobs created in the last 12 months expanded the total employment scheduled for completion in 2018. Upon completion, the 2.3 base by 3.9%, ranking Orlando top 5 in the nation for job growth. a million-square-foot center is expected to employ over 1,500 employees with up to 2,500 employees during the holiday season ORLANDO JOB GROWTH TRENDS a Amicus Therapeutics, a technology and biopharmaceutical EMPLOYMENT IN THOUSANDS & JOB GROWTH (%) company, is seeking funding to build a 200,000-square-foot manufacturing plant in Lake Nona. The expansion is expected

1,310 4.1% to create over 300 high-wage jobs with an average annual salary of $70,000. 4.0% 1,300 4.0%

1,290 3.9% 2016 2017 2018 FORECAST 3.9% 1,280 3.8% U.S EMPLOYMENT (% Change) 1.9% 1.6% 1.5% 1,270 3.8% Employment (thousands) Employment 1,260 3.7% MSA EMPLOYMENT (% Change) 4.4% 3.2% 3.9% 3.7% 1,250 3.6% MSA UNEMPLOYMENT RATE (%) 4.5% 3.8% 3.2% 1,240 3.6% Q4 2017 Q1 2018 Q2 2018 Q3 2018

Total Employment YOY % Job Change Forecast is 12-month outlook

Source: Bureau Dept. of Labor Statistics OUTLOOK JOB GROWTH & UNEMPLOYMENT RATE • According to Forbes, Orlando ranks #6 among the best big cities for jobs in 2018. • Orlando is ranked as the #4 best market for real estate in 2019, per Ur- ban Land Institute. Investors are drawn to the Tampa MSA for the cities +3.9 -40 demographic growth and attractive cost structure. % YOY BPS YOY • Orlando is ranked as the #4 best market for real estate, per Urban Land Institute. Average Q3 employment Average Q3 unemployment • According to Yardi-Matrix, Orlando is ranked #1 in year-over-year rent increased by 49,200 jobs. decreased to 3.2%. growth.

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MULTIFAMILY TRENDS DEVELOPMENT / INVENTORY Supply levels in Orlando remain elevated compared to historical trends. Orlando’s multifamily market remains vibrant, boasting among the best Over the last five years, completions totaled about 4,400 units to 7,800 industry fundamentals in the country with some of the nation’s highest units annually. As of third quarter 2018, there are over 12,000 units currently annual rent growth rates and booming investments activity. Investment under construction with a total of 7,000+ units completed in the last 12 activity has never been higher, including an Orlando record of over $3 months. With job growth remaining strong, the multifamily development billion total sales volume in 2017. Average pricing is continuing to climb and trend should continue as well. Identified projects and permit volumes average yields are still compressing. suggest supply should remain elevated for the foreseeable future.

+6.9 -40 DEMOGRAPHIC FUNDAMENTALS % YOY BPS YOY The mix of jobs and continued job growth has established a favorable demographic makeup for the Orlando MSA apartment market. Orlando’s Average effective rent Vacancy decreased to an overall population increased 14.2% from 2010-2017, one of the nation’s increased to $1,220. average of 3.1%. fastest growth rates and more than triple the national average. In addition, Orlando’s median household income continues to increase, with income levels expected to increase over 18% by 2022.

HISTORICAL & FORECASTED METRO RENT GROWTH RATES 2000: 1,644,516 2010: 2,134,419 Orlando continues to be one of the leading markets in the nation for rent POPULATION growth. Over the past 17 quarters, annual rent growth has ranged from 4.1% 2017: 2,439,563 to 7.0%, with an impressive average of 5.5%. In the year ending in third 2022: 2,681,766 quarter 2018, rent growth was 6.9%, the largest increase in the nation. Looking forward, rent growth is likely to trend closer to the metro’s historical 2000: n/a PERCENT average as new units continue to be delivered throughout the MSA. 2010: 36.8% RENTER 2017: 38.8% HOUSEHOLDS ORLANDO RENT GROWTH RATES 2022: 38.7%

