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MARKET VIEW | APARTMENT MIAMI-DADE | BROWARD | PALM BEACH


EXECUTIVE SUMMARY

MARKET TRENDS

MIAMI’S APARTMENT BOOM EASES PRESSURE ON RENTAL MARKET

Q3 2017 APARTMENT REPORT

Q3 2017

Q2 2017

FORECAST

VACANCY

5.88%

h

b

NET ABSORPTION

2,273

g

g

11,144

b

b

COMPLETIONS

3,064

g

g

rent to lease up units quickly.

EFFECTIVE RENTS

1,437

g

b

At the moment there are about 11,144 units under development.

RELATIVE TO PRIOR PERIOD | SOURCE: COSTAR PROPERTY®

The Apartment market in Miami-Dade currently has a vacancy rate of 5.88%, which is 26 basis-points lower than last quarter. It has a positive net absorption of 2,273 units and 3,064 units delivered in the last quarter.

CONSTRUCTION

Effective Rental rates grew slightly to $1,436 per unit. As a large amount of new supply is entering the marketplace, developers provide generous concessions such as waiving deposits, application fees and providing one months of free

As it is becoming harder for developers to find new deals due

OUTLOOK

to high construction costs and land prices, less and less new projects will break ground in the near future. Most development is happening in the Miami Downtown and Brickell area, where

The apartment market is stable even though large supplies are entering the market.

high rents justify developments. Another trend is the focus

New apartment buildings are renting up quickly as people are attracted by often

on Transit Oriented Development (TOD) with many projects

high-luxury amenities. However, there is not much room for rent growth as many

in proximity to the Metrorail.

units already reached the maximum of what people can afford. Miami is still a market with relatively low median household incomes of $46,452 and therefore one of the least affordable in the country. It is likely though that current construction levels will be absorbed as Miami’s population is growing by about 40,000 people a year.

JOB GROWTH BY INDUSTRY MIAMI

US

SOURCE: US DEPARTMENT OF LABOR STATISTICS

INFORMATION MANUFACTURING FINANCIAL ACTIVITIES CONSTRUCTION PROFESSIONAL & BUSINESS SERVICES -4.0%

-3.0%

-2.0%

-1.0%

0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

TOTAL NONFARM MINING AND LODGING OTHER GOVERNMENT TRADE, TRANSPORTATION & UTILITIES LEISURE AND HOSPITALITY EDUCATION AND HEALTH SERVICES

ONE COMMERCIAL REAL ESTATE | MIAMI-DADE | APARTMENT | Q3 2017

2


MARKET ACTIVITY

COMPLETIONS, ABSORPTION AND VACANCY TRENDS COMPLETIONS

About 2,273 apartment units were absorbed in the past quarter and 3,064 units added to the market. Concerns about an oversupply of apartment units have been expressed in recent months, but the market has not yet shown any signs of saturation as vacancies dropped by 26 basis-points to 5.88%. The construction boom in Miami-Dade remains unbroken. There are currently 11,144 units under development, which despite the large supply in this quarter represents another increase to last quarters units under development. With the large amount of supply in the pipeline, developers started to become cautious in new project. With land prices and construction costs reaching record heights, it has become difficult for developers to start new projects, as only certain areas offer enough density and sufficient rental rates to make projects profitable. Millennials and baby boomers, the two largest American generations in history, are both approaching life stages that

ABSORBTION

VACANCY

SOURCE: COSTAR PROPERTY®

3,500

7.00%

3,000

6.00%

2,500

5.00%

2,000

4.00%

1,500

3.00%

1,000

2.00%

500

1.00%

0

0.00%

Q2 2016

typically motivate people to buy a home: marriage, children,

Q3 2016

Q4 2016

Q1 2017

Q2 2017

Q3 2017

retirement, and becoming empty nesters. However as of now this trend is not happening, which can be attributed to multiple reasons. First millennials are a generation, which is pushing major life events such as children and marriage back; this currently allows them to stay in an apartment. Babyboomer’s who became empty nesters, have a hard time finding sufficient inventory to downsize. That causes housing prices to stay

