Nearly 16,000 apartments are slated to come online in South Florida this year, but rents are still expected to keep rising, according to a new report.
Apartment rents rose annually in Miami, Fort Lauderdale and West Palm Beach in June, according to Marcus & Millichap’s multifamily report. In Miami-Dade, rents were up 8.8 percent in the second quarter, year-over-year, to nearly $1,450 a month. In Palm Beach County, rents increased 3.5 percent to just over $1,500. And in Broward’s major cities, rents budged by only 0.6 percent to $1,474.
Vacancy rates, which have been rising in all three metros, are expected to keep increasing as new projects get delivered. The report looked at growing employment rates, rising home prices and the affordability gap between rents and mortgage payments. Earlier this year, Berkadia predicted rents would begin to level off in South Florida, citing an increase in rent concessions and rent drops in some major markets.
In all three counties, the Marcus & Millichap report found that renting was cheaper than the average monthly mortgage payment.
Miami
In Miami-Dade, 5,235 new units have been completed so far this year, a 2.5 percent increase from the previous year. Class A rents jumped nearly 13 percent up to $2,012 a month, which is likely due to the number of new rentals being delivered. Nearly 12,000 units are in the pipeline.
Coral Gables and South Miami reported the biggest shifts with rents up 12.2 percent year-over-year to $1,769 a month and a 6.8 percent vacancy rate.
The county’s vacancy rate was up to 3.8 percent in the second quarter.
Broward
Rents barely changed in Broward, where more than 4,000 new apartments were completed over the past year. Nineteen projects with 5,600 units are in the works, with some delivery dates stretching into 2019, according to the report.
A year earlier, rental rates increased nearly 7 percent, according to the report. Some submarkets, like Fort Lauderdale and Coconut Creek, reported drops in rents during the second quarter of this year. Rents fell 3.6 percent to $1,556 in Fort Lauderdale and 0.6 percent to $1,470 in Margate, Coconut Creek and North Lauderdale.
In Broward, the vacancy rate was up to 5 percent in the second quarter.
Palm Beach
Rents rose in Palm Beach County, albeit at a slower pace than the 6.4 percent increase from the year before. North Palm Beach reported the biggest gains in rents, up 6.5 percent to $1,547 a month. West Palm Beach was close behind with a 6.2 percent annual rent bump, up to nearly $1,300.
Nearly 3,000 new apartments have been completed so far this year, and 1,661 of those were in the second quarter. Seventeen developments totaling 4,300 units will be delivered over the next 18 months, including the 398-unit Altis Boca Raton, the largest in Palm Beach County.