Once-rising apartment rents are reversing course.
The long reach of the coronavirus pandemic has punctured what was a long period of rising multifamily rents in the state, according to a new report from real estate data firm CoStar.
Naples, with a 3.61% drop in multifamily lease rates from March 11 through April 5, posted the second-largest fall in the state, behind only Fort Walton Beach, at 3.97%. Overall, 16 markets statewide have losses that exceed 1%, the report shows. Ocala, with a 0.25% gain, is the lone region in Florida with a gain.
Florida multifamily landlords and owners, according to CoStar, have been among the hardest hit of any state nationally. “This is likely due to the state’s dependence on many of the industries that have been most acutely affected by the coronavirus outbreak,” the report states, “especially in the leisure and hospitality and retail sectors.”
The report focuses on four- and five-star properties — units that tend to update their rents the most frequently. During the same time frame of Florida’s fall, the average asking rent in upscale and luxury apartments in the U.S., the report shows, has dropped about 0.9%.
The decrease in rents is about to collide with another issue for multifamily developers: increased supply. That’s because 60% of the markets experiencing falling rents — and all the ones of Florida’s west coast — are adding new multifamily units at relative rates well above the national average. Of the 10 Florida markets with the highest negative rent growth, only Panama City is building less than the nation’s average 3.6% of existing inventory.