12
Aug
Thinking of downsizing? Here is what is happening in Multifamily….
| After seeing strong absorption in the first quarter of 2025 apartment demand in Miami softened in the second quarter, totaling around 1,200 units, below the ten-year quarterly average of over 1,400 units. This has continued to drive an expansion in the market’s vacancy rate, which now stands at 7.6%, above the 5% vacancy seen at the start of 2024. Tenant demand has remained in “catch-up” mode as newly delivered units have remained elevated over the last three years. As over 90% of new construction has been concentrated in the luxury, 4- & 5-Star segment, this has resulted in higher vacancies for this type of product, standing at 11.6% today. An increasingly competitive landscape for well-to-do renters has weighed on luxury apartment rent growth most of all, with annual gains standing at just 1.1%. Additionally, elevated concessions, typically two months of free rent, remain the norm, further dampening effective rent gains. Vacancies are expected to remain elevated relative to recent lows as supply additions are expected to outpace demand through 2028. Vacancies have so far increased from historic lows of 3.0% in early 2022 to 7.6% as of the third quarter of 2025. Still, these remain below the U.S. average vacancy rate of 8.1%. As supply pressures are limited to higher quality economic headwinds, which continue to weigh on household formation, will likely dampen demand growth in the near future. While international immigration bounced back from 2022 to 2024, driving around 90% of population growth, a recent shift in government policies is impacting continued population gains. In fact, market participants have noted an increase in vacancies from immigrants leaving the city, especially in the more affordable price segments. Source: CoStar Analytics |