According to Cushman & Wakefield, investors spent $5 billion on South Florida multifamily buildings in the first half of the year, the second-highest sum on record.
It might be safe there for some time: Despite ongoing rent rise in Miami-Dade, Broward, and Palm Beach counties, the region's rental market demand is beginning to moderate. According to Cushman's mid-year South Florida market analysis, the vacancy rate in Miami-Dade plateaued in comparison to the same time last year, while it increased in both Broward and Palm Beach.
Only the second half of last year, when investors spent $5.7 billion on multifamily homes, has seen sales of $5 billion this year. Multifamily sales in South Florida totaled a record $11.4 billion last year, more than doubling the previous high of $5.5 billion achieved in 2016.
Despite rising borrowing rates and waning demand, multifamily investors kept moving forward since rents were growing due to the region's continual influx of new inhabitants. Investors paid record prices in each of the three counties on a per-unit basis. Multifamily real estate in Miami-Dade County sold for an average of $345,000 per unit. Each apartment cost $300,000 in Broward. $379,00 in Palm Beach.
The 296-unit Watermarc at Biscayne Bay in Miami's Edgewater neighborhood was purchased in June by Aimco subsidiary Air Communities for a staggering $211 million, or $713,000 per unit.
A few weeks before, the Allure at Abacoa, a 304-unit Jupiter rental community, had been purchased for $161.1 million, or $530,000 per apartment, by a joint venture between Bainbridge Companies and TPG Real Estate Partners.
Additionally, in March, a freshly constructed complex with 385 apartments in Fort Lauderdale's Flagler Village was purchased for $195 million by California-based property management business Thomas Tomanek & Associates, or $506,000 per unit.
According to the Cushman report, Miami-average Dade's monthly rent increased by 7.5 percent over the previous year to $2,186. Renters in Broward paid an average of $2,210 per month, an increase of 5.3 percent, while those in Palm Beach paid an average of $2,326 per month, an increase of 0.3 percent from the same time last year.
The survey states that the average monthly rent in the priciest submarkets, which include Aventura, Coral Gables, Fort Lauderdale, and Boca Raton, is more than $2,500.
According to Cushman, demand is not as high as it was last year, even though the fact that vacancy rates are still in the low single digits. The 3 percent vacancy rate in Miami-Dade County did not change. Multifamily vacancies increased in Broward from 3.5 to 4.4 percent over the previous year. The vacancy rate in Palm Beach increased from 4.5 to 6.4 percent.
In comparison to 5,473 units during the same period last year, absorption has decreased to 2,986 units in the first half of this year. By the end of the year, Cushman forecasts a "marginal rise" in vacancies since absorption is projected to fall short of the 10,743 planned delivery units.