MARKET REPORT
SOUTH FLORIDA | MULTIFAMILY
Q4 23
1
ONE COMMERCIAL REAL ESTATE | MULTIFAMILY | Q4 2023
A BOUTIQUE BROKERAGE WITH INSTITUTIONAL QUALITY SUPPORT ONE Commercial Real Estate was born from a commitment to be a change agent for clients and industry professionals. Founded by Daniel de la Vega, the President of ONE Sotheby’s International Realty, we offer superior results to owners, occupiers, and developers of commercial real estate by obtaining and sharing intelligence as well as applying our knowledge, experience, competence and technical skills. Our team members have experienced several cycles that have taught valuable lessons. We have decades of on-the-ground experience and market knowledge in South Florida advising clients in all aspects of commercial real estate. We provide the insight necessary to lead informed and efficient decision making. The commercial real estate landscape has changed. Florida is impacted by global economic and political events more than most. Capital is forming new markets, redefining old ones, and continues to shape the fabric of our ever-growing landscape. Understanding these changes allows us to continue serving our clients and communities. By embracing the data and analytics we can identify movements, address obstacles, forecast challenges, and secure a vision for the future. This edition of the ONE Commercial Market Report examines the multifamily markets in Miami-Dade, Broward, and Palm Beach counties.
Daniel de la Vega Chief Executive Officer ONE Commercial Real Estate
ONE COMMERCIAL REAL ESTATE | MULTIFAMILY | Q4 2023
2
Miami-Dade County Q4 2023 | MULTIFAMILY REPORT MIAMI MULTIFAMILY HITS $1.6 BILLION IN 2023; LUXURY PROPERTY TRANSACTIONS DOMINATE DESPITE ECONOMIC CONCERNS
EXECUTIVE SUMMARY
1 YEAR AGO
CURRENT
INVENTORY UNITS
181,283
187,404
as higher interest rates and slowing economic
UNDER CONSTR UNITS
26,088
28,385
growth impacted investment activity. Despite this,
12 MO ABSORP UNITS
2,967
5,156
volume remained in-line with longer term trends
VACANCY RATE
4.94%
5.30%
averaging $1.7 billion annually over the past 10
MARKET ASKING RENT/UNIT
$2,279
$2,318
years. Since 2020, strong tenant demand, resulting
MARKET SALE PRICE/UNIT
$314,781
$295,663
in significant rent gains, has attracted outsized
MARKET CAP RATE
4.75%
5.22%
investor interest to Miami. Double-digit pricing
SOURCE: COSTAR
Transaction activity reverted back to pre-pandemic norms in 2023, totaling $1.6 billion for the year,
growth in 2021 and 2022 has underscored investor appetite for multifamily in the area, though higher interest rates, softer rent gains and higher costs, particularly for insurance, are now slowing pricing gains and activity. Over the past few years, transactions of over $100 million have reached double digits, with over 13 trades in 2021 and 12 trades in 2022 surpassing this figure. This was up from an average of around two of these transactions a year from 2015 to 2020. In the last couple of years, seven transactions have exceeded $200 million, an unprecedented
CHANGE
just over $400,000/unit over the past four quarters. Virtually all trade activity for deals above $100 million have involved institutional and private equity players, with public and private REIT buyers making up an increasing share since 2021. Three large trades for over $100 million occurred in 2023, two have been concentrated in newly built luxury properties. Large trades continued into the fourth quarter of 2023 with 29 WYN which was purchased by Berkshire from the Related Group in October. The 4-Star, 248-unit property located in Wynwood, sold for $135 million or over $544,000/unit. The property was completed in June of 2023.
occurrence before 2021, though 2023 saw one
An exception to the newer built demand was the purchase of
transaction at over $270 million and only two
the renovated Southgate Towers by Apartment Income REIT
transactions of over $100 million. These trades have
for around $270 million at more than $547,000/unit. The over
been concentrated in large 4 & 5 Star apartment
490 unit property at 900 West Ave in Miami Beach, is a prime
complexes that have been built or renovated in the
example of the strong pricing that even well located and well
last eight years.
maintained older assets can achieve.
Four of these trades occurred in the downtown
Despite continued investor interest, an interest driven rise in
Miami, Wynwood and Miami Beach areas, and one
cap rates and softening fundamentals is impacting pricing.
each in Coral Gables, South Miami and Doral. Due
Transaction cap rates rose significantly in the second half of
to their location and age, these assets have traded
2023, from lows in the mid-4% to 5% range in 2022 to the
at a premium of over $550,000/unit on average,
mid 6% range. Going forward, tight financial conditions will
well above average pricing for 4 & 5 Star assets of
continue to result in slower transaction activity relative to the
3
ONE COMMERCIAL REAL ESTATE | MULTIFAMILY | Q4 2023
MARKET REPORT
ONE COMMERCIAL REAL ESTATE | MULTIFAMILY | Q4 2023
4
SALES VOLUME & MARKET SALE PRICE PER UNIT $380K
boom in 2021 and 2022. Additionally, pricing growth
$2B
$360K
$1.8B
will remain muted as softening rent growth impacts
$340K
$1.6B
value creation.
