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Apartment construction is booming in South Florida, even though the market is past its pandemic-era leasing and rent peak.
“Developers are still very bullish on the Miami story,” said Juan Arias, a national director at CoStar Group. “You have a lot [to be completed] in 2027 and 2028.”
After Covid’s onset, out-of-staters rushed to South Florida, driving unprecedented demand, rent growth and a building spree that created a supply overhang. A record 18,600 units were completed last year, outpacing 15,000 net new leases, just as the influx of Northeasterners and West Coasters slowed and many who weathered the pandemic here moved back home. Median asking rents in the tri-county region decreased 3 percent last month, year-over-year, according to Realtor.com.
Yet, developers are continuing construction like it’s 2021, casting doubt on future lease-ups and rent growth, and threatening to prolong the supply overhang, experts warn.
The pandemic-era strong fundamentals have slowed, according to Arias. “That presents a significant headwind for the amount of multifamily getting built,” he said.
In the 12-month period that ended Sept. 30, construction started on 14,515 apartments in South Florida, according to data from CoStar. This outpaces the 13,338 starts in the 12-month period that ended Sept. 30 of last year, and also the 14,464 starts during the same period of 2021, the data shows. It’s also not far behind the 14,980 starts in the 12-month period that ended Sept. 30 2023. Yet, it far lags the peak 22,296 starts in the 12-month period that ended Sept. 30 2022.
“The assumption is net deliveries are going to continue to outpace demand through 2027 for luxury properties,” Arias said, adding that this “may be a little bit optimistic.” It “could get worse.”
Developers are unfazed. By the time they finish towers, they believe demand will return and leasing will be robust. They say they’re picking submarkets that will have appeal and need housing, and are adding amenities to draw tenants.
Yet, it takes an average of a year and a half to two years to stabilize a new project, much longer than the six-month lease-ups during the market bonanza, experts say. This means buildings finished next year will compete with those finished this year, and towers finished in 2027 will compete with those completed next year.
“It gets sandwiched, so you won’t see these properties lease up in 16 months,” said Andrew Rahman, of property manager Crown Residential. “It will take much longer than that, and they are not going to see the results they want.”
Top of the market
Most construction is of four- and five-star apartments, mostly in prime submarkets, according to Arias of CoStar.
Of the total 26,502 units under construction, nearly 60 percent are in coveted neighborhoods east of I-95, and nearly a quarter are in downtown Miami and Miami’s Arts & Entertainment District, Brickell and Edgewater, CoStar data shows.
They’re asking top rents that target specific demographics: well-heeled Miamians, many of whom work for the new-to-market companies, and out-of-state transplants, who often retain higher paying jobs outside of Florida. (Miami-Dade County’s median income is $87,200, less than New York’s $103,000, Los Angeles’ $106,600 and Cook County’s $119,900, according to HUD.)
Already, these high-end apartments have a vacancy of 13.4 percent, more than South Florida’s average vacancy of 10.2 percent, CoStar data shows.
“A lot of the out-of-staters who want to go to Miami … that has slowed down and the amount of construction occurring in those particular markets is something we want to stay away from,” said developer Robert Suris. “We feel those markets have a lot of inventory delivering.”
Future in-migration will be key.
Steve Ross, who started West Palm Beach-based Related Ross, and Ken Griffin, who moved his Citadel and Citadel Securities to Brickell are prompting smaller firms to move to South Florida and bring employees who will lease, optimists said.
“It used to be in Miami, your largest tenants were law firms. Now we are seeing different tenants we haven’t seen in the past,” said developer Dan Kodsi.
But Trump’s immigration policies threaten South Florida population growth, Arias said.
In the first three quarters of this year, 13,693 people from abroad moved to Miami-Dade County, marking a 66 percent decrease, year-over-year, according to the Miami Association of Realtors, which based its analysis on driver’s license exchanges. It marked a 63 percent decrease from 2023, 49 percent decrease from 2022, 14.7 percent decrease from 2021 and 30 percent decrease from 2019.
More than 2,050 Colombians; 1,600 Cubans and 970 Venezuelans exchanged their licenses in the first three quarters of this year, a decline from each of the past four years, the data shows.
In Doral, home to a large Venezuelan community, some with varying legal statuses, including Temporary Protected Status, are moving to Europe for fear of deportation, leaving some apartment buildings with vacancies of 10 percent or higher.
A number of Ukrainians, who also are eligible for TPS, and Russians broke their leases early at some of Estate’s buildings, Suris said.
“There has been a flight of even wealthier [people] that don’t have immigration status that were renters of higher-end multifamily,” he said. “Immigration policy has affected the market for sure.”
New York City’s mayoral election could counter this. If Zohran Mamdani, whose anti-Israel stance and calls for higher taxes have prompted anxiety, wins, more New Yorkers could head south.
“People are counting on a huge growth in population if Mamdani gets elected, exceeding what happened during the pandemic,” said Tal Frydman, of Newmark.
At the same time, homeownership remains out of reach for many, despite a slight drop in prices and mortgage rates. That’s a boon for apartment buildings.
“It’s moving people from choosing to buy to being forced to rent. A lot of those are renters by choice, especially in the four- and five-star buildings,” said Eli Beracha, a Florida International University real estate professor. “They can afford to rent, but they don’t have enough for a down payment.”
Gen Zers are inclined to pay higher rents in exchange for top buildings, market optimists said, pointing to Edgewater’s Forma Miami. Completed last year, it’s 97 percent leased, despite rents reaching $7.70 a square foot, higher than the $3.19 a square foot average for top Miami-Dade units.
Similarly, Coral Gables’ multifamily market is roughly 95 percent leased, partly due to FIFA opening an office in the city. But some staff are hired temporarily for the 2026 World Cup.
“What happens when these [people] move out?” said Rahman of Crown Residential, referring to well-heeled employees. “You are going to see a slight drop” in occupancy, he said.
Hollywood is particularly strained with the supply overhang, he added. Concessions abound: Tenants could get two months rent free at the 362-unit Bread Building; three months rent free and a $1,500 gift card at the 180-unit Griffin 441; and two months rent free and a $2,000 gift card at the 324-unit Hollywood Heights, according to their websites. All were completed last year.
“No market that’s not a bloodbath is offering two-and-a-half months free and gift cards,” Rahman said. “All are trying to fight for the same [prospective tenants]. Unless there’s a huge spike in population, and we’re talking a tremendous spike, this is going to spill into 2028.”
That’s not stopping Calta Group from planning to start construction early next year of a pair of apartment buildings with 251 units, combined, near Hollywood’s Young Circle. They are expected to be completed in mid-2027.
Will demand rise?
“Demand will definitely pick up by then,” said Calta’s Gaetano Caltagirone, adding that impending openings of retail, dining and a Brightline stop will drive demand. “Miami is becoming extremely expensive. It’s important to have these alternatives of living 10-15 minutes away from downtown Miami.”
The current multifamily slowdown started about 10 months ago and will turn around, said real estate attorney Dennis Eisinger. But when?
“That could be another two or four or five years. … Have the developers overbuilt? Yes,” said Eisinger, of Eisinger Law. “Developers just by nature are, ‘Hey I am a developer, I see the future, and I know I can start now because in two years when my building is ready, I’lll be good.’”
As a whole, South Florida’s multifamily market remains healthier, benefiting from its ever-present appealing climate, coastal access and lack of a state income tax, developers and analysts said.
“Ours is a little bit of a slowdown, a minor downturn. It might be going down more before it goes back up,” Eisinger said. “Let’s hope developers don’t kill the market by overbuilding.”
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