Orlando Multifamily Report – Summer 2020
The swift economic blow translated into rent contractions over the summer, with effects likely to linger.
Orlando rent evolution, click to enlarge
Orlando’s multifamily sector is at a crossroads. Following four years of strong supply, totaling almost 29,000 units—the bulk of these at the higher end of the quality spectrum—the coronavirus-induced crisis has put an end to the metro’s ongoing expansion. The pandemic triggered massive job losses, pushing some renters to seek more affordable housing. With the average rate at $1,346, rent growth was flat on a trailing three-month basis through August, after more than six months of steady contractions.
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Orlando sales volume and number of properties sold, click to enlarge
With tourism at a standstill for several months, the metro’s unemployment rate skyrocketed. In May, the rate hit 21.1 percent before slowly improving to 15.3 percent as of July, according to preliminary data. Without a doubt, the leisure and hospitality sector was the most severely impacted, losing 43.5 percent of its workforce in the 12 months ending in June. And with Orlando’s economy heavily relying on tourism, the effects of the coronavirus crisis will most likely linger. Construction was the only segment to add jobs over 12 months (3,400 positions), which offset a fraction of overall losses.
On the heels of last year’s 7,888-unit cycle high, developers added another 3,749 units in 2020 through August. Deal velocity slowed down, with only $1.3 billion in assets trading, down from $1.9 billion in the same period in 2019. Considering fundamentals and the economic climate, we expect Orlando rents to drop 4.7 percent this year.