ECONOMIC OVERVIEW

high, and makes starter homes for millennials unaffordable. Major development projects in Miami/Dade include the

Q3 2017

GROWTH

UNEMPLOYMENT RATE

5.1%

+ 4.1%

The tower, which will be Florida’s tallest building and the highest

POPULATION GROWTH

2,760,930

+ 1.42%

tower south of Manhattan when it is complete, may not hold

MEDIAN HOUSEHOLD INCOME

46,962

+ 4.14%

LABOR FORCE

1,173,000

+ 1.73%

85-stories Panorama Tower, which is set to deliver by the end of the year and is going to add another 800 units to the market.

the title for long. Florida East Coast Realty intends to follow up the project with the even more massive One Bayfront Plaza, for which updated plans were submitted in late 2016. Under the current plans, One Bayfront Plaza would rise more than 1,000

CHANGE AS PER YEAR-TO-DATE | SOURCE: US DEPARTMENT OF LABOR STATISTICS

feet tall, and include as many as 900 apartment units. The vast majority of projects of this scale are concentrated in the Brickell/ Downtown Miami Submarket, where apartment demand tends to flock and rents are typically high enough to justify such highend construction. Projects here are often designed to compete with the large presence of for-sale multifamily construction in the market, which is heavily skewed toward high luxury. Another trend of new residential construction is the focus

AVERAGE ASKING RENTS TRENDS EFFECTIVE RENTS

SOURCE: COSTAR PROPERTY®

on Transit Oriented Development as Miami becomes better interconnected with public transport. Often these developments

1,440.00

come with restricted parking, as construction is cheaper and

1,435.00

many millennials, with the emergence of ride-sharing platforms, forego on owning their own vehicle.

1,430.00 1,425.00

LEASING ACTIVITY After a decline in rental rates in the last quarter, the large

1,420.00 1,415.00

supply of high end units pushed rental rates up to an average

1,410.00

of $1,436 per unit, which represents an increase of 0.91%

1,405.00

compared to the previous period. ONE COMMERCIAL REAL ESTATE | MIAMI-DADE | APARTMENT | Q3 2017

Q2 2016

Q3 2016

Q4 2016

Q1 2017

Q2 2017

Q3 2017 3


SALES ACTIVITY

PRICE TRENDS

Investment sales in Miami dropped by 72% compared to the last quarter. Part of the reason is the 2nd quarter marked a record high of $770 million in sales. Investors are becoming more cautious in buying apartments as cap-rates are becoming tighter and a tread of oversupply.

CAP RATE

$/UNIT

SOURCE: REAL CAPITAL ANALYTICS

300,000

6.05% 5.85%

250,000

5.65% 5.45%

200,000

TRANSACTION HIGHLIGHTS DURING THE LAST QUARTER INCLUDED:

5.25% 5.05%

150,000

4.85% 4.65%

100,000

4.45%

A joint venture between PGIM Real Estate and

50,000

4.25%

the Related Group sold the 398 apartment unit Manor

Q1 2015

Q3 2015

Q1 2016

Q3 2016

Q1 2017

Q3 2017

CityPlace to TA Realty for $135 million. The price equated to $339,196 per unit.

TRANSACTION VOLUME AMLI Residnetial sold 300-unit Miramar Park

GARDEN STYLE

MID/HIGHRISE

SOURCE: REAL CAPITAL ANALYTICS

Apartments to Eaton Vance Management for $82 million or $273,333 per unit. Amenities at the complex include a pool, fitness center, yoga studio and a clubroom with an arcade game, bar area and poker table. It has units ranging from one to three bedrooms.