$320K
$1.4B
$300K
$1.2B
$280K
$1B
$260K
$800M
$240K
$600M
$220K
$400M
in late 2022. Still, annual starts for 2023 totaled over
$200K
$200M
8,400 units, above pre-pandemic figures averaging
21
22
23
SALES VOLUME
24
25
26
Higher financing costs and a slowing economic environment are begining to impact development with construction starts receding in 2023, after peaking
amplified surge in demand has emboldened apartment
PRICE/UNIT UNITED STATES
PRICE/UNIT
MARKET ACTIVITY
over 6,600 units from 2015 through 2019. A pandemic
$0
$180K
SALES VOLUME
MARKET SALE PRICE/UNIT
FORECAST
developers in the Miami area over the last three years. 2021 starts of over 12,000 units almost doubled the
MARKET CAP RATE
historical annual average and 2022 starts rose even further, reaching a record of over 15,900 units. The
7.0% FORECAST
vast majority of starts remain underway, with under construction units totaling over 28,000, representing
6.5%
the largest supply pipeline in all of Florida and the ninth
6.0%
largest in the country.
5.5%
Supply underway represents around 15.1% of existing inventory with over 90% set to deliver as 4 & 5
5.0%
Star luxury units. Over 65% of units underway are 4.5%
concentrated in the area between I-95 and the Atlantic Ocean, with the majority, over 40%, located between
4.0%
downtown Miami and the reinvigorated Wynwood 3.5% 21
22
3 STAR MIAMI
23
24
area. Following national trends, new development is
26
25
MIAMI
4-5 STAR MIAMI
occurring in areas with a significant and growing share
UNITED STATES
of neighborhood amenities, which include proximity to beach access and new or updated retail establishments.
MARKET RENT PER UNIT & RENT GROWTH 18%
Employment gains are set to drive household formation
$2,800
16%
and income growth over the coming years, resulting
$2,600
14%
in a continued rise in housing demand, though these
$2,400
12%
$2,200
10%
$2,000
8%
$1,800
6%
$1,600
4%
$1,400
2%
FORECAST
0%
$1,200 21
22
ASKING RENT GROWTH (YOY) MIAMI
5
23 EFFECTIVE RENT MIAMI
24
25 ASKING RENT MIAMI
ONE COMMERCIAL REAL ESTATE | MULTIFAMILY | Q4 2023
26 ASKING RENT UNITED STATES
have slowed over the last year. Slower demand and ASKING RENT GROWTH
RENT PER UNIT
$3,000
an increase in competitive supply delivering in close proximity is resulting in longer lease-up periods along with increased concessions. These incentives will likely have to remain in place well into 2026 as new deliveries begin to wane thereafter. Still, homeownership has been impacted by higher insurance premiums, rising maintenance costs in older condo properties and a pandemic induced surge in
MULTIFAMILY | MIAMI-DADE
TOP BUYERS PAST 12 MONTHS slow as higher financing costs weigh on development
STOCKBRIDGE CAPITAL GROUP, LLC
activity. Additionally, elevated land costs and expenses,
GID INVESTMENT ADVISORS LLC
specifically for insurance, are impacting investment
PANTZER PROPERTIES
decisions. In fact, insurance costs per unit have risen
BAYSHORE GLOBAL MANAGEMENT LLC
over 3x, from around $900/unit a few years ago to over $3,000/unit today.
BERKSHIRE
IMC EQUITY GROUP
OUTLOOK
PENSAM
RAMON MIJARES
XAVIER PEREZ RENTAL ASSET MANAGEMENT LLC $20M
$40M
$60M
$80M
$100M
$120M
$140M
$160M
$180M
SALES VOLUME - PAST 1 YEAR
home values, making renting more attractive. The limited construction of single family housing across South Florida, coupled with elevated mortgage rates further impact home affordability, helping drive housing demand towards new luxury apartments and garden style rental developments. Going forward, construction starts should continue to
Population growth has returned to Miami-Dade County after two years of losses from 2020 through 2021. That said, the county has 37,000 fewer residents than in 2019. A closure in international travel during the pandemic resulted in a drag to population growth in the area, which has historically been driven by international net migration. Additionally, a rise in the cost of living, with inflation in South Florida doubling the national average, has driven net domestic out-migration as residents leave in search of a lower cost of living in central, northern Florida as well as in Georgia and Texas. While lower income residents have been exiting the county, Miami-Dade has enjoyed an inflow of high-networth individuals, which brought in $6.4 billion in new
SUBMARKET SALES TRANSACTIONS PAST 12 MONTHS SUBMARKET
SALES VOLUME
TRANSACTIONS
TRANSACTED UNITS
AVERAGE UNITS
MARKET CAP RATE
MARKET SALE PRICE/UNIT
DOWNTOWN MIAMI
$267,350,000
23
725
32
5.0%
$405,740
MIAMI SPRINGS/DORAL
$226,100,000
4
1,005
251
5.1%
$306,040
NORTH MIAMI BEACH
$169,755,400
45
999
22
5.3%
$260,095
LITTLE HAVANA
$97,249,411
57
563
10
5.7%
$228,835
MIAMI GARDENS/OPA-LOCKA
$96,241,460
27
507
19
5.4%
$227,688
KENDALL
$95,863,600
2
331
166
5.1%
$282,460
HIALEAH/MIAMI LAKES
