There are currently 2445 residential condominium units available for rent in the Greater Downtown Miami area… and there’s more inventory coming!
As Integra Realty Resources (IRR) reported to the Miami Downtown Development Authority in the Q3 2016 Residential Market Study “Flash Report”, we had 3,748 new construction condominium units delivered in 2016, with an additional 2,774 units expected to be delivered in 2017 ; 2,846 in 2018 and 1,960 in 2019. And we know that a large percentage of that inventory will be put straight back out onto the market as rentals.
New conventional rental apartments will exceed new condominium units in 2017
In addition to the existing inventory and the anticipated new construction condominium inventory, this building cycle has seen more conventional rental apartment buildings under construction in the downtown market than ever before. With the completion of Five Midtown, Monarc, SoMa in Brickell, and others in 2016, we saw the addition of 1,038 conventional rental apartments. That number is expected to balloon to more than 7,000 by 2019, with another 3,575 new apartments delivered in 2017 alone.
With all of those apartments and condominiums for rent, it should not be a surprise that rental rates have started to adjust. The first half of 2016 saw an end to the regular annual rental increases, then a 2% – 4% drop in the third quarter, quarter-over-quarter.
Given the additional inventory expected in 2017, I project that rental prices will continue to adjust downward through at least 2017 as investors seek to keep their units occupied. It’s not all doom and gloom for landlords, though. The full time population in the Greater Downtown Miami has grown by 22,000 since 2010, and expected to continue growing at roughly 4,400 per year through 2021. I think that while 2017 is going to be rocky for rentals, by 2019 we should see population growth catching up to inventory.