With healthy employment growth continuing, Berkadia predicts this year’s apartment market in South Florida will have the most deliveries in more than two decades.
Their 2019 South Florida Multifamily Market Outlook said construction was scheduled to be complete on nearly 12,000 units by year-end, up more than 18 percent from deliveries in 2018.
“Apartment leasing is expected to remain healthy too as employment growth – particularly in the professional and health sectors – is expected to outperform the national average in 2019,” the report found.
“South Florida’s apartment fundamentals continue to be exceptional thanks to sustained job and population growth combined with a trend away from homeownership,” said Charles Foschini, Senior Managing Director and Berkadia Florida Co-Leader. “There are an increasing number of ’lifestyle renters’ – people who could buy but want to live in a more dynamic, amenity-rich setting. Apartment owner/operators have been very creative in catering to that segment of the market.”
Added Mitch Sinberg, Senior Managing Director and Berkadia Florida Co-Leader, “The market for buying and selling apartment properties also remains healthy, although given where we are at the cycle, we anticipate deal volume to dip slightly in 2019. Interest rates have risen, but we anticipate a tightening of spreads will compensate for any price increase.”
Trends Include 2.1 Percent Employment Growth
Berkadia’s Florida Investment Sales and Mortgage Banking teams collectively completed over $4.5 billion in multifamily and commercial property sales and financings in 2018.
Trends cited by Berkadia:
- Employment growth of 2.1 percent should drive leasing activity higher than inventory growth.
- Healthy demand should shift average apartment occupancy up 50 basis points to 95.5 percent by the fourth quarter, which is slightly above the five-year average.
- Average effective rent is forecast to rise 3.7 percent to $1,606 per month.