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South Florida Multifamily 2021 Forecast

Calum Weaver • 3/17/2021
Positivity Reflects Market Sentiment. Six Months Ago it reflected COVID Cases.

In the space of less than 12 months, the South Florida multifamily market went from near record sale activity, to virtually no sale activity and back to near record sales. Miami-Dade and Broward experienced record average per unit sales in 2020 ($233,000 and $225,000 per unit respectively) and Palm Beach was the second highest average per unit sales ever recorded ($170,000 per unit). Positivity now reflects sentiment, whereas six months ago it reflected Covid cases.
While the region still has not recovered all the jobs lost from Covid, the V shape recovery model does apply to the South Florida multifamily market. South Florida is awash with out-of-state private capital looking to invest in the multifamily market and it will further increase in 2021. Although bullish conditions prevail challenges remain. In this edition of the Weaver Report, we have highlighted key analysis which will shape the market going forward.

MULTIFAMILY SALES
  • In 2020 there were 254 multifamily sales totaling $3.1 billion. Despite almost six months of no sale activity from April through September total sale volume was only down 15% from 2019. Miami-Dade and Broward witnessed record average per unit sales and Palm Beach was the second highest average per unit sales.
  • Overall sales decreased for a fourth year in a row from the record of 2016. There are fewer deals available in the market which has slowed sale volume. The biggest challenge is finding viable acquisition opportunities with more buyers than sellers in the market.
  • For the third year in a row Broward County witnessed the lion share of sale activity with a total of 46.7% or $1.44 billion in sales.
  • We anticipate sales volume to increase in 2021. Out of state private capital buyers are the most active in the market.
  • Approximately 75% of all sale activity occurs in product built 1980 or newer. Sale activity began shifting to newer product as many of the newly constructed multifamily buildings stabilized and sold to investors. With almost 25,000 units under construction, we expect this shift to continue with strong newly constructed apartment sales in 2021 and beyond.
  • Value-add remains. One of the concerns from Covid-19 was value-add buyers would go into hibernation. Would buyers still underwrite rent upside through value add? The overwhelming answer is yes. There remains huge investor appetite for value-add properties, but there are limited acquisition opportunities.