Apartment Vacancies on the Rise in South Florida, Report Says
Apartment Vacancies on the Rise in South Florida, Report Says
There were more empty South Florida apartment units in the first quarter of 2023 than the previous four quarters, a recent report stated.
What is the vacancy rate in the Miami, Fort Lauderdale and West Palm Beach metro?
- According to a multifamily (apartment) market report from the brokerage Lee & Associates, South Florida had a vacancy rate of 4.8% in Q1 2023, up from the 3.5% vacancy rate for Q1 2022. It's also higher than the vacancy rate for Q2 2022 (4.1%), Q3 2022 (4.6%), and Q4 2022 (4.5%).
The rents recorded in the report only include multifamily apartment buildings and not rented condos or single-family homes. As of Q1 2023, there were 536,673 units in South Florida, a 2.95% increase in apartment inventory from last year.
Andy Hidalgo, a senior vice president of Lee & Associates' South Florida office and the author of the report, said that while the number of apartments leased "took a slight hit," South Florida's multifamily apartment market is still stronger than most markets in the U.S.
"Rents in South Florida will continue to be up from pre-Covid levels, as this market is still a top choice for investors, notwithstanding the current economic climate, due to an unprecedented influx of people moving in from out of state," Hidalgo said.
What is the asking rent for apartments in the Miami, Fort Lauderdale and West Palm Beach metro?
- As of Q1 2023 the average asking rent for a multifamily apartment was $2,097 a month, a 2.84% increase from last year. However, that is far below the 20 to 30% annual rent increases South Florida experienced in 2021 and 2022 as remote working professionals and high-income households started moving to the region in droves.
Real estate insiders anticipated a slowdown in apartment rent hikes last year, though there was a disagreement over how much.
Hidalgo said rising interest rates, insurance rates, and building costs are making it too costly for most developers to build.
"The real estate economics in South Florida is overheated right now and doesn't make sense for a developer's bottom line," Hidalgo said. "When interest rates on construction loans are at 8%, double the 4% from where it once was, the underwriting will not make any sense. The cost to build is higher than what developers would get for rent."
But Hidalgo said "savvy developers" who obtained financing before interest rates increased will continue to build and be in a position to secure development rights from local governments. They "will move forward with their entitlement processes, and get all the approvals in place to capitalize when the capital markets start to ease."
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.
