The Miami rental market has been booming for the past few years. Higher than expected job growth combined with a growing population has produced favorable conditions for multi-family housing in South Florida.
According to the Yardi Matrix 2016 Summer Market Report, job growth has been the driving force behind Miami’s resurgence over the past eight years. New employment has spread over many sectors, including professional and business services, trade, transportation, education, health services, as well as hospitality and leisure. Improving relations with Cuba is also something worth watching, as Miami’s economy expects to benefit from a new trading relationship with this close neighbor. Miami’s government and business leaders have also been working to bring Chinese business and developers to North Miami, in an effort to build a Chinatown neighborhood and add to an already substantial international population.
To keep pace with demand, construction is on the rise as more than 10,000 units are expected to be added in the next two years. While downtown Miami and its surrounding submarkets are offering most of the new construction, the West Palm Beach and Fort Lauderdale regions are showing strong increases. The metro’s growth outlook has produced a wave of investment, as transaction volume reached $3.6 billion in 2015. As demand stays high, rents are expected to have another good year with 2016 growing by 7%.
Rental growth in Miami was 4.6% year-over-year through August. This was just slightly below the national average of 5%. The average rent was $1,397, 15% higher than the national average of $1,220. Growth was led by the working class (Renter-by-Necessity) segment, which increased 5.4%, while the luxury segment grew by 3.8%.
Demand for housing remains strong as job growth has outpaced the national average for most of the last five years, as Millennials and others are attracted to South Florida’s climate and social scene. Miami is also considered one of the country’s most international cities, with a large Latin American and Caribbean population.
More than half of all the Miami metro submarkets had increases of 5% or more over the past year. Three of them – North Miami Beach, Riviera Beach, and Norland saw double-digit increases. Of the 71 submarkets in the metro area, only three had rents fall in the last year. Based on continued strong demand, which will match the oncoming supply, rents are expected to grow 7% in 2016.