Availability Sparse in Miami Apartment Market
Marcus & Millichap ranks it second in the country; new residents there are likely to rent, often in luxury properties.
It has never been more difficult for residents to find a vacant apartment in Miami-Dade.
“The tremendous immigration from northern markets continues to drive occupancies and double-digit rent growth for the foreseeable future,” Matthew Lawton, executive managing director, investment sales & advisory, JLL, tells GlobeSt.com. “Quality of life, favorable tax treatment, corporate relocations and great talent pools will continue to drive the Florida economy.”
Availability was at 1.2 percent entering the second quarter, ranking lowest among all major United States markets, according to a quarterly report (2Q) from Marcus & Millichap.
Marcus & Millichap added that the “recent demand surge will likely be sustained, as single-family home prices in Miami are the most expensive in Florida, suggesting new residents are more likely to rent than to opt for homeownership.”
Paul Cohen, national Director of Sales, Crexi, tells GlobeSt.com that according to its data, multifamily transactions in Miami have seen a significant uptick in 2022.
“This aligns with what we are seeing on the ground with rapidly increasing rents and scarce supply,” Cohen said. “Crexi buyer traffic for Miami (and South Florida in general) has grown 37% in the last quarter. Miami has surpassed New York and Los Angeles as the most active market in the US on Crexi.”
Supply Wave at a Two-Decade High
It’s been more than two decades since the metro has experienced a supply wave of this size, Marcus & Millichap reported, combining that with “a pace of rent growth that leads all major U.S. metros this year.”
Job gains from companies such as Microsoft and Blackstone are boosting Class A demand, according to the report, helping the metro’s office-using sectors perform “well above” the pre-COVID-19 peak entering this year.
These high-paying jobs have developers focusing on high-end offerings in dense neighborhoods such as Downtown Miami-South Beach and Coral Gables-South Miami.
Out-of-Market Investors Buoy Market
Additionally, from Marcus & Millichap’s report, a flood of out-of-market investors have entered the market, elevating competition for available listings, creating transactions that zoomed to a two-decade high in 2021, more than double the number of trades from the previous year.
The mean cap rate compressed to 5.3 percent as the average sale price increased by more than 6 percent during the past year.
Entry costs in downtown Miami are the highest in the metro, often exceeding the $500,000 per-unit threshold.
Buyers seeking upside potential are targeting listings in lower-cost submarkets such as Little Havana, Homestead-South Dade, Hialeah-Miami Lakes and North Miami.
Class B/C assets there generally change hands at less than the market average; first-year returns can reach into the mid-6 percent range.