Signs of Slowing: South Florida Apartment Rent Growth Cools in Q3 Amid Construction Boom
“Signs of slowing”: South Florida apartment rent growth cools in third quarter amid construction boomInvestment sales so far this year hit a low last seen in 2014, a report shows
Investment sales so far this year hit a low last seen in 2014, a report shows
South Florida’s apartment rent growth slowed in the third quarter, amid a construction boom that led to higher vacancies, a recently released report shows.
Developers completed 13,388 apartments in South Florida in the first three quarters of the year, more than the 13,210 units finished in all of last year, according to data from brokerage Lee & Associates. The new supply tempered the market, slowing rent growth, while high borrowing costs thwarted the investment sales frenzy of 2021 and early last year.
“There are signs of slowing across a lot of the major metrics,” said Todd Cohen, principal of Lee & Associates South Florida. “But slowing from what? This market was beyond on fire. A cool off is necessary for the health of our market in general.”
Net absorption of 7,780 apartments through the third quarter lagged behind net deliveries of 13,388 units, according to Lee’s data. As a result, occupancy declined. The vacancy rate in the third quarter rose to 5.4 percent from 4.6 percent in the third quarter of last year.
While the Federal Reserve’s interest rate hikes since last year have thwarted some planned multifamily projects, developers with financing in hand are continuing to build. In Miami-Dade County, 16,260 units are expected to be completed by the end of 2024, with 4,364 of those finished this year, according to a Colliers data issued early last month.
Generally, a building boom coupled with a lagging absorption could spell vacancies and reduced rents. But faced with high mortgage rates and a lack of housing inventory, would-be homebuyers are expected to drive rental demand, Cohen said. Florida’s business-friendly climate and lack of a state income tax will maintain the tri-county region’s reputation as a magnet for new residents, he said.
“While I don’t think anything can match what was happening from 2021 to early 2022 in terms of torrid pace” of the market,” he said, “it still would be strong, and I think it still will be.”
Digging in on Rents
South Florida’s average monthly asking rent was $2,121 in the third quarter, Lee’s report shows. That’s a hair over the $2,126 rent in the previous quarter and a 1 percent increase from the $2,099 rent in the third quarter of last year.
About Lee & Associates South Florida
Lee & Associates South Florida is a fully vertical commercial real estate brokerage firm focused on industrial, office, retail, multifamily, investment and land sectors. Our dedicated team of professionals is led by Matthew Rotolante, CCIM, SIOR a 4th generation South Florida native in a family that has owned and operated commercial property here since 1928. Lee & Associates is the largest agent owned brokerage in the nation with Senior Agent’s ability to earn profit share resulting in the highest splits while still receiving full resources, support and leads from our national network. Our collaborative and cheerful culture allows for open communications throughout the company, fostering the sharing of information and best practices to better enable client decision making. The Lee & Associates’ robust national network that sold and leased over $32 Billion in 2022 offers clients a cross-market platform of expertise and deal opportunities across all asset specialties and representation roles. For the latest news from Lee & Associates South Florida, visit leesouthflorida.com or follow us on Facebook, LinkedIn, Twitter and Instagram, our company local news.
About Lee & Associates
Lee & Associates is a commercial real estate brokerage sales, leasing and management firm. Established in 1979, Lee & Associates has grown its service platform to include over 75 offices in the United States and Canada. Lee & Associates is the largest agent owned commercial real estate brokerage where agents get the greatest return for their efforts and hence are more committed and better enabled to provide superior results for their customers. For the latest news from Lee & Associates, visit lee-associates.com or follow us on Facebook, LinkedIn, Twitter and Link, our company blog.