$.90 BN $.80 BN $.70 BN $.60 BN $.50 BN $.40 BN $.30 BN $.20 BN $.10 BN $.00 BN Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017

INVESTMENT SALES | LANDLORD REPRESENTATION | TENANT REPRESENTATION | ASSET MANAGEMENT | PROJECT MANAGEMENT

ONE COMMERCIAL REAL ESTATE | MIAMI-DADE | APARTMENT | Q3 2017

4


APARTMENT STATISTICS SUBMARKET

TOTAL INVENTORY (UNITS)

VACANCY (%)

YTD NET ABSORBTION

YTD DELIVERIES

UNDER CONSTRUCTION

EFFECTIVE RENTS

Aventura

2,122

11.07%

233

400

-

1,736

Bal Harbour/South Beach

13,269

7.02%

184

-

376

1,472

Brickell/Downtown Miami

19,607

7.06%

893

1,293

6,375

1,655

Coconut Grove

1,757

7.53%

79

51

-

1,563

Coral Gables

6,500

5.73%

(22)

-

594

1,806

Hialeah/Miami Lakes

16,744

2.64%

(52)

100

226

1,280

Homestead/South Dade

6,621

5.84%

237

319

972

1,147

Kendall

13,024

5.61%

645

652

866

1,559

Miami Gardens/Opa-Locka

15,218

3.35%

726

613

677

1,117

Miami Springs/Doral

16,116

9.23%

593

1,057

80

1,654

North Miami Beach

13,434

5.05%

(120)

-

878

1,180

Outlying Miami-Dade County

460

30.93%

109

244

100

1,734

Westchester/Tamiami

2,562

2.51%

(5)

-

-

1,293

Total

127,434

5.88%

3,498

4,729

11,144

1,437

SOURCE: COSTAR PROPERTY®

SIGNIFICANT SALES TRANSACTIONS PROPERTY ADDRESS

BUYER NAME

# UNITS

SALES PRICE $

$/UNIT

SUBMARKET

3450 NW 85th Court

TA Realty

398

135,000,000

339,196

Doral

11000 Miramar Blvd

Eaton Vence Management

300

82,000,000

273,333

Miramar

15601 SW 137th Avenue

Pinebrook Property Holdings

309

37,250,000

120,550

Richmond West

19701 SW 119th Court

Cabana Club Preservation

332

30,000,000

90,361

Cutler Bay

11124 SW 234th St

SW 112 Investments

468

21,300,000

45,513

Goulds

MAJOR DEVELOPMENT PIPELINE PROPERTY ADDRESS

COMPLETION

LUMA at Miami Worldcenter

2020

World Trade Center of the Americcas

2019

Maizon at Brickell

DEVELOPER

SUBMARKET

429

ZOM

Brickell/Downtown

400

Regalia Developers

Brickell/Downtown

2019

262

Melo Group

Brickell/Downtown

Wynwood 25

2019

289

East end Capital

Brickell/Downtown

Square Station

2018

710

Melo Group

Brickell/Downtown

Biscayne 27

2018

328

TRG

Brickell/Downtown

MiL:a

2018

318

Robert Miller

Miami Gardens/Opa-Locka

Vice

2018

464

PMG

Brickell/Downtown

Seventeenth Street

2018

450

Falcone Group

Brickell/Downtown

Panorama Tower

2017

800

Florida East Coast Realty

Brickell/Downtown

ONE COMMERCIAL REAL ESTATE | MIAMI-DADE | APARTMENT | Q3 2017

#UNITS

5


STEVEN NOSTRAND President & COO ONE Commercial Real Estate snostrand@onecommercialre.com

BROWARD

JULIAN SCHEEFF Director of Intelligence ONE Commercial Real Estate jscheeff@onecommercialre.com Miami | North End Aventura Golden Beach Bal Harbour Surfside Sunny Isles The Islands Bay Harbor Islands Indian Creek Normandy Isles La Gorce Sunset Islands Venetian Islands Fisher Island Key Biscayne Miami Beach South Beach Mid Beach North Beach Downtown Miami Midtown Edgewater Downtown Miami

MIAMI-DADE COUNTY

Palm/Hibiscus/Star Islands

Brickell Western Miami Doral Miami | South End Coconut Grove Coral Gables Pinecrest Palmetto Bay CocoPlum Gables Estates Snapper Creek Lakes Ponce-Davis & High Pines Old Cutler Bay Deering Bay

ONE Commercial Real Estate 1000 Brickell Avenue, Suite 500 Miami, FL 33131 305.704.9787

The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.

Market View Q3 2017 | Apartment - Dade  
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