Miami—Most multifamily rental markets are tight these days, but the metro markets of Florida have been doing especially well, according to the most recent report on the state by Apartment Realty Advisors Florida. Throughout 2011 and the first quarter of 2012, ARA notes, Florida remained a top-performing state for multifamily properties, seeing both strong occupancy and rent growth.
For a time, the flight to rental properties from for-sale housing drove much activity in Florida’s cities. More recently, however, employment growth has returned to the state. A net of over 202,000 jobs were created in the state between April 2011 and April 2012, according to the Census Bureau, the third-largest total job growth in the U.S. during that period, and the largest growth in terms of percentage: 2.46 percent.
According to the report, “Demand resulting from the healthy recovery of jobs, along with the fundamental shift toward rentals, helped to reduce vacancies in the state’s major metro areas, leading to robust revenue growth in Florida’s apartment sector. Continuing employment growth, declining homeownership rates and an increasing 20-34 year old age cohort will drive the multifamily fundamentals throughout 2012 and into 2013.”
All parts of the state are benefitting from the trend. For example, apartment fundamentals South Florida are improving, with an average occupancy of 95.5 percent as of 1Q12. The Tampa market experienced a dramatic increase of nearly 410 basis points in occupancy between 1Q 10 and 1Q 12. Occupancy stood at 94.1 percent in 1Q 12 and is projected to continue above 94.5 percent during the next few quarters. Orlando will likewise see further occupancy increases, to well over 94 percent by the end of 2013.
Rents have followed occupancies in their upward trajectory, ARA says. In South Florida, Palm Beach County experienced rent growth of 5.2 percent, while Miami-Dade recorded rent growth of 3.8 percent and Broward recorded a 3.1 percent jump, all for the year ending with 1Q12. Rents in the Orlando MSA increased 4.2 percent between 2010 and 2011, and the area is projected to see rent growth of 5.2 percent in 2012 and 4.4 percent in 2013.
Naturally, investors have taken notice. Sales volume picked up substantially during the six months ending 1Q 2012, as interest rates remained low and investors became increasingly attracted to the strong property performance occurring in Florida’s core markets. South Florida saw the bulk of new deals in the last six months. The number of transactions (excluding fractured/bulk condo sales) in the region increased from 15 to 31 transactions between the six months ending 3Q 2011 and six months ending 1Q 2012, reports ARA.