Miami luxury rentals’ development outpaces demand

Even though the desire to live in luxury residential buildings is high, the supply is currently outweighing that strong demand, according to high-end luxury residential developers.

There’s no question that South Florida is the place where many Americans want to live and demand is high but recently supply is higher, said Asi Cymbal, chairman of Cymbal DLT.

“We believe this will continue for the next 12 to 18 months until it returns to normalcy with supply and demand,” he said.

Residents will seek out luxury apartment living because housing starts are down dramatically, he added, and construction starts are down dramatically.

“This is happening because interest rates are high, the cost of construction is high and also because there’s a lot of supply in the market,” Mr. Cymbal explained. “Rents are tapped in the near term and are not going up for the next six to 12 months.”

Cymbal DLT recently delivered Laguna Gardens in Miami Gardens, one of the first multifamily projects to open under the Live Local Act, and plans to soon be breaking ground on another luxury $1.5 billion Nautico District in Fort Lauderdale with multifamily, condo, hotel and retail.

A couple of years ago, the luxury rental market was robust due to people moving to South Florida during covid, said John Zalkin, executive vice president for client relations and partner at RKW Residential, In 2022, he said, those renters decided to stay in Miami and they went on to go either try to buy a home or they moved to a more suburban setting.

“So, you lost a big percentage of the new group of people that were here as renters,” he said, “and we also had a lot of deliveries.”

In 2021, there were 11,000 luxury units started, in 2022 there were 15,400 starts, in 2023 about 7,500 units were delivered, and so far in 2024, over 8,300 units will be placed on the rental market, he said.

RKW Residential is currently working on Soleste NoMi in North Miami Beach, which is almost 50% leased.

“It’s kind of like a perfect storm of issues and problems. You have all these deliveries that we’re still trying to weed through and digest what was delivered,” Mr. Zalkin explained. “When you read all this, you would think it’s catastrophic, but it’s not. South Florida has always been resilient. We always overbuild and it’s always absorbed, and the same thing is happening now.

“For the next 12 to 18 months, the market is going to be sluggish, but if developers were able to break ground either last quarter of 2023 or this year, they are going do incredibly well when they deliver,” he added, “because they be delivering (in three to four years from now) into a much better market because of the absorption and the lack of starts.”