The semi-annual report, authored by Executive Managing Director Calum Weaver of Cushman & Wakefield’s South Florida Multifamily Team, details the state of the multifamily market in the three counties comprising South Florida — Miami-Dade, Broward and Palm Beach.
The report finds an eighth consecutive year of multifamily expansion in South Florida fueled by tremendous demand from both investors and tenants. Important highlights of the report include:
- To date in 2017, there have been 198 multifamily sales in South Florida valued at nearly $3.6 billion. The annual record of $5.6 billion was set in 2016.
- Approximately half of 2017 multifamily sales in South Florida have involved Class A product. In the past two years, 85% of multifamily sales have exceeded $20 million, a marked increase from the historical average of 30%. This has lead to record per-unit and per-square-foot transaction values.
- With the home ownership rate in South Florida at a 30-year low, demand for multifamily housing in South Florida continues to outpace supply. Weaver anticipates the need for nearly 57,000 new multifamily units in the next five years. Currently, there are only 18,518 units under construction.
- New rental supply is quickly being absorbed into the market. Almost all new multifamily product is Class A+ due to elevated construction and land costs.
- South Florida multifamily rental rates achieved record levels for the seventh consecutive year. Rents have grown by more than 20 percent across all South Florida markets in the past five years. Further growth is anticipated as Class A+ product comes online; value add investors push rents in former Class B/C and properties; and demand obviates the implementation of concessions.
- South Florida income levels continue to improve, remaining in line with rent growth. From June 2016 to June 2017, South Florida saw the largest income growth (4%) in the U.S.
- Despite a dwindling supply of available properties, South Florida multifamily investment opportunities still exist in the value add and affordable housing markets. Value-add opportunities remain in high demand as investors look to target underserved, middle-market tenants.
- While South Florida remains a land-constrained market, multifamily development opportunities remain in suburban markets; along the Brightline and Tri-Rail routes; and for senior communities near affluent single-family markets.
- Vacancy rates in some markets jumped slightly upon the introduction of new product. Weaver anticipates those markets will stabilize in short order with the absorption of new units.
- Cap rates remain flat with no notable shift anticipated for 2018. Any potential interest rate increases will likely be offset by spread compression, given historical precedent.
- The multifamily debt markets remain robust with a plentiful options for potential investors.
“South Florida multifamily sales continue at feverish levels,” said Weaver. “As new supply gets completed and stabilized, developers are selling the newly completed inventory at record pricing levels. An increasing population, demographic shifts and higher single-family home pricing are contributing towards strong rental demand. Despite all the new multifamily construction, the demand for rentals continues to outpace supply.”
“Simply stated, median home values are increasing at an even greater rate than rents, making ownership even tougher and rental demand even stronger,” explained Weaver. “The median home value in Miami-Dade is now over $330,000, meaning a renter who could afford a 10% down payment on a median-priced home in Miami-Dade would have a mortgage around $2,000, $700 more than the average Miami-Dade rental.”
About the South Florida Institutional Multifamily Team
Cushman & Wakefield Multifamily in South Florida focuses exclusively on meeting the needs of institutional and private owners of multifamily properties and land development throughout South Florida including Miami, Fort Lauderdale, Palm Beach, Naples, Fort Meyers, Treasure Coast and the Keys. Our team is comprised of seasoned professionals with over 100 years of combined Real Estate and Investment Sales experience with over $20 billion in multifamily transactions. We are consistently ranked as the No. 1 Multifamily Team in South Florida. Our proven marketing process involves a highly structured, controlled and competitive offering, specifically tailored to the needs of multifamily owners and the local market. We have consistently produced maximum pricing by attracting and engaging the most aggressive investors for our property listings.
About Cushman & Wakefield
Cushman & Wakefield is a leading global real estate services firm with 45,000 employees in more than 70 countries helping occupiers and investors optimize the value of their real estate. Cushman & Wakefield is among the largest commercial real estate services firms with revenue of $6 billion across core services of agency leasing, asset services, capital markets, facility services (C&W Services), global occupier services, investment & asset management (DTZ Investors), project & development services, tenant representation, and valuation & advisory. To learn more, visit www.cushmanwakefield.com