South Florida multifamily sales hit record $11B in 2021, marking nation’s hottest CRE market: report

Out-of-state private capital investors expected to continue to dominate the market in 2022

(Live Four West, LoopNet, iStock)
(Live Four West, LoopNet, iStock)

After reaching a record $11.4 billion in sales last year, South Florida’s multifamily market is poised for another banner year, according to a recently filed report.

Out-of-state investors will continue to dominate the multifamily market in the tri-county region and rents will continue to rise, though not at the astronomical rate seen in 2021, Cushman & Wakefield’s report states. Population growth fueled by people migrating from other parts of the U.S., as well as a renewed influx of international visitors, will continue to affect rental affordability. And workforce housing will continue to be underserved in 2022, according to Cushman & Wakefield.

The $11.4 billion investors spent in 2021, buying 603 rental properties in Miami-Dade, Broward and Palm Beach counties, was more than double the previous annual record of $5.5 billion set in 2016, the report states. All three counties also broke records for average price per apartment.

Institutional firms, REITs and ultra high net worth investors buying newly built Class A apartment properties accounted for 82 percent of 2021’s sales volume, the report shows.

“South Florida multifamily is arguably the hottest commercial real estate market in the U.S.,” the report said. “Fundamentals are bullish and investors and renters continue to come to the region.”

The most expensive submarkets are Aventura, Coral Gables, Fort Lauderdale, Boca Raton, Delray Beach and Palm Beach Gardens/Jupiter, where monthly rents are averaging more than $2,500, according to the report.

As far as new construction, developers added 7,362 apartments last year, but they will more than double that number in 2022, the report states. To keep pace with demand, another 17,893 units are scheduled for completion this year.

Miami-Dade County

Last year, buyers spent an average of $278,342 per unit in Miami-Dade, where rents increased 19.7 percent, year-over-year, according to Cushman & Wakefield. A renter will pay an average of $1,997 a month in Miami-Dade.

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Class B and Class C apartment buildings accounted for 78 percent of Miami-Dade’s sales activity last year, the report states. Miami-Dade’s vacancy rate fell from 6.7 percent in 2020 to 3.2 percent in 2021.

The largest multifamily trade in Miami-Dade was Starwood Property Trust’s $371.1 million purchase of The Palmer Dadeland, a pair of 25-story buildings with 844 apartments.

Broward County

The average price paid per unit in Broward was $281,163, according to Cushman & Wakefield. Rent spiked by 23.3 percent last year, with renters paying an average of $2,073 a month.

Class A properties accounted for nearly 50 percent of apartment building sales in Broward, the report states. The vacancy rate tumbled from 7.4 percent in 2020 to 3.2 percent in 2021.

Motivational speaker, social media influencer and real estate investor Grant Cardone led the way in Broward last year with a $744 million acquisition of a 1,688-unit portfolio spread out among properties in downtown Fort Lauderdale, Sunrise and Weston.

Palm Beach County

Investors paid an average of $292,221 per unit in Palm Beach County, which had the biggest single-year rent increase ever recorded in South Florida at 32.1 percent, the report states. Renters paid an average of $2,280 a month last year.

Class A and Class B properties represented 92 percent of all sales in 2021. The vacancy rate dropped from 7.9 percent in 2020 to 4.1 percent last year, the report states.

Atlanta-based Cortland’s $230 million purchase of a newly built apartment community at Uptown Boca represented the largest multifamily deal in Palm Beach County last year.