Central Florida Multifamily Market Report
Tampa
Market Overview
Tampa’s multifamily market is on the cusp of a historic number of construction completions. Around 10,500 units were completed over the first nine months of the year, surpassing the 8,200 units record set in 2022. The areas with the most significant amount of new construction, Pasco County and Southeast Tampa, are experiencing some of the highest vacancy rates in the region standing at 18% and 11%.
Due to rented demand not being able to keep up with the pace of construction completions, Tampa is projected to have one of the most significant gaps between supply and demand in the U.S. by the end of this year. However, far fewer units are expected to be completed in 2025, and going into 2026, which will aid in narrowing this gap. Rent growth should return to positive territory, although this is heavily dependent on the successful lease-up of the thousands of units produced this year and expected in the coming quarters.
Tampa By the Numbers
- Vacancy Rate: 9.8%
- Rent Growth: -0.1%
- Absorption in SF: 7,557
- Deliveries in SF: 11,975
- Sales Volume: $1.7B | Last 12 Months | Source: CoStar Group
Market Performance
As competition for tenants has risen, landlords in the Tampa market have had to lower their asking rents. Overall, asking rents have fallen -0.1% year on year to $1,810 per month. The Tampa market faces significant supply challenges, particularly in the coming quarters. An extended period of high vacancy will make it difficult for landlords to raise rents here. Rent growth’s return to positive territory is heavily reliant on how well the thousands of apartments built this year lease up.
Tampa’s multifamily market is the most active in Florida, with a total sales volume of $1.8 billion in the last year. Following a slow start to the year, investment sales activity increased in the second quarter, reaching over $700 million in total sales volume. American Landmark, a local private investment group, paid $135 million, or $302,000 per unit, for The Pointe on Westshore in May. The 444-unit, 2021-built neighborhood was 92% occupied at the time of selling and traded at approximately $100,000 per unit higher than the market average. Market participants were already optimistic about Tampa’s multifamily capital markets, given the degree of activity seen in the second quarter. As pricing and cap rates slow down, potential sellers will have a clearer idea of what their property could sell for at today’s prices.
Orlando
Market Overview
Orlando is currently the top-ranked market in the state of Florida thanks to its number of units absorbed in the last 12 months. The regions absorption has outpaced both Tampa and Jacksonville collectively. Orlando’s new development pipeline remains among the most elevated in the U.S. as of Q4 2024. In addition to the units finished in the previous year, more than 90% of which were Class A units, another 15,000 units are currently under development across the market. While the U.S. multifamily sector faces considerable downside risks, Orlando is considerably more insulated because to its relatively diverse local economy and the impact of tourism on total GDP.
Orlando By the Numbers
- Vacancy Rate: 10.2%
- Rent Growth: -1.2%
- Absorption in SF: 14,773
- Deliveries in SF: 12,817
- Sales Volume: $1.2B | Last 12 Months | Source: CoStar Group
Market Performance
Due to a rapid rate of new deliveries, vacancy has grown by more than 50 basis points in the last year to 10.2%, close to a 15-year high. The only time vacancy has reached higher was in Q4 2008 when Central Florida was taking on the fallout of the Great Financial Crisis. Rent growth is gradually improving, with the potential to return to pre-pandemic levels as early as the second quarter of 2025. Orlando has also experienced a recent absorption surge due to a stronger-than-expected pace of population growth in 2023 which resulted in additional renter demand.
The 13,000 units absorbed in Orlando during the last year account for around 2.5% of total multifamily absorption in the United States, or more than one out of every 50 units nationwide. Market participants have stated that sellers are hesitant to put properties on the market right now, owing to a big bid-ask spread as price discovery remains a challenge. Those with a low maturity are more inclined to list properties in the current market, while others are compelled to sell due to pressure from business partners.
Sarasota
Market Overview
Renter demand has surpassed supply by more than two-to-one this year. The market absorbed approximately 1,550 units by the end of the third quarter. Nevertheless, current demand levels represent a significant improvement above pre-pandemic averages. Overall, asking rentals have dropped -1.6% from this time last year to $2,010 per month. Several submarkets, particularly those with a large construction pipeline, are experiencing ask rent reductions of more than -3%. An additional 4,100 units are scheduled to be delivered in the coming quarters. These units will continue to add to supply-side pressure on Sarasota’s vacancy rate. Submarkets such as Venice/Englewood are projected to establish new vacancy records as thousands of units are expected to be available over the next 12 to 18 months.
Sarasota By the Numbers
- Vacancy Rate: 13.5%
- Rent Growth: -1.6%
- Absorption in SF: 4,040
- Deliveries in SF: 2,452
- Sales Volume: $355M | Last 12 Months | Source: CoStar Group
Market Performance
Sarasota’s multifamily vacancy rate has slowly increased after reaching an all-time low of 3.1% in the fourth quarter of 2021. The vacancy rate is at 13.5%, up over 200 basis points from the previous year. Despite being positive, renter demand has not been able to keep up with the historically high rate of development completions over the last 12 months. New supply will continue to put upwards pressure on Sarasota’s vacancy rate, but the extent of this pressure will start to subside in 2025. Roughly 4,100 units are under construction, down from nearly 6,000 units this time last year.
