By Lisa McNatt
CoStar News
There has been a degree of uncertainty over the past couple years regarding the long-term desirability of living in an urban core post-pandemic. However, recent leasing and investment trends seem to indicate such concerns about urban areas haven’t yet materialized in Orlando.
Renter demand in downtown Orlando and its urban core has been stronger in the past two years than it ever was pre-pandemic, with average asking rents up 17% year over year and net absorption — the difference between move-ins versus move-outs — topping 1,900 units during the same period. While the district’s vacancy rate is nearly double the Orlando apartment market average overall, it has dropped by over 400 basis points in the trailing 12-month period.
The trends in downtown Orlando are similar to what’s playing out in the urban cores of other key Florida markets. Both the Tampa and Miami areas have experienced remarkable resiliency in the face of potential adversity, boosted in no small part by escalating pricing pressures within Florida’s heated single-family home market.
Net absorption of apartment units in downtown Miami accounts for one-third of all absorption in the greater Miami market, and asking rents are $600 above the market’s average. Add to that the fact that 37% of all new development activity in the market is in downtown Miami. Then again, it’s a walkable, vibrant area that offers a short commute for those who work in the core office nodes of Brickell and downtown proper.
Tampa’s urban core is experiencing its own surge in apartment demand, aided in large part by the continuing development of the $3 billion Channelside area, significant improvements to pedestrian areas along the Riverwalk, the arrival of a second grocery in the downtown area and immediate accessibility to Amalie Arena. Asking rents in downtown Tampa are averaging $2,400 per month, a marked premium over the market’s average of $1,690 and a far cry from the average rent of $1,915 per month seen just two years ago.
Renter demand is surging in all three metropolitan areas at the same time in which they have ranked among the top cities in the country for home price appreciation. As long as potential buyers are priced out of the single-family market, which is occurring at a feverish pace across the state, multifamily owners will continue to find reason to push rents.
All these trends are attracting investment capital at a record level.
Multifamily transaction volume has been remarkably robust over the past year, and the final quarter of 2021 set a record for quarterly transaction volume in the downtown areas of Orlando, Tampa and Miami. Each of these urban locales accounted for well over $400 million in total transaction volume during the fourth quarter, and collectively, investment activity in the three areas totaled $1.3 billion.
Considering the current pace of investment taking place in the first quarter of 2022, it doesn’t appear as though investment activity, or renter demand for that matter, will abate in the near term. The recent sale of the upscale mid-rise 55 West apartment tower at 55 W. Church St. in downtown Orlando just traded for $150.3 million, a new high-water mark for the urban core.
Developer Makes Big Residential Bet in Miami's Brickell District
