“Everybody thought Miami was finished, and now it has become again one of the top locations for developers for multi-family rentals,” said Robert Kaplan, principal at Ackman-Ziff Real Estate.
With rents on the rise, thousands of units poised to come onto the market over the next several years, and investors seeing the potential for positive returns on their investments, Miami's residential real estate market is "defying all previous predictions" and outracing most other cities in America.
So, why is Miami’s market making such a rapid recovery after being one of the hardest hit by the housing crisis? A combination of factors are contributing to this phenomenon, starting with steady population growth, up 2.1 percent in 2011, its largest increase in a decade. Robert Cruz, chief economist at the Economic Development & International Trade department of the Miami Dade County government, says the continued influx of foreigners, including Hispanic immigrants, has contributed to this growth. Furthermore, according to the U.S. Department of Labor, its economy is diversified and unemployment has fallen by nearly 2 percent in the past year to 8.9 percent.
Most importantly, these workers are adding to the rental demand. Developers are confident that the new rentals will compete with Miami’s 'shadow inventory' of condos, and are looking to lure in renters who are otherwise priced out of the expensive, luxury sector in Miami’s core, but who are still looking to pay “for professionally run and managed apartment complexes” says Michael Adler, CEO of Adler Group. Moreover, though developers are building rentals now, capitalizing on the availability of financing for multi-family, the possibility to convert to condos, particularly along waterfront real estate, is still an underlying motive. For developers like Ezra Katz, CEO of the Aztec Group, this may be especially true. “You can squeeze only so much out of a renter, then you cross the line into ownership,” he said.