Miami Multifamily Rental, Vacancy Rates Tick Up

MIAMI-Asking rental rates and vacancy rates in the city’s multifamily market have both increased over the past few years, according to the recently released Grubb & Ellis’ Multi-Housing Report for the local market.

Class A rental rates have increased an average of 4.1% per year in the last five years, and class B/C rental rates have increased an average of 3.1% per year. As a result, class A property rents increased to $1,248 per month year to date from $1,230 per month for the comparable period in 2002. Meanwhile, class B/C rents increased to $820 from $798 per month for the same periods.

As the economy improves and job growth occurs, asking rents are expected to grow 3% to 4% next year to the five-year average rates, according to the report.

Renters’ moves to condominiums and single-family homes will slow down next year, and that will help produce a moderate increase in asking rents, the report adds.

Also according to the report, vacancy rates have been growing since 2000 in the local submarket. Class A rental properties had a 10% average vacancy rate for this year to date. This compares to 8% for the 2002 period. Furthermore, class A vacancy is expected to stay in the low double digits next year as a result of new luxury product developed in the city and Coral Gables central business districts.

On the other hand, class B/C properties have averaged just 4.6% vacancy this year, up from 4.5% last year. The apartment-to-condo conversion has helped keep this figure low for class B/C suburban apartment properties. In the suburbs, more rental units are being converted to condos than are being built, helping to keep the vacancy rate down. And the low vacancy rate should continue next year, the report explains.

The report concludes that, year to date, class A and B/C apartments in the city’s submarket had positive net absorption, compared with a negative net absorption in 2002. Class A communities had a positive net absorption of 508 units this year to date, compared with negative 79-unit absorption in 2002, and class B/C properties had a positive net absorption of 614 units this year to date, compared with a negative net absorption of 1,084 units last year. For 2004, the report states, a positive net absorption is expected, with moderate hikes in both property classes.