Could South Florida be on the brink of another housing bubble? It’s a question everyone is asking these days as home prices across the region rose dramatically over the past year or so.
Such a scenario seems unlikely, however, based on what we see happening in the multifamily sector. Demand for apartments and condos still far exceed supply in most parts of South Florida. Occupancy rates in 2013 dipped below 5% for the first time since 2007, and with faster-than-average population growth expected – a lot of people are relocating here to escape the chilly Northeast or politically turbulent parts of South America – that demand is only going to increase. Experts anticipate 2 to 3% rent growth over the next few years, and as much as 7% to 8% rent growth year over year on higher quality assets in places like Brickell, Coral Gables and Downtown Doral in Miami. Multifamily is by far the strongest, most desirable commercial property type in South Florida – the biggest challenge for many investors is finding viable product to purchase.
As a result of this positive climate, many new developments are coming out of the ground, particularly in “suburban-urban” centers like Downtown Doral (Miami) and Pembroke Gardens (Broward). In 2014, there are 14,700 units scheduled for completion – nearly twice that delivered in 2013. Of the 21 submarkets in South Florida we track, there are probably three or four that will experience heavy concentrations of deliveries in 2015 which could result in short-term concessions. But we are nowhere near peak – and we may not peak for several years.
By: Ken Krasnow
Managing Director | CBRE South Florida
Ken Krasnow is the Managing Director for CBRE’s South Florida offices. In 2013, his region executed over 1000 transactions – 175 sales, and 825 leases – with an aggregate value exceeding $2.8 billion. In addition, CBRE South Florida completed over 1,400 valuation and advisory assignments and $600 million in loan originations.