Growing demand in Osceola County for larger vacation homes has prompted greater focus by developers on five-plus bedrooms this year, with buyers showing unparalleled demand for eight-plus bedrooms, builders and the county property appraiser tell GrowthSpotter.
Demand in Greater Orlando's vacation home market topped out at seven bedrooms just a few years ago, but new construction over the past six to 12 months has favored 10 bedrooms or more, said Steve Trover, CEO of Celebration-based All Star Vacation Homes, which manages about 200 properties, half of which boast five-plus bedrooms.
"Multi-generational travel in the U.S. is becoming a big thing, and it's really baby boomers driving this, with grandparents coming of age with quite a few kids and grandkids," he said. "When you think of vacation home rentals in the past you've thought of British, South Americans and Canadians, but the group really driving this segment is Americans."
Property Appraiser Katrina Scarborough noticed the trend in large homes going up in western Osceola County in late 2014. Her staff has been proactively researching the construction market in recent months, and while their findings thus far are anecdotal, she says supply is growing rapidly for such large homes.
"Developers are most likely marketing these to foreign investors, as we've had a growing number in Osceola," she said. "Since Jan. 1, 2014, 20 percent of the home sales here were to out-of-state buyers (about 2,840 out of 14,000-plus sales), and of that 60 percent were foreign buyers."
Encore Funds, a real estate private equity firm based in Boca Raton, is one of the largest developers of vacation rental homes in Osceola County right now. The company has close to 3,000 new homes in the pipeline for Reunion Resorts and the former Splendid China Theme Park site, with 100 homes under construction now.
Encore has built vacation homes of four to 13 bedrooms, but sales have skewed in the past year to eight-plus bedrooms, said managing director Jim Bagley.
"The vacation rental home market competes very effectively against hotels on a head-in-bed price perspective," he said. "I don't see it slowing down. We're enjoying the significant upswing in Orlando's tourism and that visitation drives buyer interest in vacation homes.
"With foreign nationals, there's a lot of capital flight from many countries now," Bagley continued. "So any time there's geopolitical risk in these countries, they come to a safe haven like Florida, and one of the quickest things they can buy is vacation rental homes."
Orlando-based developer Park Square Homes is currently building the first phase of its 321-unit Sonoma Resort vacation homes community in Kissimmee, with homes ranging from four to nine bedrooms. Models with five or more bedrooms have dominated the 25 units sold thus far, company president Steve Parker told GrowthSpotter earlier this month.
"This is a fairly new trend for Central Florida, compared to the established markets for very large vacation homes in places like Myrtle Beach, the Outer Banks (North Carolina), Colorado, and Destin and Fort Walton Beach," said Trover of All Star. "The rental guest is driving buyers to these larger homes, and they're buying larger over smaller because your profit and nightly rate is best on the seven-to-10 bedroom."
Windsor at Westside's eight-bedroom model (beginning at $450,000) has been the most popular thus far among 70 sold units now under construction or in permit processing, said sales consultant Craig Russo.
"Rental demand for that size has been the highest in this area, and supply up until now has been out of balance," he said. "Buyers see that their best return is in that eight- to nine-bedroom range."
Of Windsor at Westside's planned 600 homes through two phases, more than 500 will be single-family homes of six bedrooms or more.
Lennar is another builder with vacation home resorts in development in Osceola featuring single-family homes of five-plus bedrooms.
Tracking the growth of this niche hospitality market is challenging. The industry's Vacation Rental Managers Association has limited data on Greater Orlando, and the local market's growth has prompted dozens of small vacation home managers to pop up in recent years.
Ninety-four vacation rental companies were registered with Osceola County's tourism agency last year. The county said it had 9,800 rental units in 2014, compared to more than 24,000 hotel rooms in the county.
Market demand for large homes prompted All Star Vacation Homes' Trover to open a new firm within the past year, Fullhouse Vacation Rentals, which is designing and developing its own custom homes of seven-plus bedrooms.
Fullhouse has 13 homes built thus far and should reach 20 by year's end, each with amenities tailored for the large group, like en-suite bathrooms for each bedroom, an extra-large kitchen to accommodate multiple guests cooking, and a pool, hot tub, home theater and game room.