Committed to South Florida.
Broward County Apartment Market | 4Q 2016
Director | Multi-Housing Group
305 509 8336
The South Florida real estate market is currently in transition with quantitative easing over, slower
demand from foreign buyers, and excessive supply of dwelling units. The Broward County
apartment market seems not affected by the recent slowdown in Miami Dade County caused by
the excessive supply of luxury units and the drastic reduction of the artificial demand that has
rapidly fueled developments. The apartment market is currently at an inflection point in this
Hypersupply phase as of the 4th quarter of 2016 (4Q16). The labor market in Broward County
has been stronger than expected with the local economy adding 30,700 jobs over the past 12
months as of November 2016 according to the bureau of labor statistics (BLS). Total net
absorption, occupancy rate, and rent growth have rebounded from the downturn of 3Q16 due to
the strong job growth experienced from the expansion of the port Everglades and the tourism
sector.
This Hypersupply phase is characterized by the rapid multifamily development with 4,938 market
rate units currently under construction in Broward County. The Dania/Hallandale Beach, and
Oakland Park Markets have experienced the strongest rent growth rate at 2.1% and 1.2%
respectively, while the Deerfield Beach and Fort Lauderdale markets have posted the highest
vacancy at 5.6% and 5.3% respectively in 4Q16. Tenants’ desire to save money over
unaffordable class A properties will continue to push rents up for class B properties which is
having a trickle-down effect on class C Properties.
This Hypersupply phase will affect the apartment market rent growth rate tremendously in 2017,
especially in the Deerfield/Pompano Beach, and Fort Lauderdale submarkets which have started
to show signs of frothiness due to their lagging rent growth rate and absorption level relative to
the number of units in the development pipeline.
Market Analysis
Axiometrics, REIS, Certified Commercial Investment Member Institute (CCIM), Costar Group, Mueller, Real Estate Finance, Multi-Housing News, National Multifamily Housing Council, National Real Estate Investor, South Florida Business Journal, The Real Deal and US Bureau of Labor Statistics.
Our goal is to help investors maximize asset value by anticipating the recessionary phase of this real estate cycle.
Broward County Apartment Market is transitioning from a seller’s market to a buyer’s market.
Revenue Analysis
Broward County Rent Details
Unit Mix Avg. Rent Avg. SF Avg. Price/SF
Studio $1,018.00 625 $1.63
One Bedroom $1,159.00 787 $1.47
Two Bedroom $1,422.00 1,101 $1.29
Three Bedroom $1,795.00 1,365 $1.32
Average $1,348.50 969.50 $1.43
561 471 8000 | | 561 394 5200
Development Analysis
With over 340 new developments
totaling over 47,000 apartment units
currently under construction in South
Florida, lenders and developers have
started to put their feet on the brakes.
The capital markets have recently been
very reluctant to finance new
construction in South Florida as lenders
perceive the market as being saturated
with luxury units that households with
the area’s median income cannot afford.
Such a slowdown in construction
financing does confirm the nervousness
of developers because of the
disproportionate amount of luxury units
being built compared to affordable units
that the market needs.
Landlords in oversupplied markets
should closely monitor their submarket
property fundamentals to remain
competitive, as turnovers might be
higher than usual in the coming
quarters.
Landlords should pay close attention to
the 1,364 apartments currently under
construction in Fort Lauderdale and the
1,750 apartments coming online in
Broward County during the 1Q17.
Landlords should expect concession
wars to pick up as developers will be
competing more aggressively for
tenants to boost their occupancy.
Many of the development projects
currently being announced will remain
on the drawing board until the current
supply in the delivery pipeline is
absorbed or until the next real estate
boom hits South Florida.
Multi-Housing Report Broward County Market | 4Q 2016
Non-Farm Employment Numbers – Dec 2015-2016
Sector Gain/Loss Rate
Professional and Business Services 7,500 5.2%
Trade, Transportation, and Utilities 9,300 5.0%
Education & Health Services 5,100 5.0%
Leisure and Hospitality 4,100 4.5%
Government 900 0.9%
-1.0%
0.0%
1.0%
2.0%
3.0%
1 2 3
Revenue Growth Comparison
Broward County Deerfield Beach
Pompano Beach Oakland Park
L. Lakes/Lauderhill Fort Lauderdale
Dania/Hallandale Beach Hollywood
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
Vacancy Rate Comparison
2Q16 3Q16 4Q16
.
