A photo illustration of the Watermarc at Biscayne Bay in Edgewater (left), Motif in Fort Lauderdale’s Flagler Village (middle), and Allure at Abacoa in Jupiter (right) (Google Maps/Watermarc at Biscayne Bay, MotifFlagler.com, Abacoa.com/Allure at Abacoa, Getty Images)
Investors spent $5 billion on South Florida multifamily properties in the first half of the year, the second-highest total on record, according to Cushman & Wakefield
It could be secure in that spot for some time: Demand in the area’s rental market is showing signs of slowing, despite continued rent growth in Miami-Dade, Broward and Palm Beach counties. Cushman’s mid-year South Florida market update shows that the vacancy rate plateaued in Miami-Dade compared to the same period last year, and was higher in both Broward and Palm Beach.
This year’s $5 billion in sales trails only the second-half of last year, when investors shelled out $5.7 billion for multifamily properties. South Florida saw a record $11.4 billion in multifamily sales last year altogether, more than double the previous high of $5.5 billion set in 2016.
Multifamily investors continued to pull the trigger, despite rising interest rates and slowing demand, as rents continued to rise amid an ongoing influx of new residents to the region, the report states. On a per-unit basis, investors paid record prices in all three counties. In Miami-Dade, multifamily assets sold for an average of $345,000 per unit. In Broward, it was $300,000 per apartment. In Palm Beach, $379,000.
In June, Aimco spinoff Air Communities paid $211 million, or a whopping $713,000 per unit for the 296-unit Watermarc at Biscayne Bay in Miami’s Edgewater neighborhood.
Weeks earlier, a joint venture between Bainbridge Companies and TPG Real Estate Partners acquired the Allure at Abacoa, a 304-unit rental community in Jupiter, for $161.1 million or $530,000 per apartment.
And in March, California-based property management company Thomas Tomanek & Associates paid $195 million, or $506,000 per unit, for Motif, a newly built complex with 385 apartments in Fort Lauderdale’s Flagler Village.
In Miami-Dade, the average monthly rent rose 7.5 percent year over year to $2,186, the Cushman report states. In Broward, the average monthly rent hit $2,210, a 5.3 percent jump, while in Palm Beach, renters paid an average of $2,326 a month, up 0.3 percent from the same period last year.
In the most expensive submarkets, including Aventura, Coral Gables, Fort Lauderdale and Boca Raton, monthly rents average more than $2,500, according to the report.
While vacancy rates remain in the low single-digits, demand is not as high as last year, according to Cushman. Miami-Dade’s 3 percent vacancy rate remained unchanged. In Broward, multifamily vacancies rose from 3.5 percent to 4.4 percent year-over-year. In Palm Beach, the vacancy rate jumped from 4.5 percent to 6.4 percent.
Absorption is also slowing, declining to 2,986 units in the first six months of the year, compared to 5,473 during the same period last year. Cushman predicts a “marginal increase” in vacancies by the end of the year as absorption will likely fall below the 10,743 units scheduled for delivery.
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