Thanks to the warm weather and business-friendly environment, Miami has become a popular destination for relocating businesses and residents alike. With a growing interest from tech and finance companies, the metro has posted above-average job growth in recent months, generating the country’s tightest rental market.
In June 2022, the jobless rate in Miami stood at 2.6%, below the 3.8% national average, according to data from the U.S. Bureau of Labor Statistics. On a year-over-year basis in April, rents in the metro increased by 24.6%, Yardi Matrix reported.
Although on a trailing three-month basis through April rent growth was led by the Renter-by-Necessity segment, increasing by 1.3% to $1,709, Class A assets also climbed 0.8% to $2,622, Yardi Matrix revealed. As employment growth in the office-using sectors continues to remain high, renter demand for luxury units is expected to stay elevated in the near future.
Luxury Properties Drive Multifamily Activity in Miami
Developers and investors have also taken note of this need for luxury properties, as the majority of the projects under construction are in the lifestyle segment, and a significant portion of assets trading are Class A buildings.
According to Yardi Matrix, transaction activity reached $2 billion between January and April this year, exceeding last year’s $1.6 billion over the same period. Around 55% of the assets traded were Class A buildings, pushing the average per-unit price above the $300,000 mark for the first time and well above the $209,274 U.S. average.
Most of the luxury assets are changing hands in Downtown Miami, where most of the metro's new inventory is located, a Marcus & Millichap report noted. Meanwhile, buyer's looking for value-add opportunities are targeting lower-cost submarkets, such as Little Havana, Homestead-South Dade, or North Miami.
While transaction activity kicked off strong this year, it is still questionable whether this year’s volume will exceed the $9.3 billion in sales recorded last year, considering the high inflation and interest rate environment, Yardi Matrix concluded.