A Dallas-based company is building 180 luxury apartments near downtown Boca Beach, continuing a trend of rental construction across South Florida.
Behringer Harvard is clearing eight acres for The Franklin Boca at 1206 S. Federal Highway, less than a mile south of Atlantic Avenue shops and restaurants.
“We believe our project sets itself apart, especially in location,” said Jason Mattox, chief operating officer of the firm.
Behringer Harvard has not yet released a rent range for the one-, two- and three-bedroom units.
Amenities include granite countertops, full-size washers and dryers, private balconies, a fitness center, resort-style pool, library, cyber cafe and business center.
Jack McCabe, a housing analyst in Deerfield Beach, estimates there are nearly 50 apartment projects announced or under construction in Palm Beach, Broward and Miami-Dade counties.
Many of the developers would rather build condominiums, but construction financing for apartments is easier to get, McCabe said. He expects some of the apartments eventually to be converted to condos — a trend that led to the devastating housing bust starting in 2006.
“There’s definitely demand for apartments — I don’t see any red flags yet,” McCabe said. “But unless government entities reign in construction, we could quickly, within a year, be in an oversupply stage again.”
The condo conversion craze depleted the region’s supply of apartments, and the economic downturn that followed discouraged new construction, analysts say.
But many homeowners have fallen into foreclosure in recent years, forcing them to become renters. As a result, apartment occupancies are above 90 percent, and rental rates are steadily increasing.
Palm Beach County’s average monthly rent at the end of the second quarter was $1,123, a 4 percent increase from a year ago, according to MPF Research of Dallas. Broward County’s rent was $1,191, also up 4 percent.
Developers are eager to build again because investors are paying top prices for apartments, said David Dabby, a housing consultant in Coral Gables. Other types of construction aren’t as lucrative, he said.
“The value to be created for rental apartments is greater than the cost to build them,” Dabby said. “But the value that’s created for office buildings is less than it costs to build.”
Thousands of rental units are planned for the region in the next year.
Wood Partners of Atlanta is building apartments near downtown Boca, while the 456-unit Seabourn Cove rental community opened July 1 in Boynton Beach.
In May, The Altman Cos. of Boca Raton announced plans to build apartments in Boynton Beach, Coconut Creek and Pembroke Pines.
The Related Group of Miami, headed by Jorge Perez, is planning a 26-story project in downtown Fort Lauderdale along the Riverwalk.
A Phoenix developer, Alliance Residential, is building nearly 400 luxury apartments in Coconut Creek. The first units at Broadstone Cypress Hammocks at 5201 W. Hillsboro Boulevard will be ready early next year. Construction is expected to be finished by spring 2014.
Behringer Harvard’s investment arm has a stake in 47 apartment communities in 14 states across the country.