MARKET SNAPSHOT
Developers remain active in the Panhandle region, though the brunt of the historic supply wave is waning. As of early January, 3,132 units were under construction across the Panhandle—more than double the pre-pandemic average of 1,320 units from 2015 to 2019. Ft. Walton Beach leads development activity with 2,089 units, accounting for approximately two thirds of the total pipeline, followed by Pensacola with 712 units and Panama City with 576 units. However, new deliveries are expected to decline by late 2025, as only 1,276 units broke ground in 2024, a sharp drop from the 5,100 units started in 2023, reflecting a 75% year-over-year decrease. Furthermore, unit completions are projected to decline by 55% in 2025, falling from 4,664 units last year to an estimated 2,100 units this year.
Unit absorption remained strong in the Panhandle multifamily market in 2024 but was not sufficient to counteract the historic influx of new supply. As a result, the region’s overall average occupancy rate declined by 40 basis points year over year, reaching 91.6% in the fourth quarter. Occupancy is expected to stabilize within its current range over the next quarters though, as supply and demand move toward equilibrium. However, with excess inventory still lingering from the 2024 supply surge, the overall average occupancy rate is projected to decline by another 20 basis points by the end of 2025. As of the fourth quarter of 2024, Panama City maintained the highest occupancy rate at 92.7%, followed by Pensacola at 91.2% and Ft. Walton Beach at 90.9%.
Rent growth in the Panhandle region was volatile in 2024, fluctuating between modest gains and declines throughout the year. By the fourth quarter, rents had dipped 0.5% year over year. This slowdown was largely driven by the historic supply wave that hit the region in 2023, intensifying competition and prompting the widespread use of concessions to attract renters. However, rental trends varied across key submarkets. Ft. Walton Beach and Pensacola posted slight annual rent increases of 0.5% and 0.2%, respectively, while Panama City saw a 1.6% decline. With new construction activity slowing, rent growth is expected to rebound, potentially approaching 1.5% by late 2025.
Developers remained active in the Panhandle region in 2024, delivering a record 4,460 units across the area. However, new groundbreakings slowed significantly, signaling a deceleration in development. As a result, unit completions are expected to decline by 55% in 2025, dropping to 2,100 units. The surge in supply in 2024 placed downward pressure on rents, leading to a slight overall decline of 0.5% year over year in Q4 2024. But looking to 2025, the shirking construction pipeline is projected to enable rent growth to rebound, potentially reaching 1.5% by late 2025.
Despite strong unit absorption in 2024, the market struggled to keep pace with the influx of new supply, causing the region’s average occupancy rate to decline by 40 basis points to 91.6% by year-end. While occupancy is projected to remain relatively stable in 2025 as supply and demand move toward equilibrium, lingering excess inventory is expected to push the average rate down another 20 basis points by year-end.
Disclaimer: This multifamily forecast incorporates data from reputable third-party sources, including Costar, Yardi Matrix, the U.S. Census Bureau, the U.S. Bureau of Labor Statistics, and ESRI. While we make every effort to ensure accuracy, we cannot guarantee the reliability of the projections provided. Forecasts are inherently subject to change due to evolving market conditions, economic factors, and unforeseen events. We strongly encourage users to conduct independent due diligence and consult with an MMG Advisor before making any investment decisions based on this information.
