One of Downtown Orlando's most prominent undeveloped land parcels is now marketed for sale after being held for nine months by a Miami-based investor, boasting rich entitlements for mixed use and the prospect of long-term growth for urban multifamily.
Located at 434 N. Orange Ave., the vacant lot features about 319 feet of frontage on the thoroughfare, and lies next to new apartment complex Central Station on Orange, the Lynx central station for SunRail and public buses, and the Orange County Courthouse.
An affiliate of real estate investment group Midtown Opportunities,backed by developer Alex Vadia, paid $10 million for the 3.57-acre tract on Dec. 30 of last year.
Vadia sat on the property for six months until after his group paid $35.1 million in mid-July for the two blocks of land (18.69 acres) on N. Orange Avenue occupied by the Orlando Sentinel Media Group, located a block north of his first Orlando investment.
He hired Cushman & Wakefield South Florida in the weeks that followed, with a marketing campaign launched in September for the 3.57-acre parcel.
The Transit Oriented Development site features a Walk Score of 88 in the heart of downtown's Central Business District, and is a half mile or less to entertainment venues, dining and the future Creative Village campus.
Its potential uses include industrial, hotel, office, residential, retail and more, with up to 1,426 residential units allowed and more than 1.24 million developable FAR (floor area ratio) with density bonuses.
"We think the best and highest is likely a multifamily-centric property with complimentary components of either hospitality, retail or alternate residential class that may include students, or a 55-plus seniors product," Troy Ballard, senior managing director for C&W leading the property listing, told GrowthSpotter on Monday. "Market will determine the price, it's openly listed. There's a substantial amount of entitlements, no height limit, and market interest has been strong, given all the key ingredients for sustained growth in Downtown Orlando."
Sites of this size with mixed-use potential typically transact based on a site plan's approval, said Ballard, indicating a closing this calendar year is unlikely.
The long-term expectations for N. Orange Avenue to become a highly walkable urban street will be driven in large part by ultimate redevelopment of those two former Tribune blocks occupied by the Orlando Sentinel, which have 1,200 feet of frontage, Ballard said. No plans are being made now to sell or redevelop that site by Vadia, he added.
As of the second quarter of this year, the Downtown Orlando apartment rental market had an occupancy rate of 94.2 percent, excluding newly-opened properties like Crescent Central Station and 420 East, according to The Downtown Development Board.
Average monthly rates were at $1,505 for downtown, with the price per square foot at $1.61 in Q2. The new 420 East had the highest rate at the time with $2.06 per square foot, per the DDB.
Since then, rents for newly opened properties in downtown are closer to $2.10 per square foot, said Shelton Granade, vice president for CBRE Orlando specializing in multifamily.
While Granade is confident in the Central Business District continuing to mature for multifamily investment in the long term, the number of new units now in construction or advanced planning for the submarket may make new projects difficult to finance in the short term, he said.
"Thinking about long term and what's the best use in that spot it's probably a high-rise tower, but to start from scratch on that today may be cost prohibitive, because construction and land prices are going up," he said.
"To build it you need a certain rent level," Granade continued. "I fully anticipate rents in downtown to continue to appreciate, but on a per unit basis if building a high rise you're probably over $300,000 per unit for all-in cost, and I think a lender would want to see $2.40 to $2.50 per square foot for rents to capitalize that, and we're not there yet."
The absorption rate for apartments in Downtown Orlando has averaged 600 units a year for the past two years, and in Q1 of this year 709 units were brought online with 587 absorbed, according to Charles Wayne Consulting.
"Unrealistic densities and rising construction costs are placing upward pressure on rents," said Daryl Spradley, senior vice president. "Over the next year, the area of highest demand will occur below $2.00 per square foot; however, developers are challenged to make this happen."
New multifamily projects in the downtown area now under construction total more than 1,000 units, which include the 25-story, 235-unit CitiTower at 101 Lake Ave., and the 22-story, 350-unit Modera at Mill Creek on the southwest corner of E. Central Boulevard and S. Rosalind Avenue, and The Yard at Ivanhoe (up to 630 units) at Virginia Avenue and Alden Road.
There are currently 14 apartment projects proposed or under construction in Downtown Orlando totaling more than 4,300 units, Spradley said.
Those include Jefferson Apartment Group's plan for the 364-unit The 520 apartments at 514 E. Church St., which will be a second phase to its neighboring 420 East apartments, and has been moving through the city's appearance review process in recent months. Crescent Communities' 373-unit Crescent Lucerne is also working through final stages of local approval.