Strong Demand Fuels Apartment Rent Growth in South Florida
Renters in the region absorbed approximately 9,155 units so far this year, which was roughly three times the number of units absorbed during the first half of 2017 and which far outpaced the 6,336 apartment deliveries year-to-date.
MIAMI—The South Florida multifamily market is firing all on cylinders with apartment demand exceeding deliveries for the first time since 2015, according to a report released on Wednesday by Berkadia.
In the brokerage firm’s second quarter report on the multifamily market in South Florida, Berkadia attributes a strong economy and higher single-family home prices as contributing factors to the strong results in the tri-county multifamily market.
Renters in the region absorbed approximately 9,155 units so far this year, which was roughly three times the number of units absorbed during the first half of 2017 and which far outpaced the 6,336 apartment deliveries year-to-date. Berkadia states the results so far in 2018 more or less reverses the trend in 2016 and 2017 in the South Florida multifamily sector where apartment inventory exploded while demand remained somewhat tempered.
The strong demand in 2018 has fueled increases in rental and occupancy rates throughout the region. The tri-county occupancy rose 20 basis points year-over-year to 95.2%. After increasing 1.6% since mid-2016, the average effective rent in the region rose 2.4% since the end of the second quarter last year to reach $1,623 by June 2018, the Berkadia report stated.
Miami saw the largest number of new apartment deliveries in the tri-county region so far this year at 2,318 units. The occupancy rate in Miami fell from 96.3% at the end of the second quarter of 2017 to 95.6% at mid-year 2018. Rent growth has slowed in the city as well, falling from a 2.1% rate last year to 1.9% this year. The average rent in Miami rose from $1,931 in mid-year 2017 to $1,968 at the end of June 2018.
Occupancy rates in Miami Lakes and Miami-Dade also fell in the second quarter of this year. Miami Lakes’ occupancy rate fell from 98.3% in the second quarter of 2017 to 97%, while Miami-Dade’s rate plummeted from 95.5% to 85.9% during the same period.
Another highlight from the report was that annual leasing activity was the highest in the Airport West submarket since mid-2017.
Berkadia states in its report that the building boom in South Florida provided an oversized economic boost. The construction industry expanded 10.5% annually through May 2018 as employers created 13,500 jobs to lead all economic sectors in the South Florida region.
Part of the new construction jobs gain can be attributed to the work performed on the $1.5-billion expansion of the Seminole Hard Rock Hotel and Casino. The project is expected to create a total of 9,936 jobs through the summer of 2019 and will lead to 2,909 new permanent jobs once the casino opens its doors.
The South Florida unemployment rate fell from 4.4% at mid-year 2017 to 4.1% at the end of the second quarter of 2018. Other employment highlights culled from the Berkadia report include a 9.2% annual rise in the manufacturing sector, which added 8,200 positions in the past year. Overall total non-farm employment grew by 0.8% year-over-year with 21,800 new jobs added since May 2017.
Not all industries were strong in the past year as the education and health care sectors shed 2,100 jobs while the information, government and leisure and hospitality industries lost a combined 3,000 positions since 2017.