Tampa Bay Occupancy: Occupancy in the Tampa Bay Area registered at 96.6% at the end of Q1 2016. This matched the occupancy rate at the end of 2015 and represents a nine-year high. Furthermore, this marks four consecutive quarters of average occupancy greater than 96% which signifies the continued post-recession strengthening of the Tampa Bay multifamily environment.
The most notable submarkets during Q1 2016 were Egypt Lake/Lowry Park (97.9%), South St. Petersburg (97.6%) and University (97.6%). The strong occupancy performance within the South St. Petersburg submarket is particularly notable given the elevated level of supply additions in Downtown St. Petersburg.
Rent Growth: During the year ending Q1 2016, the Tampa Bay Area experienced average year-over-year rent growth of 7.2%, a nine-year local high. Furthermore, this significant rent growth outpaced both the U.S. South Region (4.2%) and National average (5.0%). This also marked six consecutive quarters of year-over-year rent growth of more than 4.0%. Most pronounced was the 1990s vintage class which recorded 8.4% year-over-year rent growth. The 1980s and 1970s vintage classes also experienced strong rental increases of 7.4% and 7.8% year-over-year respectively. The most notable submarkets for annual rent growth were Town N Country (9.8%), Tampa Peninsula (8.9%) and Temple Terrace (8.2%).
Supply: The Tampa Bay Area remains in a heightened level of supply expansion. The existing inventory base has increased by an average of 2% year-over-year over the last eight quarters. Specifically, during the past 12 months ending Q1 2016, 3,130 units were completed which expanded the supply base by 1.3% overall. Over the next 12 months, 29 projects representing 7,178 units are expected to be completed which will increase existing inventory by 3.0%. Of these units under construction, 46% are located within the Central Tampa submarket which has experienced the most post-recession development in the area. Considering the elevated level of supply additions, the strong occupancy level (96.6%) and annual rent growth (7.2%) signify a strong level of demand and absorption. Although, as more units are completed over the next few years, occupancy and rent growth are expected to normalize as supply catches up to demand.
Orlando Occupancy: During Q1 2016, the Orlando Metropolitan Statistical Area (MSA) recorded an average occupancy of 96.2% across all vintage classes and submarkets. This represents a 0.3 point increase year-overyear and marks seven straight quarters of occupancy near or above 96%. The strongest vintage classes for occupancy performance during Q1 2016 were the 1990s (97.1%) and pre-1970s (96.9%) segments. The 2000 and newer vintage class recorded the lowest occupancy (95.1%) which can likely be attributed to the significant number of units that have been added to supply over the past 12 months. The top submarkets for occupancy were Kissimmee/Osceola County and University, both equal to 97.1%.
Rent Growth: The Orlando MSA registered overall year-over-year rent growth of 6.6% during the 12 months ending Q1 2016 which marked the seventh consecutive quarter of annual rent growth of 4.0% or more. The most notable vintage class for rent growth was the 1980s segment which on average experienced 9.5% year-over-year rent growth. C-class assets also posted strong annual rent growth as the 1970s and pre-1970s classes experienced 6.8% and 7.0% year-over-year rent increases respectively. Furthermore, the leading submarkets for rent growth in the Orlando MSA were Altamonte Springs/Apopka (10.4%), Casselberry/Winter Springs/Oviedo (9.4%) and East Orlando (9.2%).
Supply: Similar to the trend experienced in Tampa Bay, year-over-year supply additions in the Orlando MSA have been between 2.0% and 3.0% during each of the last nine quarters. Specifically, Orlando MSA’s multifamily base increased by 6,500 units or 3.2% during the 12 month period ending Q1 2016. The Central and South Orlando submarkets represented 60% of the newly completed units. Looking forward over the next 12 months, the existing multifamily base is expected to increase by an additional 2.3%. Demand and absorption have remained strong through the currently elevated supply cycle as supported by strong occupancy and continued rent growth in the Class-A space. Although, as supply increases are expected to continue into the coming years, occupancy and rent growth are expected to taper to a more modest level as supply increases approach the current demand level.
Southwest Florida Occupancy: During Q1 2016, the Southwest Florida Region which is represented by the Sarasota/Bradenton and Fort Myers/Naples markets registered an average occupancy of 98.3% which placed this region in the top-3 nationally for occupancy performance. This strong occupancy trend was consistent across all vintage classes and is largely attributed to minimal additions to supply and a continually improving economy which added 19,500 new jobs over the past 12 months. The strongest submarkets for occupancy were Port Charlotte/Punta Gorda (99.6%), Naples (99.1%) and Bradenton (98.4%).
Rent Growth: On par with previous periods, rental increases have remained impressive throughout the Southwest Florida Region as year-over-year growth registered at 8.1% at the end of Q1 2016. The largest annual rental increase was experienced in the 1990s and 1980s vintage segments at 9.10% and 10.57% respectively. The Fort Myers/Naples Area continues to sustain particularly high annual rent growth registering at 9.6% at the end of Q1 2016 compared to Sarasota/Bradenton (6.1%). This ranked Fort Myers/Naples third nationally for year-over-year growth. As with occupancy, minimal additions to supply since the recession have facilitated strong demand and rent growth opportunity for multifamily operators. Considering the substantial rental increases this region has experienced in recent years combined with the increasing supply pipeline suggests that rent growth could stabilize toward a normalized growth pattern of 3%-4% in the next few years.
Supply: The Southwest Florida Region has experienced more-nominal supply increases as compared to Tampa Bay and Orlando. Over the past 12 months, three properties representing 748 units were completed which increased the supply base by approximately 0.62%. Furthermore, all of these completions were located in Fort Myers/Naples. The modest supply additions in recent years could be attributed to the tertiary nature of the Southwest Florida economies as compared to more-primary markets such as Tampa Bay and Orlando which has resulted in a slower post-recession economic recovery. Although, multifamily development is expected to increase throughout Southwest Florida over the next few years. Nine properties, totaling 3,812 units are currently under construction and will increase the existing inventory base by 3.17% once completed. The next 12-24 months will serve as an excellent case study.
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