Orlando 2Q23
Multifamily Market Report

$1,824

average rent

94.6%

average occupancy rate

$666.1M

ytd sales volume

1.9%

YoY rent change

-2.5 POINTS

yoy occupancy change

12 YTD

individual transactions

Supply & Demand

2Q23

2,019 Units

QUARTERLY DEMAND
YTD: 3,777

2,539 Units

QUARTERLY COMPLETIONS
YTD: 4,850

Annual Demand vs Completions

2018
3,129
3,455
2019
3,645
2,343
2020
4,175
4,865
2021
7,178
4,625
2022
507
3,365
2023 YTD
1,619
2,696
  • Planned
    Completions
  • Pre-Planned
    Demand

Demand Trends

  • In the first half of the year, the Orlando apartment market demonstrated its resilience with a rebound in demand. Over 3,700 net units were absorbed, marking a recovery from a streak of negative absorption that started in the second quarter of the previous year.

 

  • Six out of Orlando’s ten submarkets recorded positive net absorption in the second quarter, with South Orange County leading the pack by absorbing 629 new units. This highlights the submarket’s strong demand dynamics amidst the broader recovery of the Orlando apartment market.

Completion Trends

  • In Q2 2023, Orlando’s apartment inventory grew by 2,539 units. The Kissimmee/Osceola County submarket made the most substantial contribution, bringing 817 new units into the mix.

 

  • The past year saw a notable uptick in completions, particularly in the Kissimmee/Osceola County and South Orange County submarkets. Together, they accounted for a significant 37% of the total new supply added to the market.

Demand Outlook

  • Over the next four quarters, Orlando’s demand outlook is encouraging, with an estimated absorption of 12,231 units. This expectation aligns with a generally positive market outlook at the national level during the same period.

 

  • The Kissimmee/Osceola County, South Orange County, and Ocoee/Winter Garden/Clermont submarkets are projected to be major drivers of demand. Each of these submarkets is anticipated to account for more than 20% of the total annual absorption.

New Supply Outlook

  • The Orlando apartment market is on track for a substantial growth of inventory over the next four quarters, with the addition of 16,477 units.

 

  • The Kissimmee / Osceola County and South Orange County submarkets are expected to play key roles in this supply expansion, with projected additions of 3,473 units and 3,297 units, respectively.

Occupancy & Rent Trends

RENT VS OWN
MONTHLY PAYMENT

$2,691

Average Monthly Mortgage Payment

$1,824

Average Monthly Rent

Occupancy trends

The Orlando apartment market has consistently maintained strong occupancy rates, averaging 96% over the past five years. However, over the past year, the market has experienced a decrease in occupancy, culminating in an average rate of 94.6% in the second quarter of this year. In the second quarter of 2023, North Lake County and University submarkets stood out for their strong occupancy rates, while Central Orlando and Southwest Orlando posted somewhat lower figures.

Looking ahead, it’s projected that occupancy rates in the Orlando market may see a slight decline in the coming year, mainly due to an imbalance between new supply and demand. However, once the incoming wave of new supply is effectively absorbed, the Orlando market is expected to resume its robust growth patterns.

RENTAL TRENDS

Mirroring national trends, rent price growth in Orlando has slowed following record increases in the previous year. As of Q2 2023, new lease rents recorded year-over-year growth of 1.9%, a figure that falls below the market’s five-year average of 7.4%. Despite this deceleration, Orlando’s rental price performance remains consistent with many other sunbelt markets. With an average monthly rental rate of $1,824, Orlando offers a more affordable living option compared to South Florida, enhancing its attractiveness for individuals migrating to the state.

In terms of property classes, Class C units led with a healthy gain of 3.7%. Class A units followed closely with a 2.7% increase, while Class B units trailed at 0.8%. Two submarkets, North Lake County and Northwest Orlando, stood out with robust year-over-year rent gains of 6.8% and 5.1% respectively by the end of Q2 2023.

Submarket Rent & Occupancy

SubmarketAverage OccupancyAnnual Occupancy ChangeAverage Monthly RentAnnual Rent Change
Central Orlando93.6%-2.4%$2,1693.7%
East Orlando95.5%-1.8%$1,6983.8%
Southwest Orlando93.7%-3.4%$1,6370.9%
West Orlando94.1%-3.3%$1,8160.7%
Northwest Orlando94.5%-2.4%$1,6845.1%
Winter Park/Maitland94.8%-2.3%$1,7584.8%
Altamonte Springs/Apopka94.1%-2.8%$1,7512.0%
Sanford/Lake Mary94.5%-1.7%$1,757-0.7%
Casselberry/Winter Springs/Oviedo94.2%-2.6%$1,7821.7%
University95.8%-2.1%$1,7162.4%
East Orange County94.8%-2.2%$1,951-1.7%
South Orange County94.7%-2.3%$1,9951.7%
Kissimmee/Osceola County94.9%-2.5%$1,8113.3%
Ocoee/Winter Garden/Clermont94.9%-3.1%$1,907-0.3%
North Lake County97.3%-1.8%$1,4236.8%
Orlando-Kissimmee-Sanford, FL94.6%-2.5%$1,8241.9%

