For “the first time ever” the average price for a Class C apartment building averaged $150,000 a unit, according to a recent report on the South Florida multifamily market from Franklin Street, a Tampa-headquartered commercial and insurance brokerage.
But it isn’t just Class C apartment buildings — classified as multifamily structures more than 30 years old and in fair-to-poor condition — that are rising in value. Prices, rents, and vacancies for Class A apartments and Class B apartments are also becoming more expensive for investors in Miami-Dade, Broward, and Palm Beach counties.
According to the Franklin Street report, rents per square foot increased 23% year-over-year in the third quarter in Palm Beach County, 16.7% in Broward County, and 11.6% in Miami-Dade County. Miami-Dade still had the highest rents for Class A and Class C buildings, however, with Class As running an average of $2.42 a square foot and Class Cs at $1.57 a square foot. Palm Beach County had the highest rents for Class B buildings, which averaged $1.85 a square foot.
As for vacancies, the rates were 4% in Palm Beach County, 3.3% in Broward County, and 3.3% in Miami-Dade in the third quarter, “marking the lowest vacancies in years.”
As a result of its popularity, South Florida is luring more multifamily building investors, too. Sales volume was highest for Class As in all three South Florida counties, which totaled $1.6 billion in the third quarter. However, the largest segment in Class A sales volume came from Palm Beach County, which amounted to about $675.2 million. Class C multifamily buildings had the second-highest volume, totaling $586.5 million in all three counties. The sales volume for Class Bs in South Florida was $508.8 million.
The report noted that Class A properties in Palm Beach and Miami-Dade counties exceeded the average sales price per unit of $300,000. But Dratch found it particularly interesting that average units for Class Cs are at $150,000 each.
“Close to five or six years ago, in this same market, Class C units were selling for less than $100,000. It speaks to what has been happening across the board,” he said.
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