Nationally, rents are still trending upward, but that growth finally slowed in October. The national rent index increased by 0.8 percent–the smallest increase since February. But across most of Florida, rent rates, despite the pandemic, have been growing at a much greater pace and were immune to the plunges traditionally expensive metro areas like San Francisco, Chicago and New York saw.
Sarasota and Manatee county numbers tell the story. The month of October saw a 2.6 percent increase in month-over-month rental rates for Sarasota County, while the year-over-year increase was roughly 36 percent. The overall median, the midpoint amount ranging from the rent price of a studio to the rent price for a four-bedroom apartment, is $2,051–the first time that number surpassed $2,000. Last month it was $1,998. In October of last year, it was $1,491, all according to a recent report by Apartment List, a national online marketplace for residential, long-term rentals.
As it stands, the October rental rate for a one-bedroom apartment in Sarasota was $1,553, and a two-bedroom was $1,921.
While Manatee rental prices increased at a greater rate than Sarasota, with a month-over-month increase of 2.7 percent and a year-over-year growth of almost 42 percent, the overall median for October rental rates is $1,825 compared to $1,297 last year. The October median price for a one-bedroom in Manatee County was $1,437 and $1,724 a month for a two-bedroom.
"In most of Florida, we never saw a dramatic price drop as a result of Covid. Florida didn't have a huge vacancy increase that led prices to drop," says Rob Warnock, senior research associate at Apartment List. In fact, the report listed St. Petersburg and Tampa among the top 10 cities nationwide that saw the steepest upticks in rent prices since March 2020.
In analyzing the numbers, Warnock points to apartment vacancies as a leading indicator of rental rates.
In the years prior to the pandemic, Sarasota County's monthly apartment vacancy rate hovered between 7 and 9 percent. In October last year, it was 6.9 percent and in October 2021 it dropped to 1.5 percent. In Manatee County, October 2020 saw an almost 6 percent vacancy rate, compared to just 2.4 percent in October 2021.
Because of that, "now landlords can rent their spots to the higher bidder," says Warnock.
This spike is also probably why national, multi-family real estate investment firms have purchased into the area for the first time. To name a few, Gainesville-based The Colliers Companies is planning a 300-unit apartment complex on Fruitville Road. Capital Investment Group, based in Ohio, is poised to build a 157-unit apartment project on 10th Street. New York-based Vrzic purchased the Promenade Apartments building in April.
"We still have a net migration of nearly 1,000 people a day into the state. A lot of those people are looking to rent, so there's been a huge demand," says Adam Podbelski, vice-president of investments with local commercial real estate brokerage firm Marcus & Millichap.
"Retail is still active, but much of the office space sector was stepping back while big companies went remote, adding to a huge interest in the apartment side of things," he says. And with no problem gaining 100 percent occupancy, as the units turn, [landlords] just continue to bump rents."
In 2020, Marcuse & Millichap closed approximately 25 transactions state-wide, compared to 43 so far this year already. Podbelski expects to reach 50 by the end of the year.
So will the addition of more apartment units cool down long-term rental pricing?
"Hopefully, in the coming months, vacancies will go back up, giving renters a little more leverage," Warnock says. "But I'm not optimistic that there's going to be a huge reversal unless there's a change in the supply of homes, which takes place slowly."