Units by Submarket Delivering in 2023

24,533

Units Under Construction

16,477

Units UC Delivering In the Next 4 Quarters

Units Under Construction

Central Orlando - 975
0%
East Orlando - 1,393
0%
Southwest Orlando - 0
0%
West Orlando - 0
0%
Northwest Orlando - 1,022
0%
Winter Park / Maitland - 247
0%
Altamonte Springs / Apopka - 2,509
0%
Sanford / Lake Mary - 2,080
0%
Casselberry / Winter Springs / Oviedo - 393
0%
University - 243
0%
East Orange County - 1,312
0%
South Orange County - 4,887
0%
Kissimmee / Oceola County - 5,552
0%
Ocoee / Winter Garden / Clermont - 3,820
0%
North Lake County - 100
0%

Units Delivering Next 4Q

Central Orlando - 718
0%
East Orlando - 644
0%
Southwest Orlando - 0
0%
West Orlando - 0
0%
Northwest Orlando - 348
0%
Winter Park / Maitland - 247
0%
Altamonte Springs / Apopka - 1,909
0%
Sanford / Lake Mary - 1,232
0%
Casselberry / Winter Springs / Oviedo - 376
0%
University - 243
0%
East Orange County - 943
0%
South Orange County- 3,473
0%
Kissimmee / Ocola County - 3,297
0%
Ocoee / Winter Garden / Clermont - 2,956
0%
North Lake County - 100
0%

Sales Activity

Despite facing hurdles like increasing interest rates and challenges in maintaining occupancy, Central Florida’s multifamily property market continues to pique investor interest. Although the annual transaction volume has notably decelerated compared to 2022, the first half of the year has still witnessed vigorous activity. As reported by Real Capital Analytics, around $666.1 million was transacted across 12 sales, placing Orlando towards the of top markets in terms of total sales volume. The average price per unit in these transactions saw a 16.0% year-over-year increase, hitting $282,600, further underscoring the market’s resilience and appeal to investors.

  1. Cortland
  2. Hasta Capital
  3. UDR
  4. Investors Management
  5. GW Williams
  1. Wood Partners
  2. BREIT
  3. Robbins Property
  4. TruAmerica Multifamily
  5. Guardian Life Insurance

TRANSACTION VOLUME


YTD Transaction Volume


Y-O-Y Change


Individual Transaction Count


Price Per Unit


Annual Price Change

* Trailing 4Q average PPU

* Preliminary Data from RCA – Individual conventional MF transaction $2.5M +

Economy

In the second quarter of 2023, the Orlando-Kissimmee-Sanford metro area experienced a 4.9% GDP expansion with a net gain of 50,300 jobs, representing a 3.6% increase in employment. As a result, the unemployment rate in May dropped by 0.1 point compared to the previous year, reaching 2.7%, which is lower than the national average of 3.4%. The Leisure/Hospitality Services sector saw the most significant job gains, with 28,800 positions added, reflecting an 11% expansion. Additionally, the Education/Health Services sector reported a 4.2% increase, adding 7,200 jobs. Despite the pandemic’s initial job losses, the current employment base in the Orlando-Kissimmee-Sanford area is approximately 6% higher than the pre-pandemic level in February 2020, amounting to around 86,800 jobs.

50.3k

May Annual Jobs Created

3.6%

May 23 Employment growth

2.7%

May 23 Unemployment rate
3.4% us may rate

Top 5 Employment Sector Annual Change

leisure & hospitality services

leisure & hospitality services

Change from May 2022 to May 2023:
28,800

Percent Change:
11%

education & health services

education & health services

Change from May 2022 to May 2023:
7,200

Percent Change:
4.2%

trade, transportation & utilities

trade, transportation & utilities

Change from May 2022 to May 2023:
6,200

Percent Change:
2.4%

financial activities

financial activities

Change from May 2022 to May 2023:
3,100

Percent Change:
3.5%

government

government

Change from May 2022 to May 2023:
2,800

Percent Change:
2.3%

Hover over icons to view data
SectorChange from May 2022 to May 2023 Percent Change
Leisure and hospitality28,800 11.0%
Education and health services7,200 4.2%
Trade, transportation, and utilities6,200 2.4%
Financial activities3,100 3.5%
Government2,800 2.3%
Professional and business services2,400 0.9%
Other services1,000 2.3%
Manufacturing700 1.3%
Mining and logging0 0.0%
Information(300)-1.1%
Construction(1,600)-1.8%

Major Economic Developments

a train at a train station

Brightline nears completion of $2.8B rail expansion

1,300 Jobs Created

$2.8B Investment cost

170-mile Expansion

2023 Expected Completion

five jet flying in sky

Lockheed Martin $500M Expansion Plan

600 Jobs Created

$500 Million

1,300 Jobs generated
during construction

South Orange County Location

2023 Estimated Completion

blue solar panel boards

CMG Cleantech Invests $200M for HQ

1,200 High-paying jobs created

$75,00/Year Average Wage

$200M Investment Cost

Kissimmee, FL Location

2025 Estimated Completion

Market Outlook

Investor demand for the Orlando market remains strong, thanks to the region’s robust in-migration and economic growth. As of Q2 2023, construction was underway on more than 24,533 housing units, with around 16,477 units expected to be completed over the next four quarters. Despite the significant pipeline of new construction, there is no cause for alarm. Given the strength of Orlando’s economy and its capacity to drive household formation, these new units are projected to be absorbed over time. Even though the market is facing supply headwinds in the short-term, Orlando continues to showcase solid performance when benchmarked against national standards.

Sources: RealPage; BLS; MSCI; Orlando Business Journal; Orlando Economic Partnership.

To Gain Further Insights Into The Orlando Market Please Reach Out To Our local Team

Image of Matt

Matt Ledom

Senior Director

Jhamil Moore

Senior Advisor

Samuel Ervin

Samuel Ervin

Associate Advisor

Have a question? Ask me here!