40.0% 2000: $42,116 37.6% MEDIAN H I S T O R I C A L 2010: $48,691 35.0% F O R E C A S T HOUSEHOLD 2017: $50,543 30.0% INCOME 2022: $59,854 25.0% 20.3% 20.0% 16.0% MULTIFAMILY FORECAST 15.0% The following are Cushman & Wakefield’s projections over the near term: 10.0% 6.9%

5.0% 2.8% 1.6% 1.5% 0.6% 0.0% Q4 '17 Q1 '18 Q2 '18 Q3 '18 1-Year 3-Year 5-Year 5-Year -5.0% Change Change Change Change Change Change Change Forecast (YOY) PIPELINE % RENTS VACANCY Orlando MSA United States GROWTH Source: AXIOMetrics Forecast is 12-month outlook

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INVESTMENT ACTIVITY MOST ACTIVE MARKET PLAYERS

Orlando has recently seen historically high levels of investment activity. TOP FIVE ORLANDO BUYERS - PAST 12 MONTHS In 2017, the metro saw its highest year ever in terms of sales volume and 2015-2017 represented the strongest three-year period on record with RANK BUYER TOTAL VOLUME NO. PROPERTIES nearly $8 billion combined. The total dollar volume as of third quarter is up 1 Bluerock $346,250,000 5 almost 16% from the prior year, ranking Orlando as one of the top markets 2 Harbor Group $200,600,000 3 in the country for multifamily investment activity. 3 TH Real Estate $194,250,000 3 4 Carroll Organization $167,000,000 4 5 TruAmerica $150,150,000 3 HISTORICAL SALES VOLUME TOP FIVE ORLANDO BUYERS - PAST 12 MONTHS $3,500 RANK SELLER TOTAL VOLUME NO. PROPERTIES Carroll Organization $272,376,926 4 Millions $3,000 1 2 Lonestar $167,000,000 4 $2,500 3 Picerne $74,850,000 2 4 Bainbridge Companies $72,250,000 1 $2,000 5 Eagle Properties $24,678,073 2

Source: Real Capital Analytics (in millions) $1,500

$1,000 PRICING & CAP RATES The average cap rate for multifamily year-to-date through third quarter $500 2018 stands at 5.69%, slightly down from the prior year. Transactions in Orlando for 2018 has yielded an average price per unit of $154,000, $0 up 8% from the previous year. As the Orlando MSA continues to deliver new product, Class A sales have remained strong. For year-to-date 2018, the average price per unit on Class A deals is around $221,000, up Transaction Volume Historic Average almost 17% from 2017. Source: Real Capital Analytics

$250,000

NOTABLE SALES - THIRD QUARTER $200,000 $221,185 $150,000

PROPERTY YEAR UNITS SELLER BUYER PPU $131,884 $129,644 $188,597 $188,230 $105,869 $103,212

CLASS A $99,345 $168,868

$100,000 $88,017 $76,660 $75,404 $75,219 $141,003 $140,848 Addison on 2017 292 ContraVest BC Property $214,442 $66,029 Millenia $62,332 Investments $50,000 $44,877 CLASS B 1981 296 Robbins/LEM Taurus $161,993 $0 Canopy Apartment 2013 2014 2015 2016 2017 YTD 2018 Villas Investment Holdings Class A Class B Class C Source: Real Capital Analytics

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SUBMARKET OVERVIEW SELECT SUBMARKET NEWS

RENTS & VACANCY BY SUBMARKET Downtown Central Orlando $1,664 5.00% • A 28-story building under construction will be called

East Orlando $1,153 2.70% SunTrust Plaza at Church Street Station and become the new home of 90,000 square feet for SunTrust operations. Southwest Orlando $1,081 2.40% Completion of the building is expected in the third West Orlando $1,240 3.00% quarter of 2019 and will feature 200,000 square feet of Northwest Orlando $986 2.50% office space, a Marriott hotel and a SunRail station.