$88,453,500
29
411
14
5.3%
$239,354
NORTH BEACH
$78,311,432
22
460
21
5.4%
$255,988
HOMESTEAD/SOUTH DADE
$73,993,000
7
355
51
5.5%
$226,846
CORAL GABLES
$31,875,100
10
124
12
5.0%
$376,744
COCONUT GROVE
$31,700,000
3
73
24
5.3%
$336,043
WESTCHESTER/TAMIAMI
$27,994,400
3
123
41
5.3%
$232,419
SOUTH BEACH
$27,775,000
8
88
11
5.2%
$303,895
MID-BEACH
$16,930,000
6
60
10
5.2%
$389,040
AVENTURA
-
2
13
7
4.9%
$290,321
SOURCE: COSTAR
ONE COMMERCIAL REAL ESTATE | MULTIFAMILY | Q4 2023
6
RECENT SIGNIFICANT SALES 8255 PARK BLVD | CASERO APARTMENTS Doral, FL 33126 SALE DATE
Sep 2023
BUYER
Stockbridge Capital Group (USA)
SALE PRICE
$156M ($438.2K/Unit)
SELLER
The Carlyle Group (USA) + 1
LEASED
93%
BROKER
Walker & Dunlop LLC
HOLD PERIOD 20 Months UNITS
356
YEAR BUILT
2022
SALE TYPE
Investment
SALE COND
Deed Restriction
BUYER
Bayshore Global Management (USA) + 1
SELLER
Dragon Global Miami Real Estate Investments LLC (USA) + 1
2828 NW 1ST AVENUE | 29 WYN Miami, FL 33127 SALE DATE
Oct 2023
SALE PRICE
$135M ($544.4K/Unit)
LEASED
41%
HOLD PERIOD 9 Months UNITS
248
YEAR BUILT
2023
SALE TYPE
Investment
SALE COND
Deed Restriction, Debt Assumption
2263 SW 37TH AVENUE | MILAGRO CORAL GABLES Coral Gables, FL 33145 SALE DATE
May 2023
BUYER
Pantzer Properties (USA)
SALE PRICE
$97.5M ($411.4K/Unit)
SELLER
Wafra Inc. (USA)
LEASED
91%
BROKER
Cushman & Wakefield
SALE TYPE
Investment
HOLD PERIOD 71 Months UNITS
237
YEAR BUILT
2013
7004 SW 40TH STREET | WINDSOR LUDLAM TRAIL Miami, FL 33155 SALE DATE
July 2023
BUYER
GID Investment Advisors (USA)
SALE PRICE
$91.4M ($292.8K/Unit)
SELLER
CAP RATE
4.5% (Actual)
Altman Management Comm (USA) +2
LEASED
92%
BROKER
Cushman & Wakefield
HOLD PERIOD 18 Months UNITS
312
YEAR BUILT
2022
SALE TYPE
Investment
SALE COND
Debt Assumption
1140 SE 24TH ROAD | SEASCAPE POINTE Homestead, FL 33035 SALE DATE
Feb 2023
BUYER
IMC Equity Group (USA)
SALE PRICE
$67M ($219K/Unit)
BROKER
Borda Commercial Real Estate, Inc.
CAP RATE
5.0% (Actual)
SELLER
Mast Capital (USA) + 1
LEASED
95%
BROKER
ARA Newmark
SALE TYPE
Investment
HOLD PERIOD 26 Months UNITS
306
YEAR BUILT
2008 SOURCE: COSTAR
wealth to the metro in 2021. Former residents of New York, New Jersey, Massachusetts, and California now make up 50% of adjusted gross income flowing into Miami-Dade, with recent license exchange data pointing to a continued inflow of new residents from these states. The influx of high-income households has also driven significant appreciation in home prices, with the Federal Housing Finance Agency’s purchase-only index, showing that Miami home values have increased by 71% since 2019, well above U.S. average growth of 48% and outpacing average Florida home price growth of 69%. This rapid home value appreciation has driven a widening gap in home affordability, making homeownership increasingly difficult for the average worker. On the flip side, a rise in new wealth in the area has resulted in strong income growth, which has driven household buying power higher, rising 51% for Miami versus 38% for the U.S. average over the past decade. These gains have resulted in gross real retail sales gains in Miami-Dade County, growing by 10% in the rolling 12-month period through October 2023 versus December 2019. Despite elevated sales, real retail sales growth has slowed in recent months from peak annual growth of 16% in the first quarter of 2022, contracting 2.2% in October 2023, as inflation and higher interest rates weigh on consumer demand. With a recovery in in-migration and a healthy tourism sector benefiting from the shift in consumer spending towards travel and dining out, Miami continued to have slower, yet robust growth in 2023. Its annual job growth of 4.1% exceeded the U.S. growth of 2.8% through November 2023. Gains has been driven by other services; manufacturing; professional and business services; trade, transportation, and utilities; and government. The net job change from pre-pandemic peak through November 2023 was 6.8%, above the U.S. net growth of 3.0%. Oxford Economics forecasts that Miami will see an average job growth rate of 1.0% in 2024 and grow by 0.4% per year from 2025 through 2028, above U.S. average job growth. Miami’s startup ecosystem, fueled by strong in-migration, a nation-leading higher education system and a competitive tax structure, will continue to be an important driver of job growth going forward. According to Startup Genome’s Global Startup Ecosystem ranking for 2023, Miami was ranked 23rd in the world, an eight-spot improvement from 2022. Dozens of venture capital funds have offices in the city, and Miami has added more than 20 venture capital funds in the pandemic era. With its riskfriendly, pro-business atmosphere, Miami’s is poised to continue its recent ascension as a fast-growing venture capital center going forward.
