South Florida Rents Drop Amid Multifamily Supply Overhang

After leading the nation in apartment rent hikes in recent years, South Florida is getting a reprieve.

In Miami, monthly rents for two-bedroom units averaged at $3,350 in March, down 7.7 percent, year-over-year, according to a Zumper report. One-bedroom units averaged $2,550, or a 5.9 percent drop compared to March of last year.

It marks a turnaround from South Florida’s multifamily rent surge –– by a record 58 percent from 2020 to 2022 –– that followed an influx of out-of-staters creating unprecedented demand. Developers seized on the hot market with new projects. Now, their hefty completions over the past three years, coupled with a slowdown of in-migration, have balanced the market, allowing for a respite in rents.

As a whole, South Florida rents are down 2.2 percent, year-over-year, with the average monthly rent hitting $2,319, according to Realtor.com’s February report. (This data is for studios, as well as one- and two-bedroom units.)

Last month, Deerfield Beach led the tri-county region with the biggest year-over-year drop of 13 percent for one-bedroom rents, the Zumper report shows. The city’s median monthly rate hit $1,600.

Sunny Isles Beach took the title for the biggest rate drop for two-bedroom units at 18 percent, with the median rent hitting $3,960.

Other municipalities with year-over-year rate drops in March include Delray Beach, with one-bedroom monthly rents down 11.5 percent to an average of $1,850, and two-bedroom rates down 2 percent to $2,450, according to Zumper.

In Pompano Beach, one bedroom rents fell 10.8 percent to $1,650, and two bedroom rents dropped 10.7 percent to $2,170. Miami Beach saw a drop of 4.6 percent to $2,480 for one-bedroom apartments, and 10.4 percent to $4,040 for two-bedroom units. Coral Gables’ average one-bedroom rents hit $2,440, down 3.2 percent, and two-bedroom rents hit $3,600, down 5.8 percent. Fort Lauderdale also posted a drop of 2.6 percent for one-bedrooms, which now average $1,900, and a 9.5 percent drop for two-bedrooms, to $2,670.

Despite all this, South Florida apartments remain pricey. Miami’s $2,550 average monthly one-bedroom rent ranked as the highest in the tri-county region and the sixth highest nationwide, according to Zumper. The Magic City was more expensive than Arlington, Virginia and Los Angeles, but it still ranked behind New York, San Francisco, Jersey City, New Jersey, Boston and San Jose, California.

In some South Florida municipalities, rents rose in March. Sunrise had the biggest jump of 9.2 percent, with the average one-bedroom rate hitting $1,900. Pembroke Pines’ average two-bedroom rent of $2,400 marked a 4.3 percent increase.

Last year, developers completed a record 18,600 apartments in South Florida, outpacing 15,000 net new leases, CoStar Group data shows. That came on the heels of developers’ 15,300 completions in 2023 and 11,200 in 2022.

The rent reprieve is good news for tenants. Many longtime South Floridians are cost burdened due to their incomes lagging behind those of their out-of-state counterparts, some of whom kept their higher paying New York and California jobs.

But the rate decreases could complicate developers’ bottom lines. Over the past three years, they have felt the sting from elevated interest rates, which increase debt obligations and complicate refinancings. And developers’ hefty completions have led to slower lease-ups and an increase in concessions.