Winter Park/Maitland $1,188 2.70% • Jefferson Apartment Group and Camden Property Altamonte Springs/Apopka $1,220 3.70% announced they will develop a sister property to the Sanford/Lake Mary $1,178 3.50% 299-unit apartment complex named 420 East. The new

Casselberry/Winter Springs $1,301 3.20% project, 520 East, is planned to have 12 stories with 364 units and 7,000 square feet of ground floor retail. University $1,233 2.90%

East Orange County $1,368 3.60% Airport/436 South Orange County $1,376 3.70% • A joint venture between LeCesse Developemt and Kissimmee/Osceola County $1,101 2.30% Famlee Investment Co. has broken ground at BellaNova Ocoee/Clermont $1,289 2.90% at JubiLee Park, a 312-unit luxury apartment community.

North Lake County $905 1.80% The project will make up the second of three phases within the larger JubiLee Park planned development. Source: AXIOMetrics The first phase recently sold to Cortland Partners.

Maitland UNITS UNDER CONSTRUCTION BY SUBMARKET • The Allen Morris Company has commenced leasing at Maitland City Centre, an urban live-and-work community 2,500 in Maitland. Maitland City Centre features 220 one- and two-bedroom units as well as two live-and-work units.

2,000 The six-story project also includes 35,000 square feet of 2,006 1,970 1,928 retail and restaurant space.

1,500 1,526 1,499 University

1,181 1,000 • Preferred Apartment Communities (PAC) has acquired The Retreat at Orlando, an 894-bed cottage-style

500 641 student housing community located near the University 403 of Central Florida. The company financed the $82 million 288 296 263 0 0 206 0 purchase by assuming a non-recourse loan from Fannie 0 Mae.

Source: Cushman & Wakefield and AXIOmetrics

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TAMPA, FL

EMPLOYMENT & UNEMPLOYMENT TRENDS ECONOMIC EXPANSION The following are select job announcements from the third quarter 2018: Tampa’s overall economy is excelling, with both job and population growth rates exceeding the national average. The average working age population growth over the last two years has been roughly three times the national Publix plans to expand its existing 320,000-square-foot average, attributing to the impressive job growth in the MSA. The Tampa corporate headquarters in Lakeland by an additional 190,000 MSA added over 17,000 jobs year-over-year as of third quarter 2018. a square feet. This represents one of the most significant office Although job growth has been historically driven by the Financial Activities construction projects for the Lakeland area in more than a and Professional & Busines Services sectors, over the last two years much of decade. This expansion is expected to bring more than 700 the growth has also relied upon Construction and Hospitality. jobs to Lakeland by 2027.

Passenger train operator Brightline has scouted train station a sites in Tampa for a possible rail link to Orlando. It was reported TAMPA JOB GROWTH TRENDS that several possible train station sites scouted in Tampa are within walking distance of the proposed site of a new baseball EMPLOYMENT IN THOUSANDS & JOB GROWTH (%) park in the Ybor City area for the Tampa Bay Rays. Among other sites, Brightline scouted Tampa Union Station, a city- 1,490 3.0% owned train station, and Tampa Park Apartments, a privately

1,485 owned rental housing complex. 2.5% 1,480

1,475 2.0% 2016 2017 2018 FORECAST

1,470 1.5% U.S EMPLOYMENT (% Change) 1.9% 1.6% 1.5% 1,465

1,460 1.0% Employment (thousands) Employment 1,455 MSA EMPLOYMENT (% Change) 3.8% 2.7% 1.2% 0.5% 1,450

1,445 0.0% 4.8% 4.6% 3.4% Q4 2017 Q1 2018 Q2 2018 Q3 2018 MSA UNEMPLOYMENT RATE (%)

Total Employment YOY % Job Change Forecast is 12-month outlook Source: Bureau Dept. of Labor Statistics

JOB GROWTH & UNEMPLOYMENT RATE OUTLOOK • According to Yardi-Matrix, Tampa is ranked top 5 in year-over-year rent growth. +1.2 -30 • According to Urban Land Institute, Tampa is ranked as a top 10 Real % YOY BPS YOY Estate Market. Average Q3 employment Average Q3 unemployment • According to Forbes, Tampa is ranked as one of America’s fastest growing cities in 2018. Contributing to this is a projected wage growth of 7%, increased by 17,200 jobs. decreased to 3.4%. ranking Tampa 8th in the country.

