Demand for rental apartments is increasing in South Florida despite the opening of more than 9,000 new units in 2016, according to a first quarter market update from Cushman & Wakefield’s Multifamily Investment South Florida Team – a dynamic that continues to draw investor interest.
Record apartment sales in the region were recorded for the second consecutive year in 2016, the report shows, with the sale of 278 properties valued at an estimated $3.6 billion, and “in contrast to other real estate assets, there is no indication that the current cycle in multifamily has reached its peak in volume.
“We are now entering the eighth year of multifamily expansion in South Florida,” Cushman & Wakefield predicts. “Fundamentals remain strong and growth will continue, albeit not at the feverish levels witnessed in previous years.”
The high demand for rentals is upheld by a number of factors.
High on that list is population growth. The company’s analysts estimate that over the next five years South Florida’s population will grow by 7.5%, or 503,260 new arrivals – a significant rise over the 333,000 arriving over the previous five. While 30,093 new apartment units hit the market in the past five years – one unit for every 11 new residents – using the same ratio, Cushman & Wakefield projects a need over the next five years for 45,000 new rentals to keep pace.
“There are currently 17,652 units under construction,” the company reports, but due to higher construction and land costs, that new supply is almost exclusively Class A+ product. Affordable Class B and C supply, the team notes, remains “drastically underserved.”
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