Robust growth in the regional rental market has prompted some to wonder what effect all this new inventory will have on multi-family demand and on other commercial property markets.
According to Broker Still Hunter III, who specializes in South Florida multi-family properties, it’s a very positive effect across the board.
“The new development brings more people to the area, and all other property types benefit from the additional traffic,” he says. “They’re shopping in the shopping centers, eating in the restaurants, going to work in the office buildings — it’s all very good.”
What’s important to understand, Hunter adds, is that the new inventory is also good for the existing rental market. “Take Broward County as an example,” he says. “They’re adding potentially 12,000 new units, with 6,500 currently under construction. On its face, that 12,000 represents a 200% increase over the existing core inventory. But that’s a misleading statistic, because in previous years, 25,000 units were removed by way of condo conversion during the condo boom. So the new inventory only gets us halfway back to meeting pent-up demand.”
Even with increased supply and construction levels, occupancy remains tight in South Florida. And according to Marcus & Millichap research, this demand is growing. One of the fastest-growing segments of the local population is individuals 24 to 29 years old, a demographic group that’s highly likely to rent. And while housing affordability has improved throughout the South Florida region, the home ownership rate has declined, expanding the pool of potential renters.
A Market Snapshot
In addition, an influx of investors and debt sources that remain competitive are supporting a recovery already in full swing. As builders bring much-needed inventory online, Marcus & Millichap is busy putting buyers and sellers together to take advantage of it.
“We’re here to provide investors with access to property and provide sellers with the exposure they need to create an auction-type environment to maximize sales price,” Hunter says. “There’s tremendous interest across all segments of the market, from mom and pop investors buying smaller, million-dollar deals to the institutional investors buying $50 to $100 million deals. It’s just a terrific market right now, and we’re working with folks to make the most of it.”
A Market Snapshot
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