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MULTIFAMILY TRENDS DEVELOPMENT / INVENTORY

The average effective rent growth rate for the Tampa MSA increased by With over 10,000 units delivered since 2015 and another 8,000 currently 4.9% year-over-year. Vacancy continued to improve over the last year with under construction, Tampa is in the midst of the largest supply wave in over a 30-basis point decrease to 3.9%. 30 years. The majority of recent and current construction has consisted of large, luxury units leaving some concern of overexposure in this sector. However, Tampa has had little trouble absorbing the new supply due to its high proportion of 50+ year old households. The Baby Boomer population has a much higher income than the typical prime-renting age group and +4.9 -50 creates a larger demand pool of renters that can afford the premiums % YOY BPS YOY charged by these luxury units. Average effective rent Vacancy decreased to an DEMOGRAPHIC FUNDAMENTALS increased to $1,162. average of 3.9%. The Tampa MSA is expected to add almost 50,000 residents per year for the next five years. This strong population growth has resulted in an increase in job growth and median household income. Median household income is expected to increase over 18% to almost $60,000 by 2022. HISTORICAL & FORECASTED METRO RENT GROWTH RATES 2000: 2,394,396 Robust employment growth has resulted in an average effective rent growth 2010: 2,783,247 POPULATION of 4.9% year over year, exceeding the five-year average of 4.3%. This ranked 2017: 3,009,251 the metro fifth among the top 50 US markets and well above the US average 2022: 3,202,073 of 2.5%. Rents are projected to increase by 14.5% through 2023. 2000: n/a PERCENT 2010: 32.8% RENTER TAMPA RENT GROWTH RATES 2017: 35.5% HOUSEHOLDS 35.8% 35.0% 33.1% 2022:

H I S T O R I C A L F O R E C A S T 30.0% 2000: $37,587 MEDIAN 2010: $45,408 25.0% HOUSEHOLD $48,682 INCOME 2017: 20.0% 16.9% 2022: $56,539 14.5% 15.0%

10.0% MULTIFAMILY FORECAST 4.9% The following are Cushman & Wakefield’s projections over the near term: 5.0% 2.5% 1.8% 0.1% 0.7% 0.0% Q4 '17 Q1 '18 Q2 '18 Q3 '18 1 Year 3 Year 5 Year 5 Year (YOY) Forecast -5.0%

Tampa MSA United States PIPELINE % RENTS VACANCY Source: AXIOMetrics GROWTH Forecast is 12-month outlook

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INVESTMENT ACTIVITY MOST ACTIVE MARKET PLAYERS

Investment activity remains strong in the Tampa MSA. Since 2015, there has TOP FIVE TAMPA BUYERS - PAST 12 MONTHS been nearly $11 billion in total sales volume and the pricing has generally RANK BUYER TOTAL VOLUME NO. PROPERTIES increased steadily while compressing cap rates. Sales volume is showing Lantower Residential $230,500,000 3 no signs of slowing, with 2018 total sales volume nearing $2 billion for the 1 year. Although there is a diverse mix of trades across submarkets, recent 2 Inland RE Group $149,000,000 4 trades have been concentrated in urban submarkets such as St. Petersburg 3 Camden Property Trust $126,300,000 1 CBD and South and Central Tampa. 4 Starlight Investments $116,900,000 2 5 Northland Investment Corp. $112,500,000 1

HISTORICAL SALES VOLUME TOP FIVE TAMPA SELLERS - PAST 12 MONTHS $3,500 RANK SELLER TOTAL VOLUME NO. PROPERTIES

Millions $3,000 1 Pollack Shores $203,100,000 1 2 American Land Ventures $126,300,000 1 $2,500 3 IMT Capital $116,900,000 2 4 Crescent Heights $112,500,000 1 $2,000 5 Lamar Group $96,500,000 1

$1,500 Source: Real Capital Analytics (in millions) $1,000 PRICING & CAP RATES $500 Since 2015, there has been nearly $11 billion in total sales volume as

$0 pricing has generally increased with compressing cap rates. As a result, 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD the average price per unit on Class A deals has seen a large increase in 2018 pricing with an average price per unit around $220,000 (17% higher than Transaction Volume Historic Average 2017). Core and Core-Plus cap rates remain strong around 4.75% to 5.25% as value-add has seen yields around 5.00% to 5.75%. Source: Real Capital Analytics $300,000

