Multifamily sales declined 50 percent during the first half of the year, according to a mid-year report and forecast by Cushman & Wakefield.
Total sales volume for 2020 could also fall by half, compared to last year, as the economic effects of Covid-19 linger, the report shows.
Ninety-one multifamily projects sold in South Florida during the first six months of the year for a total of $1 billion in sales. Most of the activity was for buildings less than $20 million.That $1 billion in total sales is a 50 percent decrease year over year.
Most of the sales were in Broward County, which saw a total of $443 million from 39 apartment deals. Deals averaged $152,064 a unit or $228 a square foot. Volume was down 27 percent from 2019’s first half.
Among the three South Florida counties, Palm Beach saw the largest decrease in sales volume in the first half of the year compared to the same period of 2019. Sales totaled $180 million across 15 deals, a 58 percent drop.
Miami-Dade multifamily deals fell 20 percent, year-over-year, to $382 million.
The region experienced some milestones, according to Cushman & Wakefield’s report, authored by Calum Weaver. Miami-Dade and Palm Beach counties surpassed $200,000 a unit in sales for the first time. And Broward and Palm Beach saw record sales per square foot: $250 for Palm Beach and $228 for Broward.
Sales in Miami-Dade included investor Marc Shulman’s May sale of an apartment building in Miami Beach’s Normandy Isles to a family office from France for $9.25 million.
In March, The Related Group, Shoma Group and PGIM Real Estate Investors sold The Flats Apartments at CityPlace Doral for $100 million.
That same month, BrickOne Group, led by Costantino Cicchelli, Frank Rodriguez Melo and Stefano Garofoli, paid $6.1 million for the 30-unit building at 1442 Northeast Miami Court in Miami’s Arts & Entertainment District and the 18-unit building at 937 Southwest Fifth Street in Miami’s Little Havana.
Rents
South Florida multifamily rents held through July, despite local unemployment reaching 11.3 percent, or 320,000 people, according to the report. All three counties saw higher rents in 2020’s first half compared to the same period last year.
However, quarter-over-quarter, asking rents decreased in all three counties. Palm Beach County saw the largest quarterly drop at 1.7 percent in the second quarter, reaching $1,589. That’s the highest countywide asking rent in South Florida. Miami-Dade had the lowest with $1,519.
Among submarkets, Coral Gables had the largest decrease in asking rent, 4.6 percent, reaching $1,988, or $2.35 a square foot.
Quarter-over-quarter, Miramar had the highest uptick in asking rent of 3.2 percent in the second quarter, reaching $1,326, or $1.48 a square foot. The lowest rent in South Florida is in Belle Glade, with an asking rent of $715, or 90 cents a square foot.
Deliveries and vacancies
South Florida saw the delivery of 7,500 new multifamily units during 2020’s first half. In the second quarter, most of the new deliveries were in Fort Lauderdale with 1,836 units, followed by the Doral area with 1,297.
Newly delivered apartment units pushed vacancy rates in the first half of the year to 5.5 percent, up from 4.9 percent during 2019’s first half, according to the report.
Broward and Miami-Dade saw record high vacancy rates in 2020’s second quarter. Broward’s hit 6.5 percent, coming off the first quarter’s record low of 5 percent. Fort Lauderdale had the highest rate in the county. The Miramar area showed the lowest in the county.
Miami-Dade hit 5.2 percent. The highest vacancy rate in the county was in Coral Gables and the lowest in Westchester.
Palm Beach’s vacancy rate reached 7 percent, with the highest rate in Belle Glade at 21 percent and the lowest in outlying Palm Beach County at 3.4 percent.
Another 7,500 units are scheduled for delivery later this year — on par with Berkadia’s pre-Covid 2020 forecast from February. That should continue to lead to higher vacancies, most notably among class A buildings and in urban markets, according to Cushman & Wakefield.
A record 28,000 units are under construction overall in South Florida, with most of the units in Miami-Dade County — about 14,000 units across 63 apartment buildings. By submarket, most of the construction is in Miami’s Brickell area, with 7,228 units under construction. It’s followed by Fort Lauderdale, with about 5,000 units under construction.
In January, Magellan Development Group launched preleasing for its latest Midtown Miami apartment building, adding nearly 450 rentals to the market.
That same month, leasing began for Park-Line Miami in Overtown, part of the mixed-use development that is home to MiamiCentral.
In June, Alluvion Las Olas began accepting applications for pre-leasing at the 380-unit, 43-story luxury high-rise on the New River.