By Gay Cororaton, MIAMI REALTORS Chief Economist
Due to Southeast Florida’s strong economy and its allure to retirees and movers from more expensive states like New York, California, and New Jersey, the area has experienced surge in construction activity. Over the past three years from 2021-2023, a total of 89,007 housing units were permitted for construction in the counties of Miami-Dade, Broward, Palm Beach, Martin, and St. Lucie, according to MIAMI’s analysis of US Census Bureau’s housing permits data.
However, employment has grown faster. From 2021-2023, the total employment created was 453,740 (includes payroll and self-employed). A ratio of 2 new jobs per unit authorized is ideal but in Southeast Florida, the overall ratio over the past three years has been over this threshold: Miami-Dade County (4.9), Broward (14.9), Palm Beach (5.1), and Martin (2.9). Nationally, the ratio was 2.7.
The new housing units to be delivered in 2024 will add to the much-needed supply of housing. According to third party data[1], the units under construction in multifamily buildings with over 50 units adds 22.6% to the current stock in the Miami sub-metro area; in the Fort Lauderdale sub-metro area, 10.1%; in Palm the Beach sub-metro area, 9.2%
In multifamily buildings with over 50 units, the new construction will relieve the tight vacancy rate and upward rent pressure in Southeast Florida where asking rents outpaced the nation at 1.6% nationally, asking rents rising 2.4% in the Miami sub-metro and 2.7% in the Palm Beach sub-metro.
At the current levels of absorption, the units under construction, if delivered over a 3-year time, will add 1 percentage point to 3 percentage points to the current vacancy rates in multifamily buildings with 50 or more units, bringing Southeast Florida’s vacancy rates in line with national average.
However, the strong job growth in Southeast Florida will absorb much of the units under construction and will also replenish old stock.
Rent growth is likely to moderate in 2024 at below 2% as more supply hits the market and as lower mortgage rates draw housing demand back to the for-sale market. The units under construction could also put downward pressure on older apartments as landlords seek to retain existing tenants who may want to take advantage of the lease-up rates in newer apartments or move to newer apartments.
[1] Cushman and Wakefield. U.S. Multifamily MarketBeat | United States | Cushman & Wakefield (cushmanwakefield.com)
