Investor Demand for South Florida Multifamily Brisk Again in ’17
This year there have been 198 multifamily sales in the area valued at a total of nearly $3.6 billion, according to a report by Cushman & Wakefield.
By D.C. Stribling
Demand among investors for multifamily properties in South Florida has driven prices to new highs once again, according to the 2017 South Florida Multifamily Recap, a semi-annual report published by Cushman & Wakefield. In fact, 2017 represents the eighth consecutive year of multifamily expansion in South Florida, fueled by tremendous demand from both investors and residents.
To date this year, there have been 198 multifamily sales in South Florida valued at a total of nearly $3.6 billion, according to the report, which was released in the first week of December. The annual record of $5.6 billion was set in 2016.
About half of 2017’s multifamily sales in South Florida involved Class A product. In the past two years, 85 percent of multifamily sales have exceeded $20 million per property, a marked increase from the historical average of 30 percent. This has led to record per-unit and per-square-foot transaction values, Cushman & Wakefield reported.
Multifamily demand
With the home ownership rate in South Florida now at a 30-year low, demand for multifamily housing in South Florida continues to outpace supply. The report anticipates the need for nearly 57,000 new multifamily units in the next five years. Currently, there are only 18,518 units under construction.
Moreover, new rental supply is quickly being absorbed, Cushman & Wakefield noted. That’s the case even though almost all new multifamily product is Class A+ due to elevated construction and land costs.
The report also found that South Florida multifamily rental rates achieved record levels for the seventh consecutive year in 2017. 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; as value-add investors push rents in former Class B/C and properties; and as demand obviates the implementation of concessions.
Despite a dwindling supply of available properties, South Florida multifamily investment opportunities still exist in the value-add and affordable housing sectors. Value-add opportunities remain in high demand as investors look to target underserved, middle-market tenants, the report said.
The report was authored by executive managing director Calum Weaver of Cushman & Wakefield’s South Florida Multifamily Team. It covers the multifamily market in the three counties comprising South Florida: Miami-Dade, Broward and Palm Beach.
