Miami, Orlando, Tampa, and Jacksonville all ranked within the top 20 U.S. cities for apartment construction in 2023, though concerns over housing affordability persist.
The State of Florida is making strides in the national housing market, with Miami, Orlando, Tampa, and Jacksonville ranking among the top 20 U.S. metros for new apartment construction.
In 2023, the Miami metropolitan area was ranked as the fourth largest metro in the country for new apartment construction, according to a RentCafe market insights report, with 20,906 completed units. The bulk of these apartments were within the city of Miami itself, accounting for 9,362 units, followed by Hialeah (2,055 units), and West Palm Beach (1,175 units).
Ranking 13th nationally, Orlando accounted for 10,212 new units, while Tampa, placed 16th, added 8,817 units. Meanwhile, Jacksonville, amidst its surging population growth, secured the 18th spot with the construction of 7,145 new apartments in 2023.
New York City, New york; Dallas, Texas; and Austin, Texas were the three top-ranked cities, with 33,001, 23,659, and 23,434 units, respectively.
The surge in construction across these Florida cities was propelled by several factors, according to the report, including a sustained shift towards remote work dating back to the pandemic. However, the focus on high-end apartments for upper-middle and high-income renters raises concerns about housing affordability for the broader population.
“Households grew at a rapid rate after the pandemic as job growth boomed and young adults moved out of their parents’ homes,” said Doug Ressler, manager of business intelligence at Yardi Matrix. “At the same time, work-from-home prompted renters to form their own households to gain more living space for offices, children and pets.”
Financial challenges also loom over the construction growth, as rising costs and strict lending standards are making new projects more expensive and banks are often hesitant to lend more than 60 percent of the total cost for these projects.
“Construction debt starts at 8 percent interest, and most banks only lend 60 percent or less of the total cost of a project. Junior construction debt is even more expensive, with interest rates in the mid-teens. This financing structure can make it challenging for companies to initiate new construction projects unless they already have a substantial amount of capital on hand,” continued Ressler.
Projections from Yardi Matrix indicate a potential decline in the pace of new apartment construction by 2025, dropping by approximately 15 percent.
Despite Miami’s uptick in housing construction, Miami-Dade County remains the hottest rental market in America. The county’s Rental Competitivity Index (RCI) — a measurement of rental market competition using factors such as lease renewal rates and occupancy rates — is 122, the highest in the country. The next highest RCI nationwide was North Jersey, New Jersey at 116, while Broward County was Florida’s second most competitive region, with an RCI score of 101.
Miami-Dade County recorded high occupancy rates in its rental properties in 2023, with 71.2 percent of renters electing to renew their leases. For those seeking new housing, each available rental unit in Miami attracted an average of 22 applicants.
Moreover, in November 2023, the rental market in Miami saw average rents reach $3,280, placing it among the costliest metro regions in the country.