Florida’s major metropolitan areas are expected to maintain a surge apartment construction, driven by strong demand but potentially tempered by rising borrowing costs and a focus on luxury developments that could exacerbate affordability issues.

Florida’s major metropolitan areas—Miami, Orlando, and Tampa—are poised for continued growth in apartment construction over the coming years, despite economic headwinds that may slow development, according to a RentCafe analysis.

The U.S. apartment construction industry is projected to reach an unprecedented peak this year, with more than 518,000 units expected to be completed nationwide—a 9 percent increase from 2023. Florida’s largest urban centers are expected to contribute to the surge, driven by sustained demand for rental housing as population growth and economic opportunities continue to attract new residents. However, rising borrowing costs and broader economic uncertainties are likely to temper this momentum in the years ahead, the analysis postulates.

“The supply wave has brought 50-year high deliveries to certain metros … but the increased competition is slowing rent growth, especially in booming Sun Belt markets,” said Doug Ressler, senior analyst and manager of business intelligence at Yardi Matrix.

Miami remains the epicenter of Florida’s rental market, drawing both domestic and international residents. The city’s rental demand remains hot, with each available apartment attracting up to 19 prospective tenants, according to recent data. The housing competition stems from Miami’s rapidly expanding population and its position as a major economic hub, per the analysis. Despite plans to add approximately tens of thousands of new apartments by 2028, the supply is unlikely to meet the surging demand.

“[Miami] is set to welcome 75,736 new apartments by 2028 — half the number of units expected in New York. However, even though developers are expected to open 2,265 more units throughout the next five years as compared to 2019-2023, the upcoming apartments are unlikely to meet the pressing demand for housing in the metro,” the analysis states.

Developers’ focus on high-end luxury apartments in Miami is found to compound affordability issues, potentially deepening the housing crisis in one of the nation’s most competitive markets. As borrowing costs rise, financing new projects may become increasingly challenging, leading to potential delays or strategic shifts in development priorities.

Orlando’s economy, anchored by its tourism sector, also continues to draw new residents, sustaining demand for rental housing. The city’s population growth is expected to support ongoing apartment construction through 2028, with a multitude of new units being erected. Similarly to Miami, however, the concentration of new construction in the luxury segment raises concerns about the availability of affordable housing.

Tampa is experiencing steady economic expansion, driven by its business-friendly environment, which attracts both companies and new residents. This growth is expected to continue fueling demand for rental housing. Nevertheless, Tampa faces its own affordability challenges. The trend toward luxury developments risks limiting housing options for lower-income residents, potentially creating a mismatch between supply and demand. Like Miami and Orlando, Tampa’s future construction projects could be impacted by rising borrowing costs and economic uncertainties.

Rising borrowing costs, spurred by higher interest rates, are making it more expensive for developers to finance new projects, RentCafe contends, which could lead to a slowdown in new construction, particularly in markets where the demand for high-end apartments has already been largely satisfied. In response, developers may shift their focus toward lower-risk projects or explore opportunities in secondary markets, alongside a possibility of a pivot toward more affordable housing options.

“Even with apartment construction conquering a new peak in 2024, higher borrowing costs are affecting the multifamily sector, prompting many developers to adjust their strategies for the coming years. This means they might focus on lower-risk projects or shift toward markets with strong demand and job growth,” reads the analysis.