Broward County Q4 2023 | MULTIFAMILY REPORT BROWARD TRANSACTION VOLUME CLOSES 2023 AROUND $1.1 BILLION; CENTRAL FORT LAUDERDALE REMAINS A HOTSPOT
EXECUTIVE SUMMARY
1 YEAR AGO
CURRENT
INVENTORY UNITS
131,780
136,802
UNDER CONSTR UNITS
12,382
9,657
12 MO ABSORP UNITS
1,123
1,938
looking at transaction counts, trailing 12-month
VACANCY RATE
5.13%
7.20%
volume has fallen to around 167 trades, around
MARKET ASKING RENT/UNIT
$2,247
$2,258
50% of the cycle peak of over 350 trades totaling
MARKET SALE PRICE/UNIT
$295,122
$271,740
$5.2 billion and below the 10-year average of
MARKET CAP RATE
4.88%
5.42%
$2.1 billion. Since 2020, strong tenant demand
SOURCE: COSTAR
Transaction activity in Broward totaled $1.1 billion over the past 12 months, still, this remains more or less in line with pre-pandemic totals averaging $1.8 billion annually from 2015 through 2019. When
resulting in significant rent gains has attracted outsized investor interest to Fort Lauderdale. Double-digit pricing growth in 2021 and again in 2022 underscored investor appetite for multifamily in the area. Assets rated 4 & 5 Star in the market typically trade above $330,000/unit, 1.3 times higher than 3 Star assets, which typically trade at around $250,000/unit. Despite the rapid appreciation in values over the past couple of years, softening fundamentals and higher interest rates are beginning to impact pricing. Average
CHANGE
trades in 2021 and 13 trades in 2022 surpassed this figure, up from an average of around three of these transactions a year from 2015 to 2020. In the past couple of years, five transactions exceeded $200 million, a rare occurrence before 2021. These trades have been concentrated in 4 & 5 Star apartment complexes with more than 400 units that have been built or renovated since 2000. Due to their location and age, these assets have traded at a premium of over $417,000/unit on average, well above recent average pricing for 4 & 5 Star assets of over $330,000/unit.
annual transaction cap rates have risen from
Still, Central Fort Lauderdale remains the main target of
a three-year low of around 5.2% to 5.4% as of
investor demand, as it makes up the largest concentration of
the first quarter of 2024. Pricing has contracted
both total and 4 & 5 Star apartment inventory in the market,
significantly through the second half of 2023,
at over 25%. Since 2021 over 28% of Fort Lauderdale’s
with the trailing 12-month average transaction
transaction volume has occurred within a 3-mile radius of
price falling by -24% from peak levels in the third
Las Olas Boulevard in Central Fort Lauderdale. Additionally,
quarter of 2022, seeing a sharper contraction than
over the past 12 months, more than 60% of transaction
the U.S. average of just around -8% over the same
volume in the submarket involved 4 & 5 Star assets, down
time period.
from over 90% in 2021. This submarket enjoys a significant
After reaching double digits in 2021 and 2022, transactions of over $100 million were rare in 2023, with only one trade above this figure. Over 15
9
ONE COMMERCIAL REAL ESTATE | MULTIFAMILY | Q4 2023
sales premium over all other Fort Lauderdale submarkets, with the sales price/unit averaging over 1.2 times higher in the area due to its high share of 4 & 5 Star inventory, extended beachfront access and proximity to the retail
MARKET REPORT
ONE COMMERCIAL REAL ESTATE | MULTIFAMILY | Q4 2023 10
SALES VOLUME & MARKET SALE PRICE PER UNIT $3.5B
amenities of the Las Olas Boulevard.
$320K
$3B
Increased borrowing costs have resulted in an uptick
$300K
$2.5B
$280K
$2B
$260K
$1.5B
$240K
$1B
$220K
$500M
$340K
in sales involving debt assumptions in the market, making up around 28% of volume in 2023, up from an SALES VOLUME
MARKET SALE PRICE/UNIT
FORECAST
average of around 9% in the past five years. Three of the eight sales involving trades for over $50 million in 2023 have included debt assumptions. Going forward, a slowing economy and higher interest rates, resulting in a near-term pricing correction, will likely continue to in 2021 and 2022. Higher cap rates, coupled with
$0
$200K
21
22
23
SALES VOLUME
24
25
26
softening fundamentals, will likely remain a drag on
PRICE/UNIT UNITED STATES
PRICE/UNIT
drive slower transaction activity relative to the boom
market activity at least until an eventual loosening of financial conditions occurs.
MARKET CAP RATE 7.0%
MARKET ACTIVITY
FORECAST
Despite construction starts slowing to over 2,400 units
6.5%
in 2023, Fort Lauderdale has an elevated development
6.0%
pipeline. A pandemic amplified surge in demand has emboldened apartment developers in the area over the
5.5%
past two years. 2021 multifamily construction starts of
5.0%
over 6,100 units almost doubled the historical annual average of around 3,400 units since 2010. 2022 starts
4.5%
rose even further, reaching a record of over 6,300 4.0%
3.5%
units. The vast majority of starts remain underway, 21
22
3 STAR FORT LAUDERDALE
23
24
FORT LAUDERDALE
4-5 STAR FORT LAUDERDALE
with under-construction units totaling around 9,700,
26
25
representing the fifth-largest supply pipeline in Florida,
UNITED STATES
after Miami, Orlando, Tampa, and Jacksonville.
