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One of the Strongest Multi-Housing Markets, Miami, Set to Continue Growth in 2015

Monday, January 19, 2015

Miami is the anchor of the second strongest multi-housing buildings and apartment area in the nation. The Miami, Fort Lauderdale and West Palm Beach metros are all among the top 15 in effective rent growth, as population growth and new jobs fuel demand.

Employment and Population TotalsAs Miami’s tourism industry and other sectors increased their hiring efforts, Miami’s job growth was 2.9 percent in 2014, 110 basis points (bps) above the national average of 1.8 percent. It is a 50-bps increase from 2013, when employment growth was 2.4 percent.The forecast for 2015 shows job growth of 3.2 percent, which should once again equate to strong demand for apartments and multi-housing buildings in Miami.

According to Axiometrics, “the entire South Florida apartment market exploded in 2014. The improving economy has resulted in more relocations to the area, and the sun and surf are very attractive to millennials that are the foundation of the apartment market. Jobs are plentiful, which will fuel further growth.”

Miami Multi-Housing Development

Some 3,000 units were delivered in 2014, on top of the 2,600 that came to market in 2013. Axiometrics is expecting deliveries to rise to close to 5,000 new units for both 2015 and 2016, showcasing increasing demand for multi-housing buildings in Miami. The company noted, “expect more Class A rental units to be introduced to the market over the next few years. Class A apartments had an average occupancy rate of 97 percent during 2014, and annual rent growth hovered around 8 percent throughout the year.”

Multi-Housing Building Occupancy and Absorption

Occupancy ended 2014 at 96.2 percent, 70 bps above Miami’s 1997-2013 average. Miami’s multi-housing buildings' occupancy rate last surpassed the 96 percent mark in 2006. According to Axiometrics' forecast, occupancy should lower somewhat to 95.3 percent in 2015 but remain within the 95-96-percent range for the next five years.

Miami OccupancyMiami Completions and Net Absorption 

Rental Rates for Multi-Housing Buildings

Miami’s annual effective rent growth was 5.8 percent in 2014, a 90 bps increase from 4.9 percent in 2013. The metro’s long-term average effective rent growth during 1997-2013 was 3.3 percent. As new supply increases during the forecast period, Axiometrics projects annual rent growth to average 3.5 percent through 2020.

Miami Rental RatesMiami Annual Rental Rate Growth 

Contact HFF Miami for more information regarding multi-housing properties on the market in this area.

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