The Shift in Florida

The Florida multifamily market emerged as a prime beneficiary during the pandemic, as the migration reshuffle of U.S. residents spurred unprecedented growth in rental rates and property prices from 2020 through early 2022 in Florida. Yet, these once-celebrated Florida markets are now confronting a palpable shift. In a rush to leverage historically low interest rates, developers have launched a wave of new projects, fueled by the surge of in-migration to the Sunshine State. However, this development boom has given way to caution as the Federal Reserve’s aggressive interest rate hikes, aimed at curbing inflation, cooled apartment demand just as this deluge of new units is poised to enter the market. This convergence of factors has compelled stakeholders to grapple with the potential impact of an oversupply of new units. Nonetheless, the long-term prospects for Florida’s multifamily market remain bright despite these short-term hurdles. But a closer look at market-level data indicates a divergence within the state: some of the smaller, less frequented markets are displaying signs of recovery, while larger markets continue to search for market equilibrium.

Spotlight on Recovery: Smaller Florida Markets Leading the Way

An analysis of the Year-To-Date (YTD) net absorption and delivery data indicates a remarkable pattern—markets such as Port St. Lucie and Ocala are demonstrating robust growth, with absorption rates outpacing the number of units delivered. These markets are setting a precedent for recovery, and the 2024 forecasts suggest this trend will continue, creating pockets of opportunity for astute Florida investors.

Navigating Through Oversupply: The Cautionary Tale of Larger Markets

Conversely, major markets like Miami and Orlando present a different story. The projected data for 2024 shows a significant overhang of delivered units compared to those absorbed, signaling a potential oversupply. This trend necessitates a strategic and cautious approach from investors and developers alike, as these markets seek equilibrium.

A Strategic Approach for Stabilization and Growth

As the data paints a mixed picture across the state, it becomes evident that a one-size-fits-all approach to investment in Florida’s multifamily market is no longer viable. Stakeholders are encouraged to adopt a nuanced strategy that aligns with the unique conditions of each market. Smaller markets with favorable absorption rates and moderate pipelines present a compelling case for investment, while larger markets require a more careful analysis to mitigate the risks associated with oversupply.

Florida Real Estate: A Diverse Landscape of Opportunity

The Florida real estate market stands at a crossroads, with disparate paths of recovery and challenge evident across the state. For investors, this represents a landscape brimming with both caution and opportunity. By recognizing the distinct market conditions and adapting strategies accordingly, the potential for growth and stability remains strong, underpinning the enduring appeal of Florida’s multifamily market sector.

Florida MarketYTD AbsorptionYTD Delivered UnitsYTD Absorption less Delivered UnitsForecasted 2024 AbsorptionForecasted 2024 Delivered Units2024 Absorption less Delivered Units
Sarasota508126 3822,3362,576 -240
Port St. Lucie3440 3441,784867 917
Lakeland1960 1961,1721,069 103
Jacksonville1,2001,019 1815,8426,107 -265
Ocala225102 123960677 283
Pensacola372272 100804594 210
Fort Myers354279 751,7401,764 -24
Miami805760 457,3398,607 -1,268
Naples6748 19341835 -494
Fort Lauderdale648641 73,3464,181 -835
Gainesville-310 -31146232 -86
Melbourne146210 -64726938 -212
Ft Walton Beach-3240 -243573551 22
Panama City301573 -272773872 -99
Palm Beach5481,000 -4522,5613,784 -1,223
Orlando1,0901,637 -5478,59410,802 -2,208
Tallahassee113712 -5996661,297 -631
Daytona Beach185994 -8091,5862,067 -481
Tampa1,2302,909 -1,6796,4108,869 -2,459
Source: Costar February 2024

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