MARKET RENT PER UNIT & RENT GROWTH
Supply underway represents 7.1% of existing inventory, with around 80% set to deliver as 4 & 5 Star luxury
35%
$2,800 FORECAST
30%
$2,400
25%
$2,200
20%
$2,000
15%
$1,800
10%
$1,600
5%
$1,400
0%
in the area between I-95 and the Atlantic Ocean, with the majority, at 59%, located between the Central Fort ASKING RENT GROWTH
RENT PER UNIT
units. Around 60% of units underway are concentrated $2,600
Lauderdale, Hollywood/Dania Beach, and Pompano Beach/Deerfield Beach submarkets. Over 30% of 4 & 5 Star units delivered since 2015 and currently underway are concentrated within a 3-mile radius of Las Olas Boulevard, a major shopping, dining, and entertainment destination. Following national trends, new development is occurring in areas with
21
22
ASKING RENT GROWTH (YOY) FORT LAUDERDALE
11
23 EFFECTIVE RENT FORT LAUDERDALE
24
25 ASKING RENT FORT LAUDERDALE
ONE COMMERCIAL REAL ESTATE | MULTIFAMILY | Q4 2023
26 ASKING RENT UNITED STATES
a significant and growing share of neighborhood
MULTIFAMILY | BROWARD
TOP BUYERS PAST 12 MONTHS
OUTLOOK
THE CONNOR GROUP
With its higher concentration of finance, professional and business services, and information employment,
BAR INVEST GROUP
Fort Lauderdale boasts higher median incomes, at 11%
WATERTON
over Miami incomes and the fifth highest in the state. A
PARKVIEW MANAGEMENT INC
tight labor market, with an unemployment rate below
CARACO GROUP OF COMPANIES
the U.S. average, at 2.9%, has resulted in recent wage
ASHCROFT CAPITAL, LLC
growth outperformance with median incomes rising
GREYSTAR REAL ESTATE PARTNERS
faster than the U.S. average over the past two years. Despite a recent slowdown in job growth, total nonfarm
FCP
employment in the metro remains over 5% higher than
ATLANTIC PACIFIC COMPANIES
pre-pandemic max levels, a total of over 49,000 more
LEM CAPITAL $40M
$50M
$60M
$70M
$80M
$90M
$100M
$110M
$120M
$130M
$140M
jobs.
SALES VOLUME - PAST 1 YEAR
Over the past 12 months, job gains have been led by professional and business services, education and amenities, which include proximity to beach access and
health services, leisure and hospitality, and financial
new or updated retail establishments.
activities each growing by over 4%. More specifically,
Despite slowing employment and population growth, homeownership has been impacted by higher insurance premiums, rising maintenance costs in older condo properties, and a pandemic induced surge in home values, making renting more attractive. The limited construction of single-family housing across South Florida, coupled with elevated mortgage rates, further impacts home affordability, helping drive housing demand toward new luxury apartments and gardenstyle rental developments.
the financial activities and professional and business services sectors have been the primary drivers of job growth over the past few years, making up over 41,000 new jobs in the area since 2020 or over 60% of new total nonfarm jobs. With an average annual salary of over $86,000 for the financial activities sector in Broward County, 16% higher than the area’s median household income of over $75,000, employment gains in this sector have largely driven income growth. According to the Greater Fort Lauderdale Alliance, an economic development organization of the city,
SUBMARKET SALES TRANSACTIONS PAST 12 MONTHS SUBMARKET
SALES VOLUME
TRANSACTIONS
TRANSACTED UNITS
AVERAGE UNITS
MARKET CAP RATE
MARKET SALE PRICE/UNIT
CORAL SPRINGS
$483,983,700
13
1,942
149
5.4%
$257,114
OAKLAND PARK/LAUDERHILL
$230,668,399
42
1,530
36
5.7%
$208,431
PLANTATION/SUNRISE
$184,483,095
7
675
96
5.2%
$260,191
POMPANO BEACH/DEERFIELD BEACH
$97,375,508
20
578
29
5.4%
$248,791
CENTRAL FORT LAUDERDALE
$94,671,586
41
413
10
5.4%
$348,263
HOLLYWOOD/DANIA BEACH
$41,225,000
25
252
10
5.7%
$243,903
MIRAMAR/HALLANDALE BEACH
$31,948,400
16
233
15
5.9%
$232,779
SOURCE: COSTAR
ONE COMMERCIAL REAL ESTATE | MULTIFAMILY | Q4 2023 12
RECENT SIGNIFICANT SALES 11500 NW 56TH DRIVE | THE VILLAS AT WYNDHAM LAKES Coral Springs, FL 33076 SALE DATE
Jun 2023
BUYER
The Connor Group (USA)
SALE PRICE
$121M ($364.5K/Unit)
SELLER
AEW Capital Management (USA)
LEASED
95%
SALE TYPE
Investment
SALE COND
Debt Assumption
HOLD PERIOD 89 Months UNITS
332
YEAR BUILT
1999 (Reno 2008)
3495 N PINEWALK DRIVE | PINEBROOK POINT Margate, FL 33063 SALE DATE
Dec 2023
BUYER
Bar Invest Group (USA)
SALE PRICE
$93M ($236K/Unit)
SELLER
Blackstone Inc. (USA)
CAP RATE
5.5% (Actual)
BROKER
CBRE
LEASED
95%
SALE TYPE
Investment
HOLD PERIOD 138 Months UNITS
394
YEAR BUILT
1988
1650 SW 78TH AVENUE | ONE PLANTATION Plantation, FL 33324 SALE DATE
Jun 2023
BUYER
Waterton (USA)
SALE PRICE
$88.4M ($275.3K/Unit)
SELLER
