Job growth propels South Florida’s multifamily market

Eleven South Florida apartment properties sold in the second quarter at prices of $49 million and up

Milagro Coral Gables
Milagro Coral Gables

South Florida’s employment expansion helped to drive strong demand for rental housing and big-ticket sales of apartment properties in the second quarter.

Eleven South Florida multifamily housing properties sold from April through June at prices above $49 million the Daily Business Review reported. Their combined value was $940 million, the newspaper reported.

South Florida employers created about 117,000 new jobs in the 12 months ended in May, lowering the area’s unemployment rate to 4.2 percent from 4.7 percent in May 2016, according to the federal Bureau of Labor Statistics.

This year, the biggest deal for South Florida rental apartments has been Harbor Group International’s $159 million acquisition of the Montage at City Center in Pembroke Pines.

Other big-ticket multifamily deals this year have included Berkshire Group’s $100 million purchase of Aviva Coral Gables, a 276-unit rental apartment complex.

Shortly before that transaction closed, another apartment property in Coral Gables, called Milagro, sold to New York-based Wafra Investment Advisory Group Inc. for $78 million.

In South Florida market forecasts for 2017, real estate brokerage firm Marcus & Millichap reported heightened investor interest in rental apartments.

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In Miami-Dade, for example, “Class B and Class C assets are poised to perform well this year,” the firm reported. In Palm Beach County, “healthy market operations going into 2017 will draw greater investment to Palm Beach County’s multifamily stock, supporting asset appreciation.”

Older multifamily housing properties in South Florida will face new competition this year. Marcus & Millichap estimated that developers will finish construction of 15,200 new apartments in South Florida this year, up from 11,400 last year.

Yet the brokerage firm also forecasts 2017 increases in monthly apartment rents in all three counties: 4.7 percent in Broward, 4.4 percent in Miami-Dade, and 3 percent in Palm Beach.

The brokerage firm expects the super-tight, Miami-Dade apartment vacancy rate to dip even further to 2 percent this year from 2.1 percent last year.

The firm also estimates vacancy rates will rise this year to 4.2 percent from 4.1 percent last year in Broward, and will rise to 6.3 percent from 5.2 percent in Palm Beach. [Daily Business Review] Mike Seemuth