North Florida Multifamily Market Report
Jacksonville
Market Overview
Jacksonville’s job market has surged since 2020, growing by an impressive 9.9% since February of that year, one of the highest rates in the nation. This growth bodes well for apartment demand, and the types of jobs Jacksonville is attracting are also appealing to multifamily investors. Before the pandemic, the city’s average household income was nearly on par with the U.S. average. However, by Q3 2024, Jacksonville households are earning about $3,200 more annually than the national average. These higher incomes are expected to support the rapid lease-up of new Class A developments in 2025.
Jacksonville By the Numbers
- Vacancy Rate: 13.2%
- Annual Rent Growth: -2.5%
- Inventory Units: 121,963
- Units Under Construction: 6,071
- Net Absorption: 6,994
- New Construction: 8,177
- Rent Per Unit: $1,513 | Last 12 Months | Source: CoStar Group
Market Performance
Developers have responded to Jacksonville’s rapid job and population growth, leading to a wave of new construction that temporarily raised vacancy rates. The construction boom that began in 2022 has mostly run its course, with the number of units under construction declining by 50% since its peak. Continued growth, coupled with a slowdown in new supply coming to market next year, should help lower the metro’s vacancy rate over time and bring rent growth back to around 3% by the end of 2025.
Jacksonville’s apartment investment market has faced several national and local challenges over the past year, leading to reduced transaction activity. High interest rates have slowed deal flow across U.S. metros as lending costs and requirements have increased. In Florida, extreme weather events, including active hurricane seasons in 2022 and 2024, have led insurance companies to significantly raise per-unit rates compared to the past decade. These rising costs have pushed Jacksonville’s deal volume below $1 billion annually for the past four quarters, a stark decline from the $2.9 billion transacted in 2021. While acquisition costs are expected to ease as the Federal Reserve continues to cut rates in the coming months, elevated insurance costs are likely to persist into next year.
St. Augustine
Market Overview
St. Augustine remains a highly sought-after suburb for renters in the Jacksonville metro area. With its top-ranked school district and an abundance of new Class A apartments available for lease, the area is well-positioned to improve key performance metrics over the next 12 month. Although a recent wave of development has pushed vacancy rates close to 20%, the submarket’s appeal – particularly its waterfront views – will likely benefit property owners moving forward.
St. Augustine By the Numbers
- Vacancy Rate: 19.7%
- Annual Rent Growth: -4.2%
- Inventory Units: 9,146
- Units Under Construction: 1,360
- Net Absorption: 1,648
- New Construction: 1,288
- Rent Per Unit: $1,802 | Last 12 Months | Source: CoStar Group
Market Performance
Since 2022, developers have focused heavily on St. Augustine, leading to a nearly 50% increase in the area’s apartment inventory by Q3 2024. However, vacancy rates have declined over the last three quarters, highlighting strong demand in the submarket. While several new projects are set to completed in Q4 2024, the pipeline for 2025 is limited, which should help bring vacancy rates closer to Jacksonville’s metro average by the end of next year. Though rent growth has been negative in recent quarters, this trend is expected to reverse in 2025, and St. Augustine remains the highest-rent submarket within the Jacksonville area.
Traditionally driven by private investors, St. Augustine’s rapid growth and the completion of larger apartment buildings have attracted increasing attention from institutional investors. Over the past 12 months, institutions have accounted for 56% of buy-side deal flow, yet they control only 9% of multifamily assets in the city. St. Augustine offers investors a chance to tap into Florida’s booming markets without requiring the significant capital needed to invest in Southeast Florida. Despite broader market challenges, the dollar volume of transactions in the area through September 2024 is the highest it has been in over three years.
Daytona Beach
Market Overview
Daytona Beach has experienced rapid population growth since the start of the pandemic, adding 195,000 new residents between 2021 and the end of 2023. The city offers a range of corporate job opportunities, with NASCAR, the LPGA, and insurance broker Brown & Brown all having headquarters in the area. Additionally, Daytona Beach supports a significant blue-collar workforce, thanks to the foreign trade and enterprise zones near the Daytona Beach Airport. This diverse mix of job opportunities is expected to sustain housing demand across all apartment classes for years to come.
Daytona Beach By The Numbers
- Vacancy Rate: 10.5%
- Annual Rent Growth: -1.5%
- Inventory Units: 28,615
- Units Under Construction: 2,301
- Net Absorption: 2,201
- New Construction: 2,222
- Rent Per Unit: $1,551 | Last 12 Months | Source: CoStar Group
Market Performance
Like other areas in Florida, Daytona Beach has seen a surge of new apartment units enter the market over the past three years. As a result, Class B/C vacancy rates have remained below 8%, while Class A vacancies are hovering around 14%. However, vacancy rates have improved overall in 2024, dropping from 13.3% at the start of the year to 10.5% in Q3. The supply of new units is expected to ease in the coming years, with projected construction falling from roughly 2,500 units in 2024 to 1,200 units in 2025, and just 500 new units in 2026.
Though deal flow has significantly declined from the record highs of 2021 and 2022, Daytona Beach’s multifamily market has evolved considerably. Despite a roughly 75% drop in 12-month volume from peak levels, transaction activity in 2024 is nearly three time higher than it was in 2019. Average pricing has held steady at around $160,000 per unit is likely to rise in 2025 as lower capital costs and renewed institutional interest drive the market forward.
Gainesville
Market Overview
Home to the University of Florida (UF), Gainesville’s apartment market has experienced fluctuations over the past few years. UF provides limited on-campus housing, with just over 11,000 dorms for nearly 50,000 students, meaning roughly 75% of students rely on off-campus housing. When classes shifted online in early 2020, many students gave up their leases, causing the vacancy rate to rise from 5.0% pre-pandemic to 8.4% by Q3 2020. UF and its affiliated health system are the largest employers in the city, making the university’s enrollment figures and budget crucial indicators for investors in the local real estate market.
Gainesville By the Numbers
- Vacancy Rate: 8.3%
- Annual Rent Growth: 1.6%
- Inventory Units: 27,717
- Units Under Construction: 768
- Net Absorption: 300
- New Construction: 505
- Rent Per Unit: $1,451 | Last 12 Months | Source: CoStar Group
Market Performance
Q3 2024 marked Gainesville’s strongest quarter for net absorption since 2021, reducing the metro’s vacancy rate by 20 basis points, the first drop in this metric since 2021. Of the nearly 770 units in the construction pipeline, 384 are expected to begin leasing by year-end, with another 240 slated for completion in Q1 2025. No additional projects are scheduled for completion until Q1 2026, giving the market time to balance supply and demand. Unlike many Sunbelt markets, Gainesville has experienced positive rent growth this year, providing a stable environment for apartment owners.
Per-unit pricing in the metro has settled around $127,000, though there’s a wide price gap between newer Class A assets and older properties. Prices for newer towers near UF average around $170,000 per unit, with top-tier properties reaching as high as $215,000. In contrast, older buildings in East Gainesville often sell for under $100,000 per units. The price declines driven by interest rate hikes have primarily affected high-end buildings, while pricing for older assets has remained stable throughout the rate cycle.