PGIM Real Estate (USA)
CAP RATE
5.6% (Actual)
BROKER
ARA Newmark
LEASED
94%
SALE TYPE
Investment
HOLD PERIOD 125 Months UNITS
321
YEAR BUILT
2013
10900 W 17TH STREET | THE ATLANTIC PRESERVE Plantation, FL 33322 SALE DATE
Jul 2023
SALE PRICE
$86M ($293.5K/Unit)
LEASED
93%
HOLD PERIOD 43 Months UNITS
293
YEAR BUILT
1989
BUYER
Atlantic | Pacific Companies (USA) + 1
SELLER
PGIM Real Estate (USA)
SALE TYPE
Investment
420 SW 27TH AVENUE | RIVERLAND APARTMENTS Fort Lauderdale, FL 33312 SALE DATE
Feb 2023
BUYER
Eastham Capital, Inc. (USA) + 1
SALE PRICE
$84.1M ($304.6K/Unit)
SELLER
The Shidler Group (USA)
CAP RATE
4.8% (Pro Forma)
BROKER
Berkadia Commercial Mortgage LLC
LEASED
95%
SALE TYPE
Investment
SALE COND
Debt Assumption
HOLD PERIOD 11 Months UNITS
276
YEAR BUILT
2021 SOURCE: COSTAR
top employers in Fort Lauderdale include Nova Southeastern University, First Services Residential, HEICO, and American Express. Combined, these education, finance and high-tech companies employ over 20,000 residents in South Florida. Other major employers also include AutoNation, Citrix Systems, DHL Americas, Spirit Airlines, JetBlue, and Castle Group. An influx of retirees along with strong employment gains drove an outperformance in population growth from 2010 through 2018, though this has slowed in the past few years as affordability concerns have driven residents towards lower cost Central Florida markets. Still, a strong recovery in net international migration through the first half of 2022 has helped buoy total population, which grew by over 11,000 residents from July 2021 to July 2022 in Broward County, well above the over 3,000 resident growth in Miami-Dade County. Still, housing affordability will continue to present a drag on population growth as lower income households are increasingly priced out of the area. According to the Federal Housing Finance Agency’s purchase-only index, Fort Lauderdale home values have increased by over 65% since 2019, well above U.S. average growth of over 48%. Median home purchase values remain 18% below levels in Miami, presenting Fort Lauderdale as a more affordable option relative to its neighbor in the South, still the rapid rise in housing costs has deteriorated affordability and presents a headwind to future household growth.
Palm Beach County Q4 2023 | MULTIFAMILY REPORT PALM BEACH MULTIFAMILY TRENDS UPWARD TO CLOSE 2023; INVESTOR INTEREST HOLDS, UNDERSCORED BY DOUBLE-DIGIT PRICING GROWTH
EXECUTIVE SUMMARY Palm Beach multifamily demand continues to grow at a healthy pace, with apartment absorption growing over 2% annually in the fourth quarter of 2023, relative to 1.8% average growth for the U.S. Still, following national trends, demand has slowed from peak levels of around 8.1% annual growth seen in the third quarter of 2021. Additionally, delivery of new apartment units have outpaced absorption in 2023, resulting in a rise in the vacancy
1 YEAR AGO
CURRENT
INVENTORY UNITS
76,642
79,980
UNDER CONSTR UNITS
6,766
6,290
12 MO ABSORP UNITS
688
2,004
VACANCY RATE
6.67%
8.06%
MARKET ASKING RENT/UNIT
$2,409
$2,420
MARKET SALE PRICE/UNIT
$328,340
$309,878
4.45%
4.87%
MARKET CAP RATE
CHANGE
SOURCE: COSTAR
rate from a low of 3.7% in 2021 to 8.1% as of the
in 2019 to a max of over $261,000 in 2022. Pricing in 2023
first quarter of 2024. Affordability concerns, along
begun to contract, with average annual transaction pricing
with slowing population growth and an elevated
falling to $180,000/unit. Headwinds to occupancy, resulting
supply pipeline are weighing on multifamily
in a normalization in rent gains over the last few months,
fundamentals in the near-term, with annual asking
should continue impacting pricing and volume over the
rent gains continuing their descent, now slowing to
coming quarters.
0.5% from a high of 0.8% a year ago.
Since 2020, transactions of over $100 million have reached
Double-digit pricing growth in both 2022 and 2023
double digits, with roughly 10 trades in 2021 and six trades in
has underscored investor appetite for multifamily
2022 surpassing this figure. In the last couple of years, two
in the area, though softer fundamentals and rising
transactions have exceeded $200 million, an unprecedented
interest rates are now slowing pricing gains and
occurrence before 2021. 2023 proved to be a slow year,
transaction activity. Despite annualized activity
still two transactions of over $100 million have occurred.
remaining elevated relative to long-term historical
These larger trades have been concentrated in 4 & 5 Star
levels averaging $311 million in annual sales
apartment complexes that have been built or renovated in
volume over the last 10 years, the total number
the past 20 years.
