South Florida's multifamily market is moving toward more upscale, super luxury properties with resort style amenities that appeal to "renters by choice," says Richard Donnellan Jr., managing director of Atlantic Realty Partners in Boca Raton. These are renters who are seeking larger units, direct access garages, premium services and country club amenities. "We are also seeing mid- and high-rise developments being delivered throughout the region on urban, in-fill sites," he adds.

In the southern half of the Tri-County area comprised mainly of Miami-Dade and Broward counties, suburban land for garden apartment development is becoming scarce, causing developers to look north into Palm Beach County where development is occurring in the western and northern environs. The main reason for this is the availability of land and the area's strong job growth, which currently ranks as the third highest in the state with over 14,000 jobs having been created during the past year. The entire Tri-County area has also seen mid- and high-rise development occurring in urban in-fill locations where sites are being redeveloped from previous uses. The cost and rental structures at these developments are substantially higher than the garden properties.

Sunrise Harbor is a new mixed-use high-rise development on the Intracoastal Waterway in Fort Lauderdale. This project was completed last year and includes 352 luxury rental apartments, specialty retail and a marina. The project opened last June and is already over 75 percent leased, averaging over $1,800 per month in rent with penthouse apartments leasing for more than $5,000 per month. The project is located very close to Fort Lauderdale's major employment centers.

"These urban developments are significant because they allow people to live very close to where they work and play, reducing their commute times and alleviating traffic congestion," says Donnellan. "This concept also promotes a greater sense of community."

Rents in South Florida have risen a strong 4 percent over the past year and this trend is expected to continue due to supply and demand conditions favoring landlords.

Vacancy rates are very tight right now throughout the region. Miami-Dade County is reported at 2.5 percent, Broward at 2.9 percent and Palm Beach at 5.8 percent. Overall vacancy for the Tri-County region is 3.1 percent.

The Wellington area in Palm Beach County will explode with residential development over the next five years as the new 1.3 million-square-foot Dolphin Mall being developed by Taubman Co. opens, and the major road improvement projects accessing this area are completed. Major single family developers are well positioned in this area and new homes are starting to go up. This activity will create significant demand for the new rentals that are being developed in this area. Another major corridor to watch is northern Palm Beach County where substantial residential development is occurring including Abacoa, a large planned unit development.

There are just over 9,000 rental units under construction throughout the Tri-County area. Overall demand is forecasted at 8,700 units, which indicates the market will maintain its current tight market conditions.

The South Florida economy continues to diversify. It has become less seasonal as more employers have located here, bringing permanent residents to fill the jobs being created. People love the weather and lifestyle, and that will not change. Retirees continue to move here and it is even better for them now that their children are moving here. "However, we have geographic barriers that will ultimately constrain our ability to grow," Donnellan says. "The land is being depleted rapidly and development opportunities are harder to come by. This bodes well for investors of multifamily properties."

Richard Donnellan Jr. is managing director of Atlantic Realty Partners in Boca Raton, Florida.


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