MIAMI-A silver lining has emerged in the troubled Miami skies. The multifamily market is the most active and desirable sector in South Florida’s commercial real estate sector, with rents increasing across the region. So says a new Multi-Housing Market Update from CBRE.

Miami-Dade’s rents have increased 3.4% over the past 12 months. In fact, average apartment rents are above the record high rents recorded in 2006-2008. CBRE predicts Broward rents will climb to record heights within the next year.

“Multihousing developers are actively developing 18,000 units in 62 projects,” Calum Weaver, co-chair of the Private Capital Group at CBRE, tells GlobeSt.com. “That’s an indication that the multihousing market is extremely strong down here. In South Florida, there are only 62 multihousing communities of 2000 or newer vintage.”

Occupancies in Miami-Dade, Broward and Palm Beach have increased to 96.5%, 95% and 94.1%, respectively. Miami-Dade boasts the fourth highest occupancy level of any MSA in the U.S. Those realities are getting the attention of developers and investors alike, as cap rates for class A product range between 4.75% to 5.75%.

“The market has definitely picked up—it’s clear by the cap rates,” Weaver says. “A limited supply of product and strong demand and that’s what’s driving the train. Class A stock is trading above replacement costs so it makes it feasible to build.”

Foreign buyers are extremely active in prestigious submarkets like Miami Beach. CBRE recently sold a 28-unit, non-rehabbed property on Miami Beach for a sub-4% cap rate to a foreign investor. But domestic private investors are also doing deals. Weaver predicts the recent volatility in the stock market will bring more private investors into the market seeking safe investment alternatives.

“On the supply side, you have to remember that a lot of multihousing properties—right about 10% of the inventory in South Florida during the last real estate wave—were converted to condos,” Weaver says. “The actual supply of units right now in terms of apartments is lower than what it previously was. People forget that.”