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In Palm Beach County apartment rents soar in March, but increases expected to level out

Rental market

 

Apartment rents continue to rise faster across South Florida than the rest of the country, and renters can expect to keep shelling out more money when their leases expire.

About the only bit of good news for cash-strapped apartment dwellers: The rent increases should start to even out.

The average rent in Broward County in March was $1,436 a month, up 7 percent from the same period a year ago, according to the Axiometrics research firm in Dallas. Over the same period, Palm Beach County’s average rent climbed 8 percent to $1,429 a month.

Nationwide, the average March rent rose 5 percent to $1,187.

With apartment occupancy in the two counties at about 96 percent, landlords are firmly in control of the market. But as a wave of development opens, renters will have more options and gain some leverage, Axiometrics said.

So instead of rent hikes pushing 10 percent, South Florida renters can count on 2 percent to 4 percent a year for the next few years — still a steady jump, but much less than the frenzied run-up recently.

Last fall, data from MPF Research in Carrollton, Texas, showed rents climbing at a higher rate than most of the 50 largest metro areas nationwide.

Kelsey Dean, 24, has been searching for a one-bedroom apartment for the past four months in east Broward, from Fort Lauderdale to Lauderdale-by-the-Sea and into Deerfield Beach.

Dean said it’s challenging enough finding a place in her price range of $1,200 to $1,500 a month, but the deal-breaker for her so far is the upfront, nonrefundable fees of $1,300 to $2,200.

“When I find something, it seems too good to be true, and it is too good to be true,” said Dean, a publicist who continues to live with her parents. “I’m just glad I’m not being rushed into something because right now they’re all bad options.”

New rental projects in Palm Beach County include SofA in Delray Beach, Alexander Lofts in West Palm Beach and The Mark at Cityscape in Boca Raton.

In Broward, The Related Group recently completed the New River Yacht Club, and Alliance Residential Co., one of the nation’s biggest apartment developers, opened Broadstone Cypress Hammocks in Coconut Creek. Alliance also plans luxury units in Fort Lauderdale on the former site of the Ocean World marine park.

Although thousands of units are going up across the region, there was virtually no new construction during the recession, and the new supply still doesn’t match the rate at which South Florida developers built apartments in the last rental boom a decade ago, according to Axiometrics.

What’s more, a rebound on the jobs front is putting more people into an already-crowded rental pool.

“That’s what really gives landlords the pricing power to push rents,” said Stephanie McCleskey, vice president of research at Axiometrics.

The homeownership rate in Florida has declined steadily over the past decade, according to a recent report from the U.S. Census Bureau.

The state’s ownership rate last year was 64.9 percent, compared with a peak of 72.4 percent in 2005 and 2006. The homeownership rate in the metro area covering Miami-Dade and Broward counties fell to 58.8 percent last year from 69.2 percent in 2005. That was the biggest drop among the four largest metro areas in Florida.

Millennials increasingly are postponing homeownership because of onerous student loan debt that makes it difficult to qualify for a mortgage, analysts say. Some young professionals don’t want to be tethered to a house so they can easily move for another job.

“People are starting to do well again, but they don’t want to own,” said Ken Johnson, an economist at Florida Atlantic University. “They want to rent something nice, and there’s very little supply out there.

“They’re not saying they’re never going to buy, but they’re coming in and doing their due diligence and seeing what the market’s like for a year.”

 

By: Paul Owers 
Contact Reporter 
Sun Sentinel