According to Cushman & Wakefield (USA), $5 billion was invested in South Florida multi-family houses over the first half of the current year. This is the second best performance throughout the state’s history, second only to the second half of the previous year, when $5.7 billion was invested.
The rental demand in South Florida is showing signs of slowing down despite the continued rent growth in Miami Dade, Broward, and Palm Beach Counties, so investors keep purchasing local real estate even as the interest rates are growing and tenants’ interest declines.
Buyers had to pay record prices across all three counties. The average cost of an apartment in Miami Dade was $345,000; in Broward, $300,000; and in Palm Beach, $379,000.
In June, Aimco, a subsidiary of Air Communities, paid $211 million for Watermarc, an apartment complex located in the Biscayne Bay near Edgewater, Miami. The building offers 296 residences at $713,000 per unit.
A few weeks earlier, a joint venture of Bainbridge Companies and TPG Real Estate Partners purchased Allure at Abacoa. This residential project with 304 apartments in Jupiter cost $161.1 million ($530,000 per apartment).
In March, Thomas Tomanek & Associates (a California-based property management company) paid $195 million for Motif, a recently built 385-apartment complex in Fort Lauderdale. A single residential unit cost $506,000.
In Miami Dade, the average monthly rent increased by 7.5% year-on-year, reaching $2,186; in Broward, by 5.3%, up to $2,210; in Palm Beach, by 0.3%, up to $2,326.
Although vacancies are still few and far between, the demand is not as high as it was last year. This indicator hasn’t changed for Miami Dade, remaining at 3%. It grew from 3.5% to 4.4% year-on-year in Broward County and from 4.5% to 6.4% year-on-year in Palm Beach.
Absorption is also slowing down: it has reduced to 2,986 residential units over the first six months of the current year compared to 5,473 properties over the same time last year. Experts forecast a slight increase in the amount of vacant rentals by the end of the year, as the absorption will probably drop below the scheduled 10,743 residential units.