Cushman & Wakefield Released its 1Q 2017 South Florida Multifamily Market Update, Documenting $3.6 Billion in 2016 Sales and a Strong Start to 2017
The in-depth report, authored by Executive Vice President Calum Weaver of Cushman & Wakefield’s South Florida Institutional Multifamily Team, details the state of the multifamily market in the three counties comprising South Florida — Miami-Dade, Broward and Palm Beach.
The report finds an eighth consecutive year of multifamily expansion in South Florida driven by strong fundamentals. Important highlights of the report can be found below:
- There were 278 property sales in South Florida valued at more than $3.6 billion in 2016. This eclipses the annual record of $3.3 billion in sales established in 2015.
- South Florida rental demand continues to increase due to population growth, an inventory shortage and the rising costs of single-family homes.
- The supply of multifamily housing in South Florida continues to lag demand, with most new development coming in the Class A+ market. The supply of affordable and Class B and C product remains constrained.
- South Florida multifamily rents achieved record pricing for the sixth year in a row with the strongest growth coming in the supply-constrained Class B and C markets.
- Income levels in South Florida grew significantly in 2016, relieving some of the pressure created by elevated rents.
- Investors continue to eye Class B and C assets as value-add opportunities that can be repositioned to target renters priced out of Class A product.
- South Florida occupancy rates remain at record levels with net absorption levels outpacing new supply.
- The Fed’s December interest rate hike has had no material impact on cap rates to date and likely will not in the near future. Reduced loan credit spreads will likely serve to temper any future rate increases.
- With cap rates at or near historic lows, investors are increasingly focused on cash returns, favoring markets with stronger rental-growth outlooks and properties offering immediate cash flow.
- Debt markets continue to be robust, with the multifamily asset class enjoying the most plentiful and cheap options.
“2016 was a funny year in the South Florida multifamily market,” said Weaver, noting that the transaction pipeline trailed off a bit in the fourth quarter. “There was record sale activity, yet we witnessed economic uncertainty in the beginning of the year and political uncertainty in the second half of the year, which actually restrained transaction volume.”
“The economic and political ambiguities gave rise to a gap between buyer and seller valuations,” added Weaver. “In the second half of 2016, we entered a period of price discovery with relatively restrained transaction volumes since fewer deals came on the market for sale. However, the resultant pent up demand has given way to an extremely robust start to 2017.”
About the South Florida Institutional Multifamily Team
Cushman & Wakefield Multifamily in South Florida focuses exclusively on meeting the needs of institutional and private owners of multifamily properties and land development throughout South Florida including Miami, Fort Lauderdale, Palm Beach, Naples, Fort Meyers, Treasure Coast and the Keys. Our team is comprised of seasoned professionals with over 100 years of combined Real Estate and Investment Sales experience with over $20 billion in multifamily transactions. We are consistently ranked as the No. 1 Multifamily Team in South Florida. Our proven marketing process involves a highly structured, controlled and competitive offering, specifically tailored to the needs of multifamily owners and the local market. We have consistently produced maximum pricing by attracting and engaging the most aggressive investors for our property listings.
About Cushman & Wakefield
Cushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop, and live. Our 45,000 employees in more than 70 countries help occupiers and investors optimize the value of their real estate by combining our global perspective and deep local knowledge with an impressive platform of real estate solutions. Cushman & Wakefield is among the largest commercial real estate services firms with revenue of $6 billion across core services of agency leasing, asset services, capital markets, facility services (C&W Services), global occupier services, investment & asset management (DTZ Investors), project & development services, tenant representation, and valuation & advisory. 2017 marks the 100-year anniversary of the Cushman & Wakefield brand. 100 years of taking our clients’ ideas and putting them into action. To learn more, visit www.cushwakecentennial.com, www.cushmanwakefield.com or follow @CushWake on Twitter.