Miami’s Apartment Market Positioning Is Strong Right Now

 

Property Management Insider

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Image of apartments in Miami

 

 

Metro Miami-Dade County’s apartment market now ranks among the country’s strongest overall performers. Occupancy stands at 96.7%, and annual growth in effective rents for new leases is running at a rate of 5.2%.

Tight occupancy is nothing new for the market, as occupancy has been sustained at roughly 96% or better for four full years. Impressive rent growth, however, only emerged during the last half of 2013. Prior to that, pricing power had been held back to some degree by competition from shadow market units – mainly individually-owned condos – offered for lease. It now looks like any excess inventory in the shadow market has been burned off completely.

Helping to keep Miami’s apartment market outlook favorable during the immediate future, building activity remains fairly modest. Total ongoing construction tallies at about 4,500 units, or 2.1% inventory growth. Properties scheduled to complete specifically during 2014 contain some 2,500 units that translate to just 1.1% growth in the stock. That’s not a lot of new supply for a place where the latest numbers from the Bureau of Labor Statistics show annual job growth at roughly 23,000 positions, or 2.2% annual expansion. (View those latest employment addition numbers with a bit of skepticism. BLS figures had Miami’s annual growth rate all over the place during the course of 2013, registering at 0.3% to 2.2% from one month to another. Even if actual expansion is closer to the 2013 average of 1.0%, rather than the late-in-the-year rate that doubles the average, that pace still suggests an economic outlook healthy enough to handle 2014’s new apartment supply pretty easily.)

Enthusiasm grows for Miami’s near-term prospects with a comparison of market characteristics present now relative to those seen a decade ago, before the housing boom and subsequent bust. MPF Research places the current apartment count in Dade County at some 215,500 units, about 20,000 apartments under the peak figure seen in 2003 (prior to conversion of numerous properties into condos). Furthermore, while Miami’s current job count remains about 21,000 positions below the pre-recession high, today’s ratio of jobs to apartments actually is more attractive than the figure seen previously (5 jobs for every apartment now, versus 4.3 jobs for every apartment a decade ago).

Construction started on a handful of condo projects in Miami during the past year, and dozens more are on the drawing board. Over time, then, this metro could prove susceptible to a return of excess shadow market rentals that compete with conventional apartment communities. But there does seem to be a window over the next few years when Miami likely will rank among the premium-performing apartment markets across the country.

 

(Image source: Shutterstock)


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