$250,000 NOTABLE SALES - THIRD QUARTER $200,000

PROPERTY YEAR UNITS SELLER BUYER PPU

$150,000 $218,616 $134,277 $122,949 $197,677 $205,055 CLASS A $108,775 $98,639 $171,671 $90,885 $100,000 $90,022 $84,178 $74,591 $72,703 $150,919 Alexander at 2018 330 Alexander Levin Family $210,000 $148,281 $61,655 $55,791

Countryside Investments $50,000 $44,653 CLASS B $0 Park at Kensington 1990 204 Resource Blue Magma $140,686 2013 2014 2015 2016 2017 YTD 2018 Apartments Residential Class A Class B Class C

Source: Real Capital Analytics

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SUBMARKET OVERVIEW SELECT SUBMARKET NEWS

RENTS & VACANCY BY SUBMARKET Downtown Tampa

Central Tam pa $1,710 4.20% • The much-anticipated Water Street Tampa project has kicked off construction on its first building, the posh Peninsula $1,215 4.60% JW Marriott Hotel. The hotel is expected to have 519 Town and Country/Westchase $1,280 5.50% rooms with the highest rooftop bar in the city. In addition

Egypt Lake/Lowry Park $1,013 3.60% to the hotel, the developers have indicated within a year construction will be underway 10 of the 22 total Carrollwood/Citrus Park $1,102 3.60% buildings.

University $953 3.60% • The Tampa Bay Rays have recently announced plans for Temple Terrace $982 3.20% an $892 million stadium with glass walls and a fixed roof New Tampa/East Pasco $1,203 4.30% in the Ybor City area of Tampa. Currently located in St. Petersburg, the team has until the end of the year to Brandon/Southeast Hillsborough $1,168 4.00% notify the city of its plans to leave city-owned Tropicana South St. Petersburg $1,198 4.70% Field before 2027.

North St. Petersburg $1,249 3.60% University Largo/Seminol e $1,079 4.70% • Florida Hospital Tampa has broken ground on a six-story, Clearwater $1,138 3.60% 300,000-square-foot patient and surgical tower near North Pinellas County $1,207 3.40% University of South Florida. The $256 million expansion will be known as the Taneja Center and is slated to open West Pasco/Hernando County $945 2.30% in 2021. It is estimated to create 117 clinical jobs in its Source: AXIOMetrics first year of operation and 587 jobs by the fifth year.

Pinellas County UNITS UNDER CONSTRUCTION BY SUBMARKET • Southwest Florida International Airport has another record-breaking month in September as 418,956 2,500 passengers traveled through the airport. This represented

2,000 2,067 a 28% increase year over year. The airport reported nearly 9.3 million passengers for the fiscal year, breaking 1,500 all records in the airports 35-year history.

1,000 1,028 1,037 864 888 Bradenton 500 702 466 a preparatory boarding school and sports 380 345 • IMG Academy, 0 0 0 0 0 0 0 training facility, recently opened a new upscale hotel as one of its latest non-student accommodations. IMG recently unveiled its new five-story, 150-room hotel just outside the gates. The property, Legacy Hotel at IMG Academy, opened the doors to its first guests in mid- October. The hotel will have 75-80 full-time employees. Source: Cushman & Wakefield and AXIOmetrics

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JACKSONVILLE, FL

EMPLOYMENT & UNEMPLOYMENT TRENDS ECONOMIC EXPANSION The Jacksonville MSA continues to demonstrate solid growth, with an The following are select job announcements from the third quarter 2018: average job growth rate of 3.2% over the last five years. The Jacksonville metro employs approximately 754,000 people with an unemployment rate of 3.3%. The metro saw a year-over-year growth of 3.8% as of August 2018. UPS, the Atlanta-based delivery service, is building a Job growth over the last year has been robust, nearly double the U.S. rate. 373,000-square-foot expansion to hits regional distribution a center in Jacksonville. UPS already has over 1,650 jobs employees working at the current hub and are expected to add more once the project is complete. JACKSONVILLE JOB GROWTH TRENDS EMPLOYMENT IN THOUSANDS & JOB GROWTH (%) India-based Hinduja Global Solutions is planning to open a customer service center on Southpoint Parkway in Jacksonville. 760 3.9% a The new location will the company’s first in Florida and HGS 755 3.8% plans to hire approximately 350 new employees with the hopes to eventually ramp up to 500. 3.7% 750 3.6% is expanding its OptumRx pharmacy 745 a United Healthcare Group 3.5% business in Jacksonville. According to Jacksonville Business 740 Journal, the company is planning to hire 166 employees as it 3.4% 735 grows to meet customer needs. 3.3% 730 3.2%

