In the current economic climate, real estate has received increasing attention as an asset class. Florida’s multi-family industry was one of the most resilient sectors in the face of the pandemic, showing strong rent gains and high occupancy.
Multi-Family Industry in Florida
62,000 New Renters Moved to Florida in 2020. More Americans are now choosing to move to Florida than ever before.
Demand for multifamily rentals in Florida increased post-Covid-19 due to population growth from people migrating from other states, mainly New York & Texas. Household formations in Florida have increased by over 165,000 in 2020, which represents more than 62,000 new renters.
In commercial real estate, population growth and job growth are key indicators fueling rent growth—and Florida has those two trends going notably.
Moved into Florida
With no state income tax and low cost of living, more companies are moving their operations to Florida.
In August, Amazon announced plans for six new buildings in Florida. A new robotics fulfillment center and five new delivery stations will create more than 2,000 full-time jobs in the Sunshine State.
Earlier this year, Pfizer announced plans for a ‘global capability hub’ in Tampa, leasing more than 100,000 sq. ft. of office space with 600 new high-wage jobs. Over the last three years, more than 70 financial firms have relocated from New York City to South Florida, including hedge fund giant Elliott Management, who announced moving its headquarters to West Palm Beach.
Announcements from large companies proceed to happen across the state, strengthen the population growth that is driving multifamily demand. Florida, structural, long-term, and sustainable economic growth has been persistent over the recent years. As GDP growth is a strong driver of real estate prices and rents, real estate investments provide a direct way to participate in the strong growth of Florida’s economy.
Last November, Florida voters passed a ballot proposition to raise the statewide minimum wage to $15 an hour by 2026.
Currently set at $8.56, Florida’s minimum wage will increase to $10 an hour on September 30th, 2021.
According to the Economic Policy Institute, this measure will raise wages for around half of Florida’s workforce (as 50.1% of people currently earn less than $15 an hour).
Raising the minimum wage strengthens investors’ ability to raise rent accordingly in lower-income areas. It also significantly reduces the risk of missed rent payments, as tenants will have more money in their wallets on a regular basis.
Florida’s proactive yet thoughtful economic planning, creating balanced initiatives to boost the economy. The state has hit on a winning strategy that makes Florida a tremendous real estate investment market.