For Miami-Dade County’s renters, relief may be within reach.
By the end of 2016, developers are slated to deliver the largest influx of new inventory in the past 17 years, according to a new report, which means rent growth is likely to slow.
So far this year, the county’s multifamily market has showed strength with low vacancy rates — 2.3 percent as of the first quarter — and steadily rising rents. But according to a new report from Marcus & Millichap, an “exceptional amount of new development” in the pipeline this year will likely outpace that demand and cause vacancies to rise. And with those rising vacancies, rental rate growth could also be stymied.
Miami-Dade already saw 2,100 new apartments open their doors during the first quarter, nearly matching in three months the 2,440 units that were delivered in the entirety of 2015. And the Marcus & Millichap report said another 4,640 apartments are in the pipeline, marking the biggest inventory spike since 1999.
As noted in the report, a lack of land for single-family housing has brought multifamily projects into prominence over the past year.
Now, a flood of new condos — 11,000 in Miami-Dade’s pipeline for the next two years — could also end up as rentals, potentially leading to an oversupply of apartments.
Average rents hit $1,315 per month by the end of March, swelling 4.4 percent year-over-year. Some neighborhoods have already experienced falling rents, like Downtown Miami and South Beach, according to the report. Others saw prices explode, like in West Miami and Doral, where the average rent for an apartment jumped 13.3 percent over a single year to $1,681.
Meanwhile, the volume of investment deals has already begun slowing over the past 12 months. According to the report, multifamily sales fell 12 percent year-over-year, with neighborhoods like East Little Havana soaking up a sizable chunk of the activity. Low cap rates have distanced the gap between asking prices from property owners and investors’ yield expectations.
Despite that, prices continued their uphill sprint in Miami-Dade. Multifamily deals averaged $195,300 per unit in the first quarter, up 12.8 percent compared to last year.