Miami multifamily demand continues to grow at an above-average pace, with apartment absorption growing 2.2% annually in Q1 2023, relative to 0.7% average growth for the U.S. Following national trends, demand growth has slowed from peak levels of over 9.4% annual growth seen in Q3 2021.
As of Q1 2023, the Miami Metro had the eighth-largest apartment inventory pipeline out of all U.S. metros, and at over 17% of existing supply underway, Miami has the largest supply pipeline relative to its inventory within the largest 30 or so markets, based on supply underway. Construction starts totaled over 3,000 units in Q1 2023, a rapid pace for activity as this is well above the quarterly average for starts of around 2,500 over the last five years. A pandemic-amplified surge in demand has emboldened apartment developers in the Miami area over the last two years. Despite elevated investor interest, historically low cap rates coupled with rising interest rates and a slowing economy will continue to weigh on transaction volume through 2023 and into 2024.