By Gay Cororaton, MIAMI REALTORS Chief Economist
Miami-Dade is less troubled by excess supply woes in multifamily buildings with over 50 units.[1] Nationally in 2023, there were about a quarter of a million net move-ins (absorption) compared to the deliveries of about half a million units, or 1.5% of total inventory in multifamily buildings with more than fifty units. In comparison, Miami-Dade County saw a smaller excess supply of 1,553 units, or just 1.3% of rental inventory.
Markets with large excess supply saw their median asking rents fall in 2023 Q4. Austin’s excess supply (deliveries less net absorption) is estimated at about 12,400 units, or 4.5% of inventory, pulling down the median multifamily asking rent on buildings with over 50 units by 4.6% year-over-year as of 2023 Q4. Raleigh’s excess supply of nearly 5,000 units, or 4.1% of inventory, pulled back the median asking rent by 1% year-over-year. In Phoenix, the excess supply was about 7,500 units, or 2.2% of inventory, with the median asking rent falling by 1.3%. In Atlanta, the excess supply of about 15,000 units, or 3.1% of inventory, dragged the median asking rent lower by 1.5% year-over-year. Orlando’s excess supply of about 7,000 units, or 3.4% of inventory, pulled down the median asking rent by 2.2%.
In the Palm Beach market area, the median asking rent rose 2.7% even as the area’s excess supply equivalent to 1.8% of its inventory was higher than nationally. In the Fort Lauderdale market area, the median asking rent increased a modest 0.5%, with excess supply, at 2.9% of inventory, also higher than nationally.
Miami Metro Area’s In-Place Asking Rents Outpaced the National Rate as of December 2023
Amid sustained migration and strong job growth, the Miami Metro’s in-place rent growth as of December 2023 of 10.1% outpaced the overall increase nationally of 6.5%. The metro area’s in-place rent growth outpaced markets like Chicago (6.5%), Boston (8.0%), New York (5%), Dallas (5.2%), and San Francisco (3.3%), according to the Consumer Price Index-Rent of Primary Residence Index, which is released every two months for the area.
In-place rent growth has been slowing to a healthier pace after hitting a high of 19% in April 2023. Rent growth has slowed as the area’s rental vacancy rate rose to 10.1% in 2023 Q3 (5.6% in 2022 Q3). Nationally, the rental vacancy rate stood at 6.6% in 2023 Q3 (6.0% in 2022 Q3).
While rent growth has been slowing, the pace is still highly elevated compared to the pre-pandemic pace (1.4% in February 2020).
Rents on multifamily renewal leases rose 9.8% in the Miami Metro area, the second highest rent growth among thirty markets.[2] The renewal rent outpaces the national renewal rent growth (5.2%) and those of markets like Chicago (6.0%), Boston (6.2%), New York City (3.1%), Washington DC (2.7%), Dallas (4.0%), Atlanta (4.7%), Los Angeles (4.5%), and San Francisco (2.1%).
Southeast Florida Rental Demand is Underpinned by Strong Job Growth and Sustained Migration
Multifamily asking rents on multifamily buildings with over 50 units is likely to continue to outpace the national rate in 2024 due to the area’s smaller excess supply and strong economic fundamentals.
Strong employment growth and sustained migration will tend to bolster rent growth at a pace higher than the national rate. Total employment rose more robustly as of the end of 2023 than nationally (2.1%) in Broward (3.9%), St. Lucie (3.2%), Miami-Dade (3.1%), and Martin (2.8%), and about at par the national rate in Palm Beach (2.0%).
In 2023, job creation outpaced the number of authorized housing permits: Miami-Dade (3.2 jobs/authorized housing unit), Broward (13 jobs/authorized housing unit), Palm Beach (2.7 jobs/authorized housing unit). A ratio of two is ideal under the assumption that it takes two earners to pay for housing costs affordably.
The state of Florida continues to attract people from other states and abroad. In 2023, 153,347 driver licenses were exchanged for a Florida license in the counties of Miami-Dade, Broward, Palm Beach, and Martin, up 8.3% from the level in 2022 (141,621), with the increase driven by a 30.4% increase in foreign driver license exchanges.[3] U-Haul’s 2023 report ranked Florida second in terms of one-way U-Haul rentals for the 3rd year in a row.[4]
Download the December 2023 Southeast Florida Residential Rental Market Report for more data on multifamily and single-family rental market trends.
[1] Cushman and Wakefield, U.S. Multifamily MarketBeat | United States | Cushman & Wakefield (cushmanwakefield.com)
[2] Yardi Matrix, National Multifamily Market Report – December 2023 – Yardi Matrix Blog
[3] Southeast Florida Sees Sustained Migration in 2023 with Driver License Exchanges up 8% – MIAMI REALTORS®
[4] U-Haul report reveals Florida was second most popular state moved to in 2023 – gulflive.com
