'Balanced' Cycle
In the rental sector, 20,000 to 30,000 units are in the development pipeline for the tri-county area over the next four years, according to real estate firm CBRE.
Multifamily specialist Robert Given, CBRE's vice chairman, predicts 20,000 of those units "have a very good chance of getting developed."
That would represent a "fairly balanced" development cycle for the sector, Given said. But considering how many rental units were lost during the condo conversion craze in the middle of the last decade, South Florida could handle even more new apartment construction.
"During the conversion years we lost about 35,000 apartment units, which were typically more modern spaces built mostly in the 1990s and 2000s," he said. "That accounted for about 20 percent of the total market-rate apartment inventory in the market. ... Then we had a number of years after 2006, 2007 when we didn't build anything."
Population trends support the spate of multifamily projects. The state's population is projected to increase an average of 222,000 annually through 2019, according to the University of Florida's Bureau of Economic and Business Research.
On a daily basis, Florida nets about 700 new residents, according to Ron Shuffield, president of EWM Realty in Coral Gables. Before the real estate collapse, the state had about 1,000 net new residents a day. That plummeted to 140 during the lowest point of the downturn.
"Miami and Fort Lauderdale represent almost one-quarter of the state's population, so we probably have 160 to 170 new people coming here every day," Shuffield said. "If you divide that by 2.2 people for every household, you probably need somewhere around 75 new living units to be delivered every day. Many of those are tenants today. ... People are now just regaining the confidence to buy again."
Still, the projection of at least 20,000 rental units being developed by 2016 is far too optimistic, according to multifamily specialist Peter Mekras.
Many of the projects are planned for a few specific markets, like Doral, Miramar, Pembroke Pines and Delray Beach. The volume of development in those markets could be problematic, at least in the short-term, Mekras said. Area landlords may have to turn to concessions to compete for tenants.
"In the next couple of years, it would be hard to believe in the market-rate rental world that more than 5,000 to 7,000 units will be delivered. Some of the markets where four or five projects are being delivered could have a little fallback in rent growth and occupancy."
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