MULTIFAMILY MARKET UPDATE
RECORD-BREAKING $3.6 BILLION MULTIFAMILY SALES
IN 2016 IN SOUTH FLORIDA.
For the second consecutive year, South Florida witnessed a record amount of
multifamily sales totaling 278 property sales with approximately $3.6 billion in
value. We are now entering the eighth year of multifamily expansion in South
Florida. Fundamentals remain strong and growth will continue albeit not at
the feverish levels witnessed in previous years.
RENTAL DEMAND
New supply is easily observed by viewing the number of cranes and
construction. New rental demand is more subtle and not readily quantified
by driving or walking a submarket. Despite all the new construction, the
demand for rentals continues to outpace supply. In the past five years South
Florida’s population increased by 333,000. During the same period, 30,093
new apartment units were built. This means one unit has been built for every
11 net new residents. Over the next five years, South Florida is expected
to see a positive net migration of 7.5% or 503,260 people. Using the same
ratio, the region would need over 45,000 new rentals to keep pace with the
population growth for the next five years. There are currently 17,652 units
under construction.
Another way to consider demand is look at household formation - the number
of new households created each year. Household formations in South Florida
are expected to increase to over 50,000 each year in the next five years.
Let’s conservatively assume 40,000 new households per year and 60% enter
homeownership and 40% as renters (consistent with current homeownership
rates) that represents 16,000 new renters per year in South Florida.
The homeownership rate in South Florida is 62.1%, near a 30-year low. In
the past five years, median single-family home prices have increased 83%,
62%, and 61% in Miami-Dade, Broward, and Palm Beach Counties respectively.
Simply stated, median home values are increasing at an even greater rate
than rents, making ownership even tougher and rental demand even stronger.
The median home value in Miami-Dade is now over $330,000, meaning a
renter who could afford a 10% down payment on a median-priced home in
Miami-Dade would have a mortgage around $2,000 — $700 more than the
average Miami-Dade rental.
RENTAL SUPPLY
In the past four years 33,400 apartment units were built in South Florida.
There are currently 17,652 units under construction. Hence, we are more
65% into the development cycle and the cloud of uncertainty from
increased supply has not adversely effected the market thus far. The
reality is the perceived unknown effects of new supply are largely known
already - which is minimal and needed based on rental demand. Due to
higher construction and land costs, new supply is almost exclusively geared
towards Class A+ product. Any short-term increase in vacancies and/or
concessions will be limited to higher end product in specific submarkets
that experience several new building completions in quick succession.
Affordable or Class B and C supply remains drastically underserved.
Q1 2017 | Recap
FOR MORE INFORMATION, CONTACT :
CALUM WEAVER
Executive Managing Director
+1 954 377 0517
direct
+1 786 443 3105
mobile
www.
cushwakesouthfl.com/multifamily
#1
IN APARTMENT
SALES IN
SOUTH FLORIDA
The Cushman & Wakefield
MULTIFAMILY
INVESTMENT
SOUTH FLORIDA TEAM
The
MARKET LEADER
in the
Sale, Marketing & Financing
of
multifamily properties and
land development
in
SOUTH
FLORIDA
.
A trusted advisor, with over
$20 BILLION
in apartment
sales in South Florida.
SOUTH FLORIDA
cushwakesouthfl.com/multifamily1