South Florida was one of the best performing multifamily markets in the nation during the first quarter of 2024. Net absorption outpaced deliveries by over 1,000 units and effective rent rose 0.9 percent from the fourth quarter of 2023. Occupancy also was trending positively, rising 20 basis points quarter over quarter.
The brunt of South Florida’s multifamily success can be attributed to strong Class A performance. Occupancy has been steadily increasing over the last three quarters. Average Class A rent increased 2.3 percent annually to $2,724 above Class B during the first quarter of 2024.
Submarkets with a high concentration of luxury apartments, such as Downtown Miami/South Beach and West Palm Beach, saw demand outpace deliveries by hundreds of units during the start of 2024. In the Downtown Miami/South Beach submarket, 364 units were delivered, while net move-ins equated to 717 units.
Strong Class A performance is not a new trend in the South Florida market. Since the end of 2020, Class A rent increased 60.3 percent, rising from $3,250 in the fourth quarter of 2020 to $5,210 in the first quarter of 2024. On a national scale, South Florida had the highest-Class A rent increase while other Florida markets followed behind, with Tampa and Orlando Class A rent rising 47.0 percent and 36.4 percent over the same period.
Furthermore, the price margin between Class A, B, and C rents have widened. From the end of 2020 to the first quarter of 2024, average Class A rent was $2,427 higher than Class B rent, compared to a difference of $1,978 from 2015 to 2019. Meanwhile, the average price gap between Class A and Class C rents was nearly $3,000 per month from the fourth quarter of 2020 to the first quarter of 2024, differing from $2,228 per month pre-pandemic.
The sustained Class A growth over the past few years is underpinned by positive net in-migration and low single-family housing stock paired with appreciating home prices.
According to Miami Realtors, median home prices in South Florida have increased 40.4 percent from December 2020 to April 2024, reaching $613,000.
Meanwhile, the U.S. Census Bureau recorded about 162,600 net people moved to South Florida since the fourth quarter of 2020. In recent years, more young professionals have been relocating to the metro, as companies such as Microsoft, Amazon, and Apple have increased their presence in the Sunshine State.
High-earning individuals are choosing Florida because the state does not have a personal income tax and it’s growing luxury living notoriety. This is reflected by the millionaire population in Miami increasing 75 percent and 90 percent in West Palm Beach over the past decade, according to a wealth report from Henley & Partners.
To learn more about the South Florida market, reach out to one of our trusted advisors in South Florida.