Manhattan-based real estate developer Property Markets Group (PMG) wants to offer the lowest price-per-bed rents in downtown Orlando among new Class A multifamily, and will move quickly to close on a N. Orange Avenue site and break ground this year on its proposed three-tower project, a lead executive with the company told GrowthSpotter.
The company filed plans earlier this week for downtown's largest mixed-use multifamily project ever proposed on one parcel, with 867 apartments across three phased towers and 41,000 square feet of retail-commercial proposed at 434 N. Orange Ave., first reported here Thursday evening.
On Friday, PMG's Evan Schapiro, managing director in its Miami office, discussed what drew the full-service developer to Orlando for its newest product line geared toward Millennials.
Through its first 20 years, PMG became a top-of-market condominium developer in the United States while establishing smaller multifamily, hotel and retail platforms to diversify.
But over the past five years the company has made a push to prioritize multifamily investment, and saw it would need to differentiate in an increasingly crowded market.
PMG recognized the Millennial demographic's flight back to urban cores, and that in many cities this carried a high rent burden. In downtown Orlando, the newest Class A apartments average monthly rents that lead the market at more than $1,700.
Schapiro and his colleagues began analyzing and ranking cities where that high rent burden exists, coupled with strong employment growth, inward migration and other key factors.
Orlando ranked near the top of their proprietary index, he said.
"Millennials and young professionals want to be in downtown Orlando, but have to pay such a high amount of their income toward that rent," Schapiro said. "So Orlando makes a lot of sense for the product we can bring to market, where our units may be a bit smaller than the market norm, but by doing so we can get the per-bed monthly rent substantially below market average, which at a few hundred dollars can make a big difference to the tenant. The numbers work for us as investors, but more importantly they work for the renter."
The company's downtown project, dubbed "X Orlando," would be the third in Florida for its new PMGX Living line of "social living community" developments, following the 31-story "X Miami" project and 41-story "X Las Olas" now under construction in South Florida. The first X-branded community opened in Chicago in 2016, and a second is in development there and in Denver.
PMGX touts amenities like constant social and educational events for residents, ample storage and Wi-Fi throughout, and a lifestyle app that serves as a digital key to enter apartments and common areas, track packages, control your thermostat and more.
"With PMGX, placemaking and a sense of community are very important aspects of the project. To facilitate that we must have a very high scale for our amenities," Schapiro said. "That includes the best co-working spaces in the building, a top-of-the-line gym, a pool deck that is active and the place people want to be on the weekend. That's what we want to bring to downtown Orlando, and we think it's ripe for it."
The design of PMG's Orlando project will be refined in the coming months. Introductory renderings provided to the city of Orlando were only massing studies for the initial Framework Master Plan filing, Schapiro said.
"A great deal of effort will be put into placemaking, in the sense that we want this to be a place that becomes a magnet for downtown, and to do that we recognize this must be something befitting Orange as a main avenue," he added.
PMG will likely bring an equity partner on to the project in time, based on its track record of development partnerships in South Florida, New York and Chicago.
Schapiro said the company is prioritizing this downtown Orlando project for fast-track development as soon as possible this year, and is not the type of investor to acquire such a property and then shelve plans.
"We are racing to get this thing approved and get a shovel in the ground as soon as possible," he said. A closing on the land is anticipated for the latter half of this year, pending plan and permit approvals by the city.
Schapiro declined to estimate a total project cost in Orlando. But based on construction budgets of similarly sized PMG projects reported in other markets, $100 million to $150 million per residential tower phase is within range.
The half-mile proximity to downtown's Creative Village college campus was "super exciting to us, a major selling point," Schapiro said. But PMG doesn't plan to market the property heavily as a student housing option.
It is positioning the PMGX brand as tailored for young professionals, particularly with its four-bedroom units, which account for 25 percent of the 867 apartments in Orlando over three phases.
Those four-bedroom units aren't meant to cater to families, but instead would be furnished and rented by the bedroom as a co-living option with shared common space.
"The idea with our co-living option is you have someone moving to Orlando, they don't know anyone and don't want to spend a lot on new furniture, but they want to live in the heart of downtown," Schapiro said. "The cheapest way to do that can be to choose our building and co-living. If they end up not liking the roommates, we can move them to another unit."
For the 41,000 square feet of ground-floor retail, PMG is negotiating now with a handful of large-scale tenants on its X-branded South Florida buildings that could also be drawn to Orlando, Schapiro said.
He declined to drop names, but noted typical large retail tenant profiles like a grocer, co-working space operator, coffee shop, bar and restaurant will be considered.
"The retail experience on the ground floor is an important component of our overall project. We want the public to be at our building, in the lobby often, making it a destination," Schapiro added.
He highlighted Pizzuti's successful lease-up of its former The Sevens building over the past 18 months in downtown's North Quarter as a project that gave PMG directors confidence their more centralized location would perform well.
That location, next to the Lynx terminal for SunRail and buses, was also significant because it offers the developer a unique opportunity to eventually market its entire PMGX portfolio in Florida as interconnected by rail.
"For our Miami, Las Olas and now Orlando locations, a common theme is that all will be Transit-Oriented Developments within walking distance of a train station that can all connect (via Brightline)," Schapiro said. "We think that can be special, that from a portfolio level you could eventually ride trains to all our properties across Florida."