Broward County Building Inventory Analysis: Class-A Buildings
Year Completions Vacant Units Occupied
Units Absorption
Asking
Rent
Rent
Growth Net Rent
2010 751 1,943 32,231 1,479 $1,314 1.2% $1,239
2011 0 1,485 32,689 458 $1,323 0.7% $1,265
2012 223 1,110 33,287 598 $1,368 3.4% $1,323
2013 1,792 1,686 1,613 1,289 $1,399 2.3% $1,336
2014 2,078 2,113 36,154 1,578 $1,442 3.1% $1,362
2015 3,240 2215 40,016 3,231 $1,531 5.9% $1,450
2016 1,449 2,663 41,017 1,001 $1,593 4.0% $1,495
Broward County Building Inventory Analysis: Class-B & C Buildings
Year Completions Vacant Units Occupied
Units Absorption
Asking
Rent
Rent
Growth Net Rent
2010 0 3,135 39,168 907 $950.00 0.8% $879
2011 0 2,562 39,741 573 $968 1.9% $909
2012 0 2,190 40,113 372 $991 2.4% $939
2013 0 1,912 40,209 96 $1,015 2.4% $968
2014 0 1,429 40,692 483 $1,038 2.3% $1,002
2015 0 1,408 40,713 21 $1,082 4.2% $1,045
2016 0 1,342 40,778 -93 $1,140 0.5% $1,062
Broward County Buildings Characteristics (Data Metrics: 477 properties with 50 units or more)
By Age Percentage Criteria Low Average Medium High
Before 1970 2% Year Built 1968 1990 1988 2016
1970-1979 19% Property Size 52 Units 260 Units 249 Units 1,520 Units
1980-1989 32% Distance to Highway .1 Mile 0.9 Mile 0.7 Mile 2.6 Miles
1990-1999 22% Distance to CBD 1.4 Miles 8 Miles 7.5 Miles 14.2 Miles
2000-2009 11% Distance to the Beach 1.3 Miles 7.1 Miles 7 Miles 13.2 Miles
Post 2009 14% Concessions 1.1 Month 0.4 Month 0.3 Month 1 Month
Expense Ratio 37% 41% 43% 52%
Inventory Analysis
Realizing potential,
delivering results.
Multi-Housing Report Broward County Market | 4Q 2016
.
Construction & Absorption Analysis 2Q15 3Q15 4Q16
Markets Units Built Absorption Units Built Absorption Units Built Absorption
Broward County 255 200 179 -270 240 231
Deerfield Beach 0 13 0 -19 0 32
Pompano Beach 0 -6 0 -13 0 6
Oakland Park 0 -4 179 77 0 66
L. Lakes/Lauderhill 0 7 0 -23 0 -1
Fort Lauderdale 255 144 0 -6 0 14
Dania/Hallandale Beach 0 0 0 -93 0 20
Hollywood 0 0 0 -1 0 18
Broward County Construction Analysis
Name Address Unit Type # of Units # of Buildings # of
Floors Status Completion
BainBridge 10890 W Sample Rd, Coral Springs Apartments 255 Construction Apr-17
Celebration Pointe 5555 Celebration Point Lane, Margate Apartments 282 9 3 Construction Feb-17
Midtown Residences 4800 W Sample Rd, Pompano Beach Apartments 308 7 4 Construction Jul-17
Residences at Palm Aire 3491 W Atlantic Blvd, Pompano Beach Apartments 404 18 3 Construction Feb-17
The Atrium 900 NE 4th Street, Fort Lauderdale Apartments 11 1 3 Construction Jan-18
Broadstone Harbor Beach 1799 SE 17th Street, Fort Lauderdale Apartments 394 1 8 Construction Jul-17
Morgan on Third Ave 400 NE 3rd Ave, Fort Lauderdale Apartments 357 1 7 Construction
Fairfield 673 NE 3rd Ave, Fort Lauderdale Apartments 292 1 6 Construction May-17
Harbor Park 1919 SE 10th Ave, Fort Lauderdale Apartments 310 1 8 Construction Feb-18
Portico 1955 NW 136 Ave, Sunrise Apartments 417 4 6 Construction Feb-17
YOO at Metropica 1800 NW 136th Street, Sunrise Apartments 263 1 28 Construction Oct-17
Sheridan Station 2900 Sheridan Street, Hollywood Apartments 336 13 3 Construction
Young Circle Commons 1858 Hollywood Blvd, Hollywood Apartments 229 1 19 Construction Jan-18
Hollywood Circle 1740 Polk Street, Hollywood Apartments 297 1 26 Construction Jan-18
The Place at Dania Beach 180 E Dania Beach Blvd, Dania Beach Apartments 144 1 7 Construction
Feb-17
Park 3400 3400 Davie Road, Davie Apartments 259 4 5 Construction May-17
Estate At Mayfair 11401 Pembroke Road, Miramar Apartments 100 15 3 Construction Mar-17
Altis Pembroke Gardens SW 145th Ave & SW 5th St, Pembroke Pines Apartments 280 1 5 Construction Mar-18
Total Units 4,938
561 471 8000 | | 561 394 5200
We increase property value.
Multi-Housing Report Broward County Market | 4Q 2016
.
