Condo sales are picking up in South Florida. But it’s not being driven by people who want to live in the units they purchase. It’s being propelled by bulk buyers—those groups purchasing 10 units or more.

For instance, Miami-Dade, Broward, and Palm Beach counties have seen 28 total bulk deals close since July 2008. But six of those 28 deals closed in November and 17 deals have closed since July 1, according to Peter Zalewski, a principal at Condo Vultures, a Bal Harbour, Fla.-based consultancy focused on the South Florida real estate market.

While Zalewski can’t point to one singular event that triggered investors to start buying after kicking around the market for a couple of years, he thinks some groups have felt pressure to start making deals. There are other factors as well. “The rebound in the stock market is creating a little more optimism that the worst times are behind us,” he says.

Others think the bulk buyer phenomenon may be slightly overblown. “I think they are dominating the headlines because they are interesting and tend to draw more attention and interest, but they make up only a small portion of overall condominium sales activity,” says Adam Cappel, president of, a Miami research firm.

If bulk buyers are a real force today, Zalewski says this could bode poorly for institutional apartment owners in the area. “If someone is coming with all cash and no leverage, they can go as low as they need and undercut a current rental operator,” he says. “Unless [an institutional owner] bought 10 or 15 years ago, their cost basis will be higher.”

Cappel thinks it’s hard to make conclusions about what different buyers will want to do. “Some have turned around and tried to sell their units immediately,” he says. “Others are planning on renting out the property and starting sales two or three years into the future. The business plan depends on the specifics of the deal, the real estate, and the group involved—but there is no one strategy that every bulk buyer is employing.”

If bulk buyers do opt to hold the assets and rent them out, Andres Lemos, principal of Miami-based multifamily marketing and investment firm Miami Waterview Properties thinks South Florida apartment owners will face a similar challenge to the past couple of years. “It’s no different than developers that have been [renting their units for a lack of sales] and therefore lowering asking and effective rents due to a high supply,” he says.

Cappel agrees. “I don’t believe the presence of the bulk buyer is having that much of a dramatic effect on rental owners—no more than if they weren’t present,” he says. “Either way, there are tens of thousands more units available in Miami and South Florida than there were a few years ago. And those units need to be filled with bodies—sometimes at the expense of institutional, pure-rental communities. Despite that, I’d say that rental rates have held up better than I had expected given the influx of units.”