of trades has dropped significantly. 2023 saw a total of 64 property trades, this is down from a record of over 176 trades totaling over $3.5 billion achieved from the second half of 2021 through the first half of 2022. The rise in investor interest in the last few years also drove an increase in values, with the average annual transaction price per unit rising over 1.3 times higher from around $112,000 15
ONE COMMERCIAL REAL ESTATE | MULTIFAMILY | Q4 2023
West Palm Beach has been the central target of investor demand, making up over 20% of transaction volume since 2020. Boca Raton, Boynton Beach and Palm Beach Gardens have also seen an elevated share of activity, each representing over 17% of sales volume over the same time period. The bulk of activity in the market has been composed of 4 & 5 Star assets, with over $4 Billion in luxury properties
MARKET REPORT
ONE COMMERCIAL REAL ESTATE | MULTIFAMILY | Q4 2023 16
SALES VOLUME & MARKET SALE PRICE PER SF $360K
trading hands since 2020, representing over 65%
$1.6B
FORECAST
$340K
$1.4B
$320K
$1.2B
$300K
$1B
$280K
$800M
$260K
$600M
$240K
$400M
$220K
$200M
of transaction volume. Both Delray Beach and Boca metro, achieving above average premiums of over 25% and over 17% respectively. SALES VOLUME
MARKET SALE PRICE/UNIT
Raton continue to see the highest pricing across the
Going forward, a slowing economy and higher interest rates, resulting in a near-term pricing correction, will likely continue to drive slower transaction activity relative to the boom in 2021 and 2022. Average
$200K
low 5% range in 2022 to over 6% in 2023, impacting
$0
21
22
23
SALES VOLUME
24
25
26
valuations. Higher cap rates coupled with softening
PRICE/UNIT UNITED STATES
PRICE/UNIT
transaction cap rates have already risen from the
fundamentals will likely remain a drag to market activity at least until an eventual loosening of financial
MARKET CAP RATE
conditions occurs.
7.0% FORECAST
6.5%
MARKET ACTIVITY
6.0%
Construction starts have slowed from an elevated level in the first quarter of 2023 totaling over 2,700 units, a
5.5%
record quarterly figure for the Palm Beach multifamily 5.0%
market. A slowing economic environment coupled with higher financing costs are beginning to impact
4.5%
development activity, with starts totaling less than
4.0%
400 units since the second quarter. Still, total under 3.5%
construction units remain elevated at over 6,300.
3.0% 21
22
3 STAR PALM BEACH
23
24
A pandemic-amplified surge in demand has
26
25
PALM BEACH
4-5 STAR PALM BEACH
UNITED STATES
emboldened apartment developers in the Palm Beach area over the past few years. Delivery of new product
MARKET RENT PER UNIT & RENT GROWTH
is likely to remain elevated through 2025, with a record 35%
number of units expected to deliver in 2024.
$2,800
30%
Supply underway represents 7.9% of existing inventory
$2,600
25%
$2,400
20%
$2,200
15%
$2,000
10%
$1,800
5%
$1,600
0%
RENT PER UNIT
FORECAST
with around 70% set to deliver as 4 & 5 Star luxury units. Around 50% of units underway are concentrated ASKING RENT GROWTH
$3,000
within a five-mile radius of Downtown West Palm Beach, which is seeing significant new development, specifically nearby The Square, an experiential neighborhood by the Related Companies. Following national trends, new development is occurring in areas
-5%
$1,400 21
22
ASKING RENT GROWTH (YOY) PALM BEACH
17
23 EFFECTIVE RENT PALM BEACH
24
25 ASKING RENT PALM BEACH
ONE COMMERCIAL REAL ESTATE | MULTIFAMILY | Q4 2023
26 ASKING RENT UNITED STATES
with a significant and growing share of neighborhood amenities, which include proximity to beach access and new or updated retail establishments.
MULTIFAMILY | PALM BEACH
TOP BUYERS PAST 12 MONTHS Despite elevated deliveries in the near-term, healthy
HARBOR GROUP INTERNATIONAL, LLC
employment gains driving household formation and
THE PRAEDIUM GROUP
income growth over the coming years, should result
GREYSTAR REAL ESTATE PARTNERS
in a continued rise in housing demand. A near-term
ROBERT B COHEN II
slowdown in construction starts points to a weaker
ANCHOR EQUITY HOLDINGS LLC
supply pipeline post-2025, which should help rebalance
CEEBRAID-SIGNAL FLORIDA MANAGEMENT LTD
supply and demand in the longer term. Additionally,
CAMPECHE HOLDINGS LLC
homeownership has been impacted by higher insurance premiums, rising maintenance costs in older condo
ALEJANDRO GERSHANIK
properties and a pandemic induced surge in home
JD BOLS & ASSOCIATES
values, making renting more attractive. The limited
AJZ INVESTMENT INCORPORATED $0M
$40M
$80M
$120M
$160M
construction of single family housing across South
$200M
Florida, coupled with elevated mortgage rates further
SALES VOLUME - PAST 1 YEAR
impacts home affordability, helping drive housing Currently there are ten multifamily developments
demand towards new luxury apartments and garden
underway across the market with more than 300
style rental developments.
units each, making up over 60% of units underway.
OUTLOOK
The largest development is the Parks at Delray, which totals 747 units within a 43-acre mixed-use community
With the fourth-highest personal income in Florida, over
expected to deliver in 2025 in Delray Beach. The second
60% higher than the state average, Palm Beach is one
largest development includes 401 units at the Villas
of the wealthiest counties in the state and country. The
at Tuttle Royale in the Royal Palm Beach/Wellington
area’s outsized concentration of financial activities and
Submarket. The 4 Star apartment project is expected to
professional and business services jobs helps drives
deliver in late 2024. The third largest development totals
higher median household income levels relative to its
396 units at 4001 Design Center Drive in the Outer
southern neighbors of Fort Lauderdale and Miami.
