Strong Fundamentals Boost South Florida Apartment Market
Increasing higher paying white-collar jobs are providing essential support to the region’s most expensive apartment markets, Berkadia says.
MIAMI—The South Florida apartment market continued to strengthen in 2019 due in part to strong renter household formation and accelerated growth of payrolls, according to Berkadia’s 2020 Forecast for South Florida. Overall, households expanded 2.1% last year. Contributing to the expansion was annual net migration in 2019 more than doubling the pace of one year prior. Attracting these new residents was a 2.1% increase in employment. A significant portion of these additions were in higher paying white-collar jobs. These positions are essential, Berkadia says, as the Tri-County metro was the most expensive apartment market in Florida and one of the most expensive metros in the Southeast.
“Developers are seeking infill areas close to central business districts,” Berkadia’s Senior Managing Director Mitch Sinberg tells GlobeSt.com. “In Miami-Dade for example, there’s still a market for urban dwellers who seek to be close by employment hubs and entertainment destinations, so the challenge will be finding pockets of land suitable for multifamily development.”
Berkadia reports that developers are showing confidence in the health of the Tri-County apartment market and widening the pipeline. Construction is scheduled to complete on nearly 16,000 market-rate units over the next four quarters, the highest number of annual deliveries this cycle. Additions will be focused in and around major employment hubs as developers target young, affluent professionals.
The largest community coming online this year is the 639-unit first tower of X Las Olas in the Fort Lauderdale submarket. The new inventory is expected to underpin vigorous leasing activity metrowide as absorption this year is forecast to be nearly 50% higher than the 10- year average. Also contributing to apartment demand will be a 1.9% forecast growth in households as nonfarm employment expands 0.7%.
“Despite deliveries exceeding absorption, the demand driven by consistent population and labor growth is expected to remain so strong that we may see continued upward pressure on rents in the Tri-County area,” Sinberg says. “South Florida is showing exceptional numbers in terms of labor growth, with Miami-Dade and Monroe exhibiting the lowest unemployment rates in Florida at just 1.8%.”