In the Know: SWFL affordable housing getting gobbled up by investors, world's largest landlord
Phil FernandezInvestors have been scouring Southwest Florida to grab whatever they can get their hands on in the nation's hottest market.
A brand new National Association of Realtors report puts Southwest Florida at the top of America's most sizzling commercial metros. Nine of its best 15 are in the Sunshine State, and three of those are in this region: Naples, Cape Coral-Fort Myers and Sarasota-Bradenton.
"On the whole, these top markets generally have strong job growth, are experiencing net domestic in-migration, have low vacancy rates and greater absorption of commercial property, and are experiencing strong rent growth compared to nationally," said Scholastica "Gay" Cororaton, an NAR research economist.
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Affordable housing is where it's at with at least four area apartment complexes
Now, affordable housing is where it's at with at least four area apartment complexes selling for a combined $70 million in the past couple of weeks or so.
Blackstone Group, the globe's biggest commercial real estate owner and private landlord, is a player in half of them. Another was picked up by the nation's fourth largest affordable housing provider, Minnesota's Dominium, which has a publicly stated goal of becoming by 2025 "the country’s pre-eminent private developer, owner and property manager of affordable housing."
Last week, we reported that the fourth of these now falls under the umbrella of a comparable unknown, New Jersey-based Terra Financial Services, which assists real estate operators and investors.
Whether for this type of dwelling or other kinds of apartments and homes, it's a sign of the times for Southwest Florida, according to Lucas Professor of Real Estate H. Shelton Weeks, of Florida Gulf Coast University's Lutgert College of Business.
"This activity points to the severity of the housing shortage in the region. Investors are drawn to the market because they see the potential for increasing rents and low vacancy," Weeks told me. "One positive aspect of this influx of investment is that we are likely to see more high quality additions to our market in the future as well as older properties being renovated and brought in line with current market standards.
"However, the cost of these changes in our market will be higher rental rates for individuals and families."
$881 billion in assets
Enter the expeditiously expanding kingdom of Blackstone, which in the paperwork for these local purchases used its mighty Chicago address at the Willis Tower that it possesses.
From its perch at the former Sears Tower, previously Earth's tallest building, the powerful behemoth looks over a lot of its $881 billion in assets. That represents a 42% increase in the past year, CEO Steve Schwarzman said in a Thursday earnings call.
With logistics and life-science space, rentals are a big part of it, Schwarzman said.
"In the United States, we're now seeing rents in these sectors grow with two to three times the rate of inflation. And as the cost of new construction rises with inflation, it greatly benefits the value of our existing holdings," Schwarzman said. "Our holdings are concentrated in areas with strong secular growth that are more resilient to rising input costs."
Two of its new Southwest Florida affordable housing conquests include:
- Hawks Landing, built in 2004 on 10.5 acres. The 204-unit and its 192,750 square feet off Summerlin Road in Fort Myers was purchased for $16.2 million, according to public and Realtor records.
- And the 340-unit Bernwood Trace, with its 395,421 square feet constructed in 2000 spread over 14.72 acres in Fort Myers, bought for $24.4 million.
The latter stood out for its location to the always sharp Paige Rausch of Aslan Realty Advisors, who helped me along on the recent research trail.
"The units are off Six Mile/Winkler, near the new hospital site and the new proposed Amazon site," Rausch said.
Sundial, South Seas, Waldorf Astoria
And with 950 million square feet of logistics real estate, Blackstone is known for gobbling up Amazon spots around the nation and lots and lots and lots of everything.
Around here, for example, it's been buying and selling luxury hotels over the years, a far cry from lower rent living, such as the former Waldorf Astoria Naples, Sanibel's Sundial Resort, Captiva's South Seas Resort and the Edgewater Beach Hotel in Naples.
It was part of the 2014 purchase for $39.9 million of the 458,394-square-foot The Forum at Fort Myers and 119,709-square-foot Northpoint Shopping Center on Pine Island Road in Cape Coral. And it swooped in with mobile home acquisitions, such as the 147-unit Endless Summer RV resort in Naples, for $3.95 million in 2019.