Sales Analysis
Expert Insight The policies of this new administration are likely to affect the apartment market through its impacts on the jobs market and on the investment environment in the following instances: • The enactment of a Comprehensive Tax Reform is likely to benefit investors, thereby supporting GDP growth and promoting job creation, which could be a positive for apartments. • The expected changes in the Dodd-Frank Act should remove some of the burdensome regulations on the financial markets, consequently providing more liquidity and perhaps stimulating the single-family home buying market, which may not be a positive for the apartment properties. • Infrastructure Spending is expected to increase productivity and add value to the surrounding properties which should ultimately promote jobs and resulting in higher demand for apartments. • An Increase in the Federal Funds Rate and Interest Rate is expected to discourage an asset bubble, which may lead to higher capitalization rates and a decrease of property values, at least in the short term. • The stronger dollar will accentuate the pullback of foreign money in the South Florida property market, which may decrease competition and valuation for real estate. • As a rule of thumb, commercial property markets trail the residential property markets by about 18 months on average; with residential having peaked in 1Q16, investors should expect the commercial real estate market to soften by the 4Q17.
and making money
is all timing.
Time is money…
Broward County Sales Comparable
Name & Address Sale Date Sale Price $/SF $/Unit Cap Rate # of Units Total SF Year Built
Airport Apartments 2400 NE 10th Court, Pompano Beach
12/16/2016 $2,219,400 $131.79 $130,533 6.35% 17 16,840 1964
Carnard Apartments 3681-3801 SW 60th Ter, Fort Lauderdale
12/15/2016 $3,625,000 $124.44 $100,694 5.20% 36 29,130 1971
Baywood Apartment 601 NW 42nd Court, Pompano Beach
12/1/2016 $2,200,000 $85.22 $84,615 5.85% 26 25,816 1973
Enclave Hills 2221 NW 58th Ave, Lauderhill
11/20/2016 $3,740,000 $85.91 $85,000 6.00% 44 43,536 1973
Glenn at Cypress Creek 1949 Cove Lake Rd, North Lauderdale
11/17/2016 $36,500,000 $161.79 $162,942 5.10% 224 225,600 1998
Oakshire Apartment 2900 NE 17th Ave, Pompano Beach
11/17/2016 $5,000,000 $151.26 $108,696 6.12% 45 33,055 1987
Rustic Manor 50 SE 12th Street, Fort Lauderdale
11/17/2016 $3,537,500 $246.93 $147,396 5.15% 24 14,326 1987
Villa Hermosa 111 SE 1st St, Dania Beach
10/25/2016 $4,700,000 $178.80 $117,500 5.25% 40 25,583 1968
The Lakes at Deerfield 1100 S Military Trail, Deerfield Beach
9/27/2016 $33,750,000 $159.48 $159,198 5.15% 212 244,648 1994
Hollywood Park 1610 N Dixie hwy, Hollywood
9/7/2016 $3,000,000 $142.86 $66,667 8.50% 45 21,000 1970
New River Residence 808 SE 4th Street, Fort Lauderdale
9/1/2016 $6,050,000 $448.16 $183,333 5.00% 33 13,000 1957
Palm Cove 3380-3400 NW 30th St, Fort Lauderdale
8/30/2016 $5,200,000 $138.03 $108,333 6.75% 48 37,672 1972
Averages:
$171.22
$121,244.25
5.87%
Valuation Analysis The apartment market overall is still experiencing a shortage of affordable units due to the severe shortage of housing construction during the last recession. The currently high development cost environment has skewed the delivery of apartments to the luxury side as luxury units command higher rent than those affordable units based on area’s median household income. Such a mismatch between the needed affordable units versus the delivered luxury units is negatively impacting the equilibrium of the apartment market. Certain submarkets in South Florida will likely experience a correction due to the oversupply of luxury units, drastic reduction of cash buyers, and imminent increase in interest rates. Our team recommends apartment owners with considerable gains on their properties that don’t want to sell to monetize their profits by refinancing while property fundamentals are strong, and capitalization rates are at historically low levels. As real estate is known as a very illiquid asset class, Investors needs to put a conservative contingency plan in place for an upcoming Black Swan event as certain markets haves become incredibly frothy over the past quarters.
.
Let our Multi-Housing advisors
maximize your asset’s value
and mitigate your risk.
Feel free to contact us at 561 471 8000!
Multi-Housing Group
Economics/Entrepreneurship
University of Miami
Cell 305 509 8336
Call us today! 561 471 8000
Let our expert advisors
maximize your asset’s
value by managing risk.
Multi-Housing Report Broward County Market | 4Q 2016
Director | Multi-Housing Group
Economics & Entrepreneurship
University of Miami
Cell 305 509 8336
Fax 561 640 7855
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561 394 5200
