Florida Residents Are Returning to the Urban Apartments They Fled Last Year
“There’s been a lot of immigration to Florida, particularly South Florida with folks from the Northeast, and when you look at Brickell Avenue and downtown, or the urban core, we’re a lot less dense, and a lot more affordable than where they came from," said Berkadia's Charles Foschini.
After a 2020 exodus, urban apartment dwellers are making their return, according to commercial real estate firm Berkadia’s South Florida Mid-Year 2021Institutional Report.
Nearly 200,000 residents left South Florida’s urban centers last year, and two-thirds of those relocated to cheaper neighborhoods in the metro area. But during Q2 of 2020 through Q1 of this year, nearly 125,000 people migrated to the suburbs, while 21,000 migrated to low-cost, large metropolitan areas.
Senior managing director Charles Foschini of Berkadia in Miami said that’s due in part to people who work from home wanting to live in spaces with access to nice restaurants and amenities without having to buy a home or condo, which creates demand. According to the report, South Florida is expected to get an additional 60,000 new residents throughout this year and 2022.
“There’s been a lot of immigration to Florida, particularly South Florida, with folks from the Northeast. And when you look at Brickell Avenue and downtown, or the urban core, we’re a lot less dense and a lot more affordable than where they came from. When you look at a post-pandemic world, which I hope we will soon get to, most of the folks that occupy the money centers in Miami, were the least affected by the coronavirus and pandemic from a health perspective. It tends to focus on older and less fit folks, so there’s really not a fear of living in a downtown urban environment, and that’s where the jobs are,” Foschini said.
Apartment occupancy in South Florida averaged 96.5% in the second quarter of this year, and the average effective rent rose 7.9% year over year to $1,831 a month.
Downtown Miami and South Beach and the downtown Fort Lauderdale markets saw an upward demand for urban apartments.
“They’re being built because the demand is here, currently with increased costs of ownership of housing, which we’ve seen significant increases in Florida, that has exacerbated the need for new housing of all types. When new supply is delivered, that always inflates the vacancy rate for some period of time so that that supply is absorbed,” Foschini said.
The construction of more than 40 apartment communities in the metro area will add nearly 10,0000 new units by the end of the year, the report said. Of 264 communities in the planning stages, 56 are projected to break ground in the next four quarters. The report said that apartment occupancy will decrease to the low 95% range by the end of 2022, which will be fueled by a supply imbalance from more than 15,800 deliveries in 2022.
“What limits the absorption of supply in the urban areas where you generally have high-rise buildings is the amount of people you can move in any given day or month because you have elevators. In an operational building that’s full, you’ll have three or four elevators, when people are moving in for that period of time there’s a lot of demand on that elevator. In the suburban areas where you have garden style and lower-rise properties, they’re usually completed in clusters or in groups and you can lease as you go and the limitations of an elevator on a unit is not the same,” Foschini said.
Foschini believes that the urban apartment demand will continue to rise in the future, even despite the continuing pandemic.
“There is a lot of emphasis placed on getting better mass transit here,” Foschini said. “There’s been a lot of emphasis placed pre-pandemic on the trolley system, and different ways of getting around South Florida. Those areas are best served by those alternative means of travel. The traffic coming from the suburbs to an urban area to work, in addition to the cost of ownership of housing that’s causing and will continue to create demand for urban housing.”
Read more: