South Florida Multifamily 2018 Mid-Year Update

MULTIFAMILY INVESTMENT SALES ANALYSIS | SOUTH FLORIDA GRAPH 1 :: South Florida Historical Price/Unit Versus Price/SF SOUTH FLORIDA HISTORICAL PRICE/UNIT VERSUS PRICE /SF

MU LT I FAM I LY I NVE S TMENT | SOUTH F LOR I DA T E AM

$260

$250,000

Miami-Dade

$240

$225,000

$220

Broward

$200,000

$200

Palm Beach

$175,000

$180

$160

$150,000

$140

$125,000

$120

Price Per SF

$100,000 Price per Unit

$100

$80

$75,000

$60

$50,000

$40

$25,000

$20

$0

$0

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018 (YTD)

* $1MM+ multifamily sales

Average per Unit

Average Per SF

GRAPH 2 :: South Florida Historical Transaction Volume Versus Number of Transactions SOUTH FLORIDA HISTORICAL TRANSACTION VOLUME ERSUS NUMBER OF TRANSACTIONS

$5.5

375

Miami-Dade

$2.5 Dollar Volume Billions $3.0 $3.5 $4.0 $4.5 $5.0

Broward

300

Palm Beach

225

150

$2.0

Number of Transactions

$1.5

75

$1.0

$0.5

$0.0

0

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018 (YTD)

* $1MM+ multifamily sales Source: CoStar

Dollar Volume

Number of Transactions

RENTAL SUPPLY There were currently 18,215 units under construction at the midyear. For the most part, new rental supply was quickly absorbed. There are certain submarkets with several new buildings delivering in a short duration, causing slower lease-ups. Despite an abundant amount of cranes that cover the South Florida landscape, new construction barely keeps pace with demand. Consider these two facts: 1) since 2013 there were 46,565 units built in South Florida. Under construction

units only account for 28% of the units in the current development cycle. The new supply thus far has not adversely effected the market even though 72% of the new supply has already been delivered; and 2) Rental demand remains strong (see previous paragraph). New construction can be visualized by all the new cranes. Population/household formation is surpassing the supply but is not always as easily identifiable – unless you are in rush hour traffic. Due to higher construction and land

costs, new supply has almost exclusively been geared towards Class A+ product. Affordable or Class B and C supply remained drastically under served and continues to be a problem in South

Florida. RENTS

Rents continued to increase in 2018, and for an eighth year in a row, rents were at record levels in South Florida. In the past five years, effective rents increased by 24%, 23%, and 25% in Miami-Dade, Broward, and Palm Beach

3