Is Miami Cooling, or Just Getting Started?
Miami Multifamily pricing, recent trades, and Single Family Rentals
AvalonBay, the 3rd largest owner of apartment units in the United States, said this about Southeast Florida in its recent second quarter report,
“same-property rental revenue increased 23.9% in Southeast Florida, compared to a rise of only 2.6% in operating expenses. That led to a 39% boost in its net operating income in the region. That was the highest rental revenue increase and the highest net operating income growth AvalonBay experienced in all of its regions.”
Someone with data from 81,000 apartment units across the country strikes me as a credible source.
The more transplants I meet from the west coast, the more I hear that Miami today feels like Silicon Valley did 10 years ago. Optimistic & vibrant.
That’s a trend I’d bet on, whether interest rates are 3% or 5%.
Citadel’s Ken Griffin purchased ~$675,000,000 worth of real estate in Brickell over the last few months, AvalonBay (unsurprisingly) increased their exposure with a $295,000,000 multifamily acquisition in Broward County, and the SFR/BTR (Single Family Rentals / Built-To-Rent) space is one I’m particularly bullish on, especially in South Florida.
Let’s start with multifamily pricing.
We’ve closed over $500,000,000 in sales this year, and have another 7 deals under contract.
The latest multifamily deal we marketed (post rate hike) was worth close to $100M and received 14 written LOIs.
The last multifamily land site we marketed (post rate hike) received 16 written LOIs.
Safe to say investors still want to increase their exposure to South Florida.
But at what price?
Core Multifamily: Newer, core deals seem to be getting done at a tax adjusted +/- 4.00% cap (give or take 25 bps) with a strong case for the “Forward-Looking” Year 1 Cap Rate to be at a 4.25 — 4.50% cap. Today’s buyers are willing to accept slightly negative to neutral leverage in Year 1 given a strong case for positive leverage (and outperformance) after year 1 and beyond.
Value-Add Multifamily: There are many different flavors of value add deals with varying levels of risk. Generally speaking, we are seeing active value-add buyers today underwriting to a yield on cost, or “post renovation cap rate,” of ~5.75%. This could typically swing by +/- 25 bps depending on the risk profile of the deal.
Select Recent Transactions
AvalonBay Pays $295M For 650 Units Across Two Properties in Miramar
Harbor Group Pays $184.5M For A 372-Unit High Rise in Brickell
Lastly, here is Ken Griffin’s ~$675,000,000 Miami buying spree mapped out, along with where Citadel just signed a 95,000 SQFT lease.
(source: The Real Deal)
Select Berkadia Listings
I’ll dive into the Single Family Rental/Build To Rent space and why you should be especially bullish on a following post, but here is an opportunity to get exposure today:
LISTED: A Community of 54 Townhomes in Palm Beach County Being Built By One of the Top 10 Largest Homebuilders in the Country
LISTED: A 2021-built, 276-Unit, Garden-style Complex 2 Miles West of Downtown Fort Lauderdale’s CBD
See you in September!
in the meantime… let’s talk real estate (:
Shoot me a note at Omar.Morales@Berkadia.com