By Gay Cororaton, MIAMI REALTORS Chief Economist
Miami-Dade County is undergoing intense construction activity of apartment rentals at a level that is poised to outpace the current level of demand. With supply outpacing demand, renters could see a lot of leasing incentives.
For property managers, leaseup periods could get longer than six months and property managers will need to develop a strong branding and maximize exposure of the property more intensively across digital marketplaces (e.g. RentalBeast, ApartmentList.com) and in-person showings. Meanwhile, renters looking for new and highly amenitized apartments will have a lot of options. With intense competition, renters could see a lot of leasing incentives such as free first-month rent, moving assistance, reduced fees on amenities, and even gift cards to local businesses.
In Miami-Dade, 24,315 units are under construction as of 2024 Q2, equivalent to 19% of the current inventory[1] and equivalent to 4 years of the annualized net absorption of 5,956 units in the first half of 2024. Another 10,682 units on an annualized level were permitted in the first half of 2024[2], which is twice the pace of annualized absorption, indicating that supply will continue to outpace demand for the next five to six years.
In the Fort Lauderdale market area, 10,417 units are under construction as of 2024 Q2, equivalent to 9.8% of the current inventory and equivalent to 2.7 years of the level of annualized net absorption of 3,804 units in the first half of 2024. Another 1,774 units on an annualized level were permitted in the first half of 2024, which is below the level of annualized absorption indicating a tightening of supply sometime in 2028.
In Palm Beach, 4,616 units are under construction as of 2024 Q2, equivalent to 6.7% of the current inventory and equivalent to 1.8 years years of the annualized level of net absorption of 2,506 units in the first half of 2024. Another 1,418 units were permitted on an annualized basis in the first half of 2024, which is below the level of annualized absorption indicating a tightening of supply sometime in 2027.
Multifamily investment acquisitions fell in the first half but likely pick up as interest rates fall
Amid declining rents and high cost of financing, multifamily acquistions fell in the first half of 2024 in Miami-Dade County, according to MIAMI’s analysis of county records. However, the outlook for multifamily acquisitions is positive as interest rates continue to decline, with a high likelihood the Federal Reserve Board will start to cut the federal funds rate in September as the economy continues to weaken, with the unemployment rising to 4.3% in July 2024.
Acquisitions of Class B/C apartments in areas where property values offer the prospect of a high cap rate will be target areas, such as Hialeah, North Miami, and Homestead where the acquisition cost during the first half of 2024 was typically below $200,000 per unit.[3]
Download the July 2024 Southeast Florida Residential Rental Market Report
[1] U.S. Multifamily MarketBeat | United States | Cushman & Wakefield (cushmanwakefield.com)
[2] MIAMI Realtors® analysis of US Census Bureau permits
[3] Miami-Dade Office and Retail Properties are Top Asset Classes for Investors in the First Half of 2024 – MIAMI REALTORS®
