MIAMI—Berkadia's second quarter 2017 South Florida Multifamily Report shows stabilizing rents in the regional market as apartment deliveries reach a post-recession high. With apartment inventory growth expected to slow over the next 18 months, GlobeSt.com caught up with Charles Foschini and Mitch Sinberg, Senior Managing Directors at Berkadia, to provide some clarity into what this means.

GlobeSt.com: South Florida renters have occupied 5,986 units since mid-2016, which is almost five times the number of units absorbed in the preceding year, and occupancy still close to 95 percent. What seems to be driving this continued demand?

Sinberg: When it comes to occupancy, a reason we can attribute this high percentage is the market still playing catch up from the recession, when no new multifamily units were built. This explains why the volume of new deliveries that we're seeing hasn't had such a great effect on occupancy or rental rates. South Florida's economy also continues to do well, so we can expect demand to keep pace with new supply in the near future.

GlobeSt.com: It looks like apartment inventory will continue to grow in South Florida, albeit at a slower rate. Sixty-eight properties are underway bringing more than 18,500 units by the end of 2019. What can we take away from this?

Sinberg: The institutional apartment inventory coming from the previous real estate cycle was actually converted to condos and removed from inventory. Because of this, we've now had to build more in order to catch up with where we should have been in the beginning of the cycle.

Moreover, The Brightline—a new commuter rail that connects the downtowns of Miami, Fort Lauderdale and West Palm Beach—is expected to begin service this fall, providing an opportunity for apartment supply growth to be built adjacent mass transit.

GlobeSt.com: Where can we see transit-oriented development going in the South Florida multifamily market?

Foschini: It's really a new model for the South Florida market to embrace. There was a need for infrastructure, the right mindset and attitude for transit-oriented development to be made possible in the past.

Now, that's changed completely. We're seeing something new now, as there's an increase in the desire renters have where they can get to the greater South Florida area without a car. With so much demand, avant-garde developers are taking advantage of how to provide these renters with what they're looking for.

GlobeSt.com: Where can we see transit-oriented development going in the South Florida multifamily market?

Instant Insights /

Berkadia's Big Multifamily Takeaway

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