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Thomas-Duncan Team Outlook on the 2022 Multifamily Rent Growth

South Florida’s market is bustling with out-of-state and international investors looking to capitalize on the state’s multifamily real estate – population growth coupled with fewer restrictions, regulations, and remote work are driving the migration. For Northerners especially, the health crisis and quarantine presented a unique opportunity to move from states with high rents and high taxes like New York and Los Angeles to South Florida.

According to the 2022 Multifamily Investment Forecast, Fort Lauderdale, Florida, is currently ranked #2 for the highest rent growth at 28.9% since 2020. South Florida also outranks other metros in labor recovery, job creation, and housing affordability at #3.

“Our timeline to close is the fastest it’s ever been. We are hitting the market and going under contract within 30 days. It’s a good and bad problem to have,” said Joseph Thomas, senior managing director of investments. “Covid-19 regulations aren’t as stringent here, and everything is open when compared to the rest of the country, and Florida has strong population growth, a favorable tax environment, and desirable living conditions – all of which have contributed to tremendous populations and rent growth. “There is a robust demand for multifamily housing in suburban markets. We are seeing $300-400 rent increases in certain cases, and either the tenants are staying or there is ample demand from new tenants,” added Adam Duncan, first vice president of investments.

Typically, average rent growth in a normal year might be 3-5%, but now that rate has increased to levels as high as 15-20%. Why the rent growth? In South Florida specifically:

  • Limited supply of vacant land
  • High construction costs
  • An expensive residential housing market
  • Significant population growth

 

Moreover, nearly all the new multifamily construction is “Class A” with rental rates substantially above the “Class B and C” rents. These properties often feature amenities that would rival luxury condominiums, all to achieve top of the market rental rates, including:

  • State-of-the-art fitness centers
  • Chef-inspired kitchens
  • Elevated ceiling heights
  • Resort-style swimming pools
  • Rideshare lounges
  • Pet parks

 

Many of these new communities were built on sites that were previously Class B or C properties that were demolished, which has created an even more limited supply of affordable rentals.

Our expectation is that multifamily rental rates and occupancy levels will remain strong into the foreseeable future, as will investor demand for those assets – especially given the scarcity and irreplaceability of Class B and C properties. While it is certainly possible that rising interest rates or insurance costs could present some challenges with respect to financing and investors hitting their targeted yields, continued rental growth could offset those factors to a certain degree.

The Thomas-Duncan Team of Marcus & Millichap are leading brokers specializing in properties throughout South Florida and offer a wide range of advisory and consulting services. Follow their exclusive listings here: marcusmillichap.com/florida

Joseph Thomas and Adam Duncan are leading brokers in Marcus & Millichap’s Fort Lauderdale office specializing in the sale of non-institutional, privately owned assets in the South Florida market.

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Drew Limsky

Drew Limsky

Editor-in-Chief

BIOGRAPHY

Drew Limsky joined Lifestyle Media Group in August 2020 as Editor-in-Chief of South Florida Business & Wealth. His first issue of SFBW, October 2020, heralded a reimagined structure, with new content categories and a slew of fresh visual themes. “As sort of a cross between Forbes and Robb Report, with a dash of GQ and Vogue,” Limsky says, “SFBW reflects South Florida’s increasingly sophisticated and dynamic business and cultural landscape.”

Limsky, an avid traveler, swimmer and film buff who holds a law degree and Ph.D. from New York University, likes to say, “I’m a doctor, but I can’t operate—except on your brand.” He wrote his dissertation on the nonfiction work of Joan Didion. Prior to that, Limsky received his B.A. in English, summa cum laude, from Emory University and earned his M.A. in literature at American University in connection with a Masters Scholar Award fellowship.

Limsky came to SFBW at the apex of a storied career in journalism and publishing that includes six previous lead editorial roles, including for some of the world’s best-known brands. He served as global editor-in-chief of Lexus magazine, founding editor-in-chief of custom lifestyle magazines for Cadillac and Holland America Line, and was the founding editor-in-chief of Modern Luxury Interiors South Florida. He also was the executive editor for B2B magazines for Acura and Honda Financial Services, and he served as travel editor for Conde Nast. Magazines under Limsky’s editorship have garnered more than 75 industry awards.

He has also written for many of the country’s top newspapers and magazines, including The New York Times, Washington Post, Los Angeles Times, Miami Herald, Boston Globe, USA Today, Worth, Robb Report, Afar, Time Out New York, National Geographic Traveler, Men’s Journal, Ritz-Carlton, Elite Traveler, Florida Design, Metropolis and Architectural Digest Mexico. His other clients have included Four Seasons, Acqualina Resort & Residences, Yahoo!, American Airlines, Wynn, Douglas Elliman and Corcoran. As an adjunct assistant professor, Limsky has taught journalism, film and creative writing at the City University of New York, Pace University, American University and other colleges.