Multifamily Market Overview
Orlando, FL
Orlando is experiencing one of the strongest multifamily markets in the U.S., with high rent growth, a booming development pipeline, and a growing population. As new residents continue to be priced out of the housing market, rents are rising throughout the market, with new builds catching top dollar. This historical performance has brought investors from around the globe looking to invest in the Sunbelt market, ultimately creating a competitive investment landscape. But with no signs of slowing down in population growth or construction, Orlando is a prime market for multifamily investors chasing high yields.
Vacancy & Rent Fundamentals
With historical demand ramping up Orlando’s multifamily sector, the market’s average vacancy rate has steadied at 5.5 percent, with expectations to remain within five percent in the near term. Within the past year, over 8,000 units have been absorbed, equating to the absorption of one out of every 50 units in the U.S. With a low vacancy rate, year-over-year rent growth has performed well over the past year, moderating within the past few months. CoStar reports Orlando’s current rent growth is 15.3 percent, almost double the national average. The average asking rent reached $1,820 per month, with Class A units reaching an average of $2,000 per month.
Sales Volume
Strong fundamentals have carried the influx of transaction activity in the Orlando market. Investors can’t get enough of the sunshine state, and it shows as the market reported $9.1 billion in total sales volume over the last 12 months. The average price per unit is up 20 percent at $260,000, compressing the average cap rate to 4.2 percent. The market’s largest sale closed at $213,378,951 for the Village at Baldwin Park, a 528-unit property built in 2018. Downtown Orlando is a prime target for multifamily investors, with several submarkets following suit.
Construction
Orlando’s multifamily market has been inflated by the increasing number of people moving into the Sunbelt region, driving the demand for apartments. In total, units under construction account for 12.4 percent of the market’s existing inventory, with rents for new builds above the market average. Submarkets throughout Orlando have spurred developer’s interest as areas like Lake Nona, and the I-Drive Submarket hold the majority of incoming units. The I-Drive Submarket has approximately 25 percent of the development pipeline alone. One of the largest projects currently underway is a 625-unit mixed-use community on five acres, resulting in Lake Nona’s most extensive multifamily in history, according to CoStar.
