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MIAMI-Vacancy in South Florida’s apartment market is predicted to rise moderately next year, following more significant increases this year, according to Encino, CA-based Marcus & Millichap Real Estate Investment Brokerage Co.’s newly released Apartment Research Report for the South Florida market.

The report also shows that consistent employment growth and population have helped maintain strong tenant demand, and capital will continue to be drawn into the area’s multifamily market. In addition, area rents should continue to rise. “South Florida’s multifamily investment marketplace has shown vibrancy in 2003, with median prices up throughout the region,” Gene A. Berman, senior vice president and regional manager of the company’s Fort Lauderdale, FL, office, states in the report. “The market forecast calls for vacancy to peak in 2004 and wane thereafter, and rent growth to persist, indicating an attractive investment market that will fuel asset appreciation.”

The regional vacancy rate is expected to increase to approximately 6.9% at the end of this year from 6.1% last year; an extra 40-basis-point hike to 7.3% is predicted for next year. All three metropolitan service areas in the South Florida region reported increasing vacancy rates this year. Fort Lauderdale rose from 5.3% to 6.2%, while Miami grew from 5.5% to 6.4%, and West Palm Beach went from 8.7% to 9.2%.

Meanwhile, South Florida asking rents continue to increase as well. The average should grow 2.8% from about $958 a month this year to $979 a month next year. This year, the strongest growth was in Fort Lauderdale, where rents should end up increasing 3.6%. Effective rents rose 1.8%. In Miami, asking rents increased 3.4%, and effective rents grew 2.5%.

Planned completions next year are lower, at 6,000 units, down from about 8,900 units this year, according to the report. This year, development was even among the three cities, but construction is expected to decrease more rapidly in Fort Lauderdale next year, with most of the new units in Miami or West Palm Beach. Fort Lauderdale is having multifamily development, but condominiums will dominate 2004 construction.

Sales volume this year in Fort Lauderdale and West Palm Beach was up from last year, while it was down in Miami, where many new multifamily projects are being developed. Overall, the median price of properties sold is higher so far this year in Miami and Fort Lauderdale, but West Palm Beach’s median price to date is flat, compared with last year.

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