South Florida multi-family property sales increased to over $3.6 billion in 2016, which tops the record of $3.3 billion set in 2015. Strong fundamentals prevail, and growth is expected to continue.
As the region’s population continues to rise and the price of single-family homes steadily increases, the demand for rentals is high. According to Cushman & Wakefield, “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.”
The home ownership rate in South Florida (62.1%) is one of the lowest in 30 years, and the price of home ownership has outpaced the cost of renting. Cap rates are meager, and investors are interested in the rental market, which promises high cash returns.
Due to the rising costs of land and construction, development is primarily geared towards the A+ market. Fortunately, South Florida saw income levels rise in 2016. Options in the B and C markets continue to be sparse; however, many investors are looking at value-added properties as opportunities in those markets, which have seen the strongest growth in the past year.
Sources:
Record-Breaking $3.6 Billion Multifamily Sales in 2016 in South Florida. (2017). Retrieved from https://cld.bz/bookdata/WIDjss/basic-html/page-1.html
LeClaire, Jennifer. Record-Setting Pace Marks South Florida Market. (2017, May 12). Retrieved from http://www.globest.com/sites/jenniferleclaire/2017/05/12/record-setting-pace-marks-south-florida-multifamily-market/