Employment (thousands) Employment 725 3.1%

720 3.0%

715 2.9% Q4 2017 1Q 2018 2Q 2018 3Q 2018 MULTIFAMILY TRENDS Total Employment YOY % Job Change The average effective year-over-year rent growth rate for third quarter Source: Bureau Dept. of Labor Statistics 2018 was 5.7% with effective rents increasing to $1,028 per month. Vacancy decreased by 40 basis points displaying the markets ability to absorb the recent growth in rents. JOB GROWTH & UNEMPLOYMENT RATE +3.8 -50 +5.7 -40 % YOY BPS YOY % YOY BPS YOY Average Q3 employment Average Q3 unemployment Average effective rent Vacancy decreased to an increased by 27,400 jobs. decreased to 3.3%. increased to $1,028. average of 4.2%.

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HISTORICAL & FORECASTED METRO RENT GROWTH RATES DEMOGRAPHIC FUNDAMENTALS Over the past 16 quarters, annual rent growth for the Jacksonville MSA has Job growth continues to improve as the population in the Jacksonville MSA ranged from 3.0% to 6.0%, averaging 4.3% during that time period. In the grows. The population has increased 30% since 2000 and is expected to year-ending third quarter 2018, rent growth was 5.7%, ranking it 4th best in increase another 8% in the next five years. the country and Jacksonville’s largest increase since 2005. 2000: 1,120,884 2010: 1,345,600 POPULATION 2017: 1,476,637 JACKSONVILLE RENT GROWTH RATES 2022: 1,600,569

27.6% 28.0% 2000: n/a PERCENT 2010: 33.1% H I S T O R I C A L F O R E C A S T RENTER 2017: 34.9% 23.0% HOUSEHOLDS 35.1% 19.1% 2022: 18.0% 16.6% 2000: $42,738 MEDIAN 2010: $52,132 HOUSEHOLD 13.0% $52,564 INCOME 2017: 2022: $61,458 8.0% 5.7% MULTIFAMILY FORECAST 3.0% 2.3% 2.0% 0.9% The following are Cushman & Wakefield’s projections over the near term: 0.5%

-2.0% Q4 '17 Q1 '18 Q2 '18 Q3 '18 1-Year 3-Year 5-Year 5 Year Change Change Change Change Change Change Change Forecast (YOY)

Jacksonville MSA United States

Source: AXIOMetrics PIPELINE % RENTS VACANCY GROWTH Forecast is 12-month outlook DEVELOPMENT / INVENTORY NOTABLE SALES - THIRD QUARTER Supply in Jacksonville has remained elevated with annual completions ranging from 1.100 to 2,400 units over the last five years. In the year-ending PROPERTY YEAR UNITS SELLER BUYER PPU third quarter 2018, over 2,400 units have been completed which is a nine- CLASS A year high for annual deliveries. The largest properties under construction are: Antigua (249 units), CIEL (400 units), The Carlton at Bartram Park Portiva 2017 260 Liv Myers Apt. $174,226 Development Group (Ph. II) (355 units), Sensota Beachwalk (348 units) and JTB Apartments (350 units). Recently completed properties include Integra River Run (300 CLASS B units), The Point at Tamaya (380 units), Palm Bay Club (416 units) and Westridge 2009 312 Dome Equities Thackeray $115,384 Steele Creek (300 units). Apartments Partners

MIAMI FORT LAUDERDALE WEST PALM BEACH ORLANDO TAMPA JACKSONVILLE

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