$1,583 2Q 2024
0.3%
92.1% 2Q 2024
-20 BASIS POINTS
1,189 [YTD: 1,723]
738 [YTD: 2,116]
QUARTERLY DEMAND
QUARTERLY COMPLETIONS
The Florida Panhandle multifamily market experienced a significant reversal in the second quarter of 2024, ending an eight-quarter trend as net absorption reached 1,189 units, surpassing the addition of 738 new units during the same period. Demand was evenly distributed across the Panhandle’s key regions, with Pensacola absorbing 463 units, Ft. Walton 378 units, and Panama City 348 units. This shift marks a critical turning point for the Panhandle region. However, to effectively mitigate the substantial supply overhang accumulated over the past two years, it will be essential for demand to maintain this robust level in the coming months.
Developers remain active in the region, although there are indications that the pace of new development is slowing. As of July 1st, there are 4,701 units under construction across the Panhandle. The Ft. Walton Beach area accounts for the largest portion, with 2,089 units, representing approximately 44% of the total pipeline. Pensacola follows with 1,446 units under construction, and Panama City with 1,166 units. New unit deliveries in the region are expected to slow by mid-2025, as only 600 units have broken ground since the start of the year. This represents a 65% decrease compared to the same period last year.
The gap between supply and demand in the Panhandle multifamily market is steadily narrowing, as apartment demand in all three key cities outstripped new supply in the second quarter. Despite this uptick in demand, the overall average occupancy rate for the region declined slightly by 20 basis points year over year, largely due to a surplus of new units introduced in 2023. However, a resurgence in rental demand during the second quarter of 2024 led to a 70-basis-point-increase in average occupancy rates quarter over quarter, signaling a positive trajectory for the market. Occupancy will likely stabilize in its current range over the next four quarters.
Year-over-year rent growth in the Panhandle region turned positive, marking a modest increase of 0.3% after four quarters of annual decreases. This uptick is a welcome development, considering that supply-induced pressures have significantly impacted rent growth over the last four quarters. A closer look at the three key regions reveals a bit of a disparity though. Among the key regions: Panama City and Pensacola each recorded annual rental increases of 0.9%, while Ft. Walton Beach experienced a 1.6% decline in rental prices. However, examining the quarter-over-quarter trends presents a more encouraging picture. Rents rose by 1.9% in Panama City, 3.0% in Ft. Walton Beach, and 4.5% in Pensacola. As the construction pipeline begins to taper, annual rent growth across these three areas is expected to accelerate, potentially exceeding 3.0% by mid-next year.
Average Monthly Mortgage Payment
Average Monthly Rent
As of mid-2024, the total value of conventional multifamily transactions in the Panhandle region reached approximately $21.6 million, marking an 89% decline compared to the same period in 2023. CoStar identified only three transactions in the first two quarters of 2024, a significant reduction from the nine transactions recorded in the previous year. These three transactions this year involved a total of 74 units.
* Trailing 4Q average PPU
* Preliminary Data from Costar – Individual transaction $2.5M +
The remainder of 2024 looks promising for the Panhandle region, with a tightening supply-demand gap expected to propel rent growth into meaningful territory by year’s end. Occupancy rates are projected to stabilize around the 92% mark in the near term, supported by sustained robust demand. This optimistic forecast is underpinned by strong in-migration, and high interest rates that keep homeownership out of reach for many, maintaining a healthy demand for rental properties.
