Miami-Dade’s Apartment Market Continues to Forge Ahead in 2015
- Mar 02, 2015
Yet another year of considerable growth awaits the Miami-Dade County apartment market, according to Marcus & Millichap’s forecast for 2015. Analysts expect the area to climb another four places following last year’s impressive eight-place jump in the firm’s National Apartment Index, landing on the 9th spot and leading the way in the state of Florida.
Owners can expect a series of strong results this year due to growing rents and a high overall occupancy rate. Despite a slight increase in vacancy, the boost in demand fueled by the strengthening employment marketin the area is expected to rapidly fill in the vast amount of new space that is coming online. Although seasonal vacancy fluctuations are inevitable, specialists predict that the Miami apartment market’s fundamental mainstays will guarantee solid performance in the long run. It is estimated that 35,000 jobs will be created, marking a 3.2 percent increase, while as many as 4,800 new units will be delivered this year, nearly 40 percent more than in 2014. The difference in the growth of supply and demand translates into a 30-basis point increase in vacancy to a modest 3.5 percent. A large number of rentals are being built in the Coral Gables/South Miami and West Miami/Doral submarkets.
As a result of the low vacancy rate, landlords are expected to raise the average monthly rent by 4.3 percent to $1,297 over this year, which is 1.3 percent more than the increase registered in 2014. Some other factors also contribute to the rent growth—such as the debt market and the operating conditions, which facilitate value-add investments and ultimately drive the rents up. Cap rates stay relatively steady despite the fact that some equity will flee out of the county in pursuit of higher yields. The average capitalization rate should remain in the mid- to high-5-percent range thanks to a highly diversified pool of potential investors that seek safety in a relatively safe gateway market like Miami.
Chart courtesy of Marcus & Millichap