MIAMI—It’s officially a record. South Florida’s multifamily market posted more sales than it has in eight years during the first half of 2014.
That’s according to a report from the CBRE South Florida Multifamily Investment Properties team. The report tracks sales in the $1 million to $20 million range and reveals 172 multifamily sales totaling more than $515 million. That qualifies strongest sales activity for the first half of a year since 2006.
“The relatively low cost basis that we experienced in 2010 and 2011 is now a thing of the past,” says Calum Weaver, CBRE first vice president. “However, interest in multifamily properties is unabated. Investors recognize the strong market fundamentals for apartment buildings which has contributed to the uptick in sale activity.”
In 2013, there were 9,558 net units absorbed in South Florida, according to CBRE’s report. In the previous four years, the region averaged around 4,500 net absorbed multifamily units each year.
The positive net absorption of multifamily units has helped drive down vacancies to record lows and rents to record highs. In 2014, CBRE anticipates over 14,000 units will be completed in the region. That’s forecasted to be greater than the forecasted net absorption of 8,640 multifamily units.
“Above-average population growth in South Florida is driving the demand for multifamily product,” says Ken Krasnow, CBRE South Florida managing director. “According to the Florida Bureau of Economic and Business Research, South Florida’s population is expected to increase by 2.4 million people, or 29%, between 2013 and 2040.”
Over half of CBRE multifamily investment properties transactions in South Florida over the last year involved foreign buyers, and the firm reports foreign investors, who are more prevalent than at any previous time in South Florida, are increasingly willing to invest in older product with upside potential. Finally, the report predicts cap rates will remain in line with current levels although they may increase with any sudden uptick in interest rates.