Miami multifamily developer and investor Neology Group has raised $175 million in capital to prepare for a next new construction wave in Florida and the Southeast as the national building pipeline shrinks and renter demand rises.
The capital gives Neology the ability to pursue about $1 billion in deals, according to the company.
Lissette Calderon, Neology’s founder, told HousingWire TBD she couldn’t disclose the names of the new investors.
“We have the family offices and the private investors who have been partners with us for years,” Calderon said. “But this raise also brought new institutional investors into our capital base.”
Neology’s securing of the private equity infusion marks another signal that capital is returning to apartment developers. Investment pulled back starting in 2022 as interest rates and construction costs climbed. Developers and equity investors are increasingly positioning for the next round of scarcity.
The national apartment construction pipeline has shrunk to its lowest share of existing stock since 2013. That comes as demand has shown resilience and now outpaces the delivery of new units.
Neology’s expansion beyond Florida
The firm has developed more than 2,000 condos and 5 million square feet of residential space over the past 20 years in Florida, primarily in Miami. It manages about 1,000 apartments and has another 4,500 units in the pipeline.
“Florida remains our primary focus,” Calderon said.
With the new capital, the company will also look at opportunities throughout the Southeast. Calderon didn’t name which markets the firm is considering.
“It’s definitely going to be selective, and opportunity-driven,” she said.
Neology is now expanding into district-scale projects that combine housing with retail, hospitality and cultural space. Last month, the company announced a partnership with the Don and Mera Rubell family and Lion Development Group on a three-phase project in Miami’s Rubell Arts District. It includes a 21-story tower with roughly 330 apartment units and 10,000 square feet of ground-floor retail near the Rubell Museum.
Neology’s timing tracks with broader shifts in the U.S. apartment market. Cushman & Wakefield recently reported the strongest leasing quarter in nearly two years this spring. Renters absorbed more units than were delivered for the first time since early 2022.
New construction has slowed sharply. Only 3.5% of existing apartment stock is under construction nationally, half the 2023 peak, as elevated interest rates and costs pushed developers to the sidelines.
Florida saw some of the steepest pandemic-era construction and double-digit rent growth. That prompted Gov. Ron DeSantis to push for the Live Local Act in 2023 to boost the supply of workforce housing. It has been updated four times since.
The construction wave has since cooled off in the Florida market, particularly at the higher end. And the pipeline is now thinning both nationally and in Florida.
Private capital appears to be repositioning ahead of the next construction cycle, although timing remains a guessing game.
Some predictions point to late this year. Others point to 2028. The National Association of Home Builders reported in February that construction is expected to decline further, nearing pre-pandemic levels – a possible trough.
Private equity flow
Transaction activity offers a read on equity flow for now. Sales have improved but stayed uneven, according to the National Multifamily Housing Council‘s second-quarter apartment conditions survey. Capital constraints and mixed sentiment continue shaping deal flow.
Equity financing was the clearest constraint, with the NMHC index falling to 49, below the 50 breakeven level. Equity availability shapes both sales and new development activity.
“There’s a desire to wait until there’s a clear indication that the market has found its momentum again on the rent side,” real estate economist Jay Parsons said on NMHC’s webinar.
