Florida is on a roll. In-migration figures place the state near the top in terms of population growth. A favorable political landscape, great weather, and a multicultural convergence of participants have made Florida one of the go-to destinations for multifamily developers and investors.
Next month, ConnectCRE is bringing together the region’s key players for an exclusive afternoon event to share their views and discuss the industry’s future at Connect Southeast Multifamily (December 4th in Key Biscayne, FL).
Connect caught up with one of those key players, Andrew Dansker, CEO of Dansker Capital Group, who will be speaking on the “Navigating Capital Flow & Deal Dynamics” panel discussion, to ask him how he views the current climate and trends affecting the multifamily market.
How have you seen lender appetites shift in the Southeast multifamily market over the past 12 months?
Our firm has a national presence and compared to other parts of the country, the Southeast has been one of the most robust markets in terms of lender appetite. I think there has been a bit of caution about multifamily assets because the valuations were so hot and there was so much construction. However, as demand and supply normalize, I think we are going to go back to seeing rent growth and the hesitation there will recede. Notably, office is still a real asset class in the Southeast, whereas in some other parts of the country it has become a taboo subject. Also of note, with regard to retail, is that although it is strong, there is a tale of two cities between main street/single tenant and the enclosed regional malls which have fallen out of favor.
In your view, what are the most creative or under-utilized capital sources that are stepping in where traditional debt is pulling back?
Credit unions, hands down. I think the conventional answer here is that private debt funds have stepped in for banks and I don’t really see that happening in the way that is often portrayed by commentators. I think that the pricing structure for most debt funds makes them infeasible lenders for most projects, especially in the middle market space, which is the bulk of the market. Credit unions, however, are differentiated from banks by their cost base, their regulators, and the state of their balance sheets. This has really allowed them to step into the breach and grow their market share.
For sponsors and developers looking at the Florida/Southeast region, which deal structures (e.g., joint ventures, preferred equity, mezzanine) are you seeing gain traction amid persistent cost pressures?
In the middle market space, which is where I specialize, the primary deal structure that is gaining traction is called the “All-cash” transaction. As the CEO of a mortgage brokerage, I wouldn’t say that I am a big fan of this trend. However, overall, simply bringing more cash to a transaction and taking on less leverage is de rigueur these days.
With underwriting becoming more conservative in many cases, what advice are you giving clients to remain competitive — both in terms of deal execution and financing terms?
My first and best piece of advice is that they should be hiring a capable mortgage broker to represent them. The market is moving very quickly and conventional wisdom about how and where to find the best financing is not necessarily valid right now. In this kind of environment, more than ever, it pays to have someone make a market for a deal and consider all the available options and players, many of whom were not in the picture until very recently, and therefore are unknown even to experienced players.
Looking at the financing environment heading into 2026 – a key topic that will be covered at the event on December 4th – what scenarios do you believe are underpriced or under-anticipated by the market today?
I think the market is significantly over-focused on rates declining. I think that there are a variety of factors that may impede the continued decline in rates. For starters, inflation may be an issue in the US, in which case we may see the Fed choose to combat inflation instead of focusing on supporting the labor market. Even if rates do come down at the Fed level, the supply/demand balance between lenders and borrowers may push us in a direction of widening spreads, ultimately leading to steady or rising borrowing costs, even in a market with declining rates. Also in that vein, increased or ongoing volatility in the rate markets may also lead to wider spreads and therefore higher borrowing costs. I think that, although they may turn out to be right, those who are waiting to time the market for lowest-cost financing are deluding themselves if they think they are making a sure bet.
How do you expect the intersection of elevated construction/operating costs, regulatory/regional headwinds, and migration-driven demand to influence capital deployment in the Southeast multifamily space?
The Southeast space is poised to benefit from higher construction costs and lower capital availability in the form of constrained supply in the face of growing demand. All demographic trends point to continued migration out of the Northeast in particular, which corresponds heavily to net population growth in the Southeast. This should lead to rent growth and asset appreciation throughout the Southeast.
Join us on December 4th for Connect Southeast Multifamily at The Rusty Pelican, 3201 Rickenbacker Causeway, Key Biscayne, as the apartment industry’s leaders take the stage to explore the opportunities, challenges, trends, and future outlook for the multifamily landscape throughout Florida and the Southeast.
The post Andrew Dansker, of Dansker Capital Group, Provides His Insights on the Hot Topics at the Upcoming Connect Southeast Multifamily appeared first on Connect CRE.