A decade ago, it created its rental empire by rolling out an an ambitious campaign to buy distressed residential properties in Southwest Florida and other spots and made enormous profits. In October 2012 alone, Blackstone went on an $80 million home buying spree in 11 Sunshine State counties. All in cash.
Its practices have drawn fire from the United Nations and a few Congress members.
Democratic Sen. Ron Wyden has proposed a bill that would close whatever loopholes allow large investors to seek outsized profits in taxpayer-funded affordable housing. However, Blackstone is formidable, ranking 15th out of 33,000 organizations tracked by opensecrets.org with $44 million tied to it in political contributions in the 2020 election cycle, much of it going to the Republican-oriented Senate Leadership Fund.
As it loads up on tens of thousands of apartments, Blackstone says it intends to maintain affordability, even after federal and state rent controls expire over the next decade or two.
“These communities provide critical affordable housing, and we look forward to being long-term owners,” Blackstone said in a statement. “We will make significant investments to improve the apartments while ensuring they remain affordable and in compliance with all rent regulations.”
In case you missed it:In the Know: How many of you are going to pay a lot more for flood insurance? And who just paid $44.3 million for a mobile home park?
And:SWFL and state now among spots with top paying jobs in US, report shows
$5M reno at Crossings at Cape Coral
Last Monday, it acquired for $3.7 billion Resource REIT, which, according to its web site, has a portfolio of 45 apartment complexes in Florida and a dozen other states but none are in this region.
The new Southwest Florida transactions are part of another larger portfolio deal, with Broward-based Cornerstone Group selling 42 properties to Blackstone, according to industry magazine, The Real Deal.
While Blackstone hasn't revealed specific plans for the properties, Dominium shared what it has in mind for its $22.8 million pickup, The Crossings at Cape Coral, 1150 Hancock Creek S. Blvd., a mile from the Target at Pondella and Pine Island roads.
A year from now, the firm plans a $5 million renovation of the 168-unit complex, its first deal in Lee County and third in Southwest Florida after 2012's Whistler’s Green Apartments in Naples and 2018's Seven Palms Apartments in Punta Gorda, according to Mike Voss, director of communications.
Dominium "focuses almost exclusively on the development and long-term ownership and management of affordable housing. This focus has been continual since the company was founded 50 years ago," Voss told me. "Given the growth of the Southwest Florida region and the pressure that puts on affordable housing, we anticipate finding a number of potential new developments or renovation opportunities in the area."
The group has 4,489 units across 19 properties in Florida and 938 new units under construction in Bradenton, Kissimmee and Poinciana, Voss said. Nationally, it has over $3 billion in owned properties, with more than 37,000 apartments in 19 states.
The smaller Terra Financial is tied to the Ft. Myers Portfolio LLC that for $6.5 million nabbed 92-unit Sunrise Towers on the 2800 block of Central Avenue. The complex has had a history of code enforcement violations, including the collapse of a stairwell. The firm's representatives have not returned messages for comment.
Get in line: Aldi, Chick-fil-A debut set
Two of your favorite brands that you ask me about all the time are ready to launch at the northwest corner of Immokalee Road and Collier Boulevard in Naples.
Reps for both Aldi grocery and Chick-fil-A restaurant say their official open date is Feb. 10 on the five acres at Addison Place where a dental place also opened a month ago.
But as all of us have witnessed many times in the past, you may want to take a peek in the days prior to see if a soft opening is going on.
Aldi is getting closer on a new Lee County spot as well.
"The Cape Coral store on Santa Barbara Boulevard is now scheduled to open this spring," said Chris Hewitt, Aldi's Royal Palm Beach Division vice-president.
Based at the Naples Daily News, Columnist Phil Fernandez (pfernandez@gannett.com) writes In the Know as part of the USA TODAY NETWORK. Support Democracy and subscribe to a newspaper.