Palm Beach Gardens/Jupiter Submarket. The property is being built within a larger mixed-use area and should
The county also boasts the third-largest population
deliver by next year.
in the state, after Miami-Dade and Broward County,
SUBMARKET SALES TRANSACTIONS PAST 12 MONTHS SUBMARKET
SALES VOLUME
TRANSACTIONS
TRANSACTED UNITS
AVERAGE UNITS
MARKET CAP RATE
MARKET SALE PRICE/UNIT
BOYNTON BEACH
$158,616,898
16
681
43
5.0%
$288,759
WEST PALM BEACH
$142,967,000
23
856
37
4.9%
$296,291
PALM BEACH GARDENS/JUPITER
$119,611,000
5
511
102
4.5%
$343,241
GREENACRES
$77,925,000
5
316
63
5.1%
$237,784
DELRAY BEACH 2 19 10
$5,350,000
2
19
10
4.6%
$377,080
BOCA RATON
$4,200,000
1
18
18
4.8%
$362,863
BELLE GLADE
$2,580,000
4
161
40
7.3%
$61,267
SOURCE: COSTAR
ONE COMMERCIAL REAL ESTATE | MULTIFAMILY | Q4 2023 18
RECENT SIGNIFICANT SALES 900 WATER TOWER WAY | MANOR LANTANA Water Tower Commons | Lantana, FL 33462 SALE DATE
Jun 2023
BUYER
The Praedium Group (USA)
SALE PRICE
$138M ($396.6K/Unit)
SELLER
LEASED
84%
Related Development, LLC (USA) +1
SALE TYPE
Investment
HOLD PERIOD 29 Months UNITS
348
YEAR BUILT
2021
3590 VILLAGE BLVD | LOCKLYN WEST PALM West Palm Beach, FL 33407 SALE DATE
Jun 2023
SALE PRICE
$105.5M ($376.8K/Unit) SELLER
LEASED
95%
HOLD PERIOD 17 Months UNITS
280
YEAR BUILT
2022
BUYER
Harbor Group International (USA) Alliance Residential Company (USA) + 1
BROKER
ARA Newmark
SALE TYPE
Investment
2750 RIO VISTA BLVD | AVANA PALM BEACH GARDENS Palm Beach Gardens, FL 33410 SALE DATE
Jul 2023
SALE PRICE
$92.2M ($205.7K/Unit)
LEASED
94%
HOLD PERIOD 19 Months UNITS
448
YEAR BUILT
1991
BUYER
Greystar Real Estate Partners (USA) + 1
SELLER
Carroll (USA) + 1
SALE TYPE
Investment
SALE COND
Bulk/Portfolio Sale
6200 WALLIS ROAD | PINE RIDGE West Palm Beach, FL 33413 SALE DATE
Jun 2023
BUYER
Harbor Group International (USA)
SALE PRICE
$75M ($260.4K/Unit)
SELLER
Resia (USA)
LEASED
25%
BROKER
ARA Newmark
SALE TYPE
Investment
HOLD PERIOD 5 Months UNITS
288
YEAR BUILT
2023
3770 COUNTY LINE ROAD | BELLA VILLAGIO TOWNHOMES Tequesta, FL 33469 SALE DATE
Nov 2023
BUYER
SALE PRICE
$15M ($937.5K/Unit)
BROKER
Compass
CAP RATE
5.5% (Actual)
SELLER
Professional Realty Services (USA)
LEASED
94%
BROKER
Coldwell Banker Hometown Real Estate
SALE TYPE
Investment
HOLD PERIOD 25 Months UNITS
16
YEAR BUILT
2017
Robert B Cohen II (USA)
SOURCE: COSTAR
with over 1.5 million residents. From April 2020 through July 2022 both international and domestic migration have driven population growth in the county, which has risen by over 26,000 residents over that time period, the tenth largest increase across counties in Florida and higher than Miami-Dade and Broward County. The Palm Beach market has the sixth-highest home values out of all Florida metros, growing by over 75% over the last five years, vastly outpacing the area’s median household income growth of just over 26% over the same time period. Despite recent outsized employment growth in the higherearning financial activities and professional and business services sectors, the area’s high share of lower paying trade, transportation, and utilities jobs, coupled with leisure and hospitality jobs, which make up over 30% of employment, continue to drive a widening disparity between living costs and wages for the majority of households. Additionally, after outperforming the U.S. average in terms of population growth for almost a decade, from 2009 to 2017, growth has decelerated since 2018 as lower income residents began exiting the market for more affordable areas in central and northern Florida. This demand slowdown is now being further impacted by a moderation in finance and business services job gains which are waning due to macroeconomic headwinds. That said, new company moves into the area including Goldman Sachs and Elliot Management have earned West Palm Beach a new moniker as the “Wall Street of the South.” The newly built 360 Rosemary office building, in downtown West Palm Beach, houses these and other financial services firms which have recently moved to the area. The building sits within The Square, a new neighborhood development by the Related companies which includes apartments, retail and mixed-use space. Several New York restaurants have also opened up new locations in the area including Milos, Felice and Harry’s. According to a recent report by Henley & Partners, West Palm Beach is the 4th fastest growing in the world for millionaires over the past ten years, with 90% more millionaires today than a decade ago. This influx of wealth has attracted developers and businesses to the area, a trend that will likely continue over the next few years.
Are you ready for what’s next? Let’s have a conversation.
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