WRE News: South Florida’s Luxury Rental Market Faces Oversupply Concerns

Miami, FL – September 12, 2023 – Developers in South Florida are in a race to construct more luxury rental apartments, but this frenzied building activity may lead to an oversupply of high-end units. Despite an influx of affluent residents, multifamily construction, particularly in the Miami metropolitan area, has surged. CoStar Group reports that Miami-Dade, Broward, and Palm Beach counties have the highest share of units under construction compared to inventory in any major market in the U.S. Around 90% of the upcoming apartment units fall into the higher-end category, with rents exceeding $2,261 per month, and most of these units are set to hit the market in 2024. Miami has witnessed rental prices skyrocket, surging by 56.5% since 2019, second only to Tampa’s 56.7% increase. Although rents continue to rise, the prices for upscale apartments dipped by around 1% in the second quarter of 2023, according to CoStar. As more luxury units become available, they are taking longer to rent, causing vacancies to rise from 3.6% in 2021 to 5.6%. However, this figure remains below the U.S. average of 6.9%. In the high-end South Florida segment, vacancies have reached approximately 8.5%.