South Florida has long been a magnet for real estate investors seeking to capitalize on the region’s fundamentals. In this article we’ll explore the current CRE landscape and focus on the factors that are converging to create new pockets of opportunity in the Sunshine State.

An oversaturation of luxury buildings and a lack of attainable options

In recent years South Florida, which includes Miami, Fort Lauderdale, and West Palm Beach, has seen an influx of affluent residents from other states, drawn by the region’s economy, job opportunities, favorable tax climate and attractive lifestyle. The result of this trend is a widening gap between the supply of high-end properties and the availability of affordable rental units.

The South Florida real estate market has seen a boom in luxury developments, particularly in cities like Miami and Fort Lauderdale. High-rise condominiums, upscale apartments, and luxury homes dominate the new construction landscape. For example, almost all new construction in the Davie-Weston area, just outside Fort Lauderdale, since 2015 has been luxury apartments.¹ While these properties cater to wealthy buyers and renters, they do little to address the demand for more affordable housing and there is now an oversaturation of luxury buildings.

The increase in high-end developments has driven up rental prices across the region, making it increasingly difficult for residents to find such affordable housing. Miami now stands as the fourth most expensive city to rent in the US.²

The undersupply is so significant in Broward County that the local government has recently adopted a 10-year plan to incentivize new builds to bridge a gap of 73,000 affordable homes and 74,000 units of rental apartments.³ Savvy investors meanwhile are seeking to capitalize on this demand.

A shortage of land for new builds

While the solution to the undersupply would seem to be solved by building more units, this issue is exacerbated by one of the most pressing challenges in South Florida; the shortage of land available for new developments. Much of the area is flanked by the Everglades on one side and the ocean on the other, while a significant portion of the viable land in the region is already developed, meaning the competition for the remaining plots is fierce.

This limited availability of land drives up prices, making it more expensive for developers to make acquisitions for the purpose of new builds, which may lead to a preference to build high-end properties in an attempt to make a return on the initial purchase costs.

Per a recent report, there are just 20 square miles of land that remain vacant and zoned for residential use between Palm Beach County and Broward County combined. Broward County alone only has 5 square miles, which is less than 1% of its total land.⁴

The lack of available plots is compounded by zoning regulations and environmental concerns. Many areas have strict laws that limit the density and height of new buildings, which can restrict the type and size of developments. Additionally, environmental regulations protect certain natural areas, further limiting the available land for construction.

A thriving economy fuels ongoing demand for accommodation

South Florida’s strong, diverse economy and favorable business environment continues to make it an attractive prospect for major companies and residents alike, fueling demand for rental accommodation in the region.

Miami is of particular note and is ranked in the Top 10 economy in the US.⁵ Its unemployment rate is impressively low at 2.7%, well below the national average.⁶ The metro area is home to finance giants like Citadel, as well as JP Morgan, who recently announced further expansion plans.⁷ Several tech leaders such as Microsoft, Amazon, and Apple are also seeking to increase their presence in the area.7

Adding to the diverse range of sectors available for workers in South Florida is AutoNation, an automotive retailer with a HQ in Fort Lauderdale, and the Nova Southeastern University in nearby Davie, each of which employ ~4,000 people.⁸ Meanwhile West Palm Beach also has a diverse range of job opportunities, including IT, a substantial agribusiness sector, and a healthcare sector that provides 80,000 jobs.⁹

South Florida has seen consistent population growth, driven by both domestic migration and international immigration. The population in the Miami metro area increased 1.3% in 2023¹⁰ and this growth creates a continuous demand for housing, both for sale and rent, providing investors with the potential of a stable and expanding market.

The shortage of land for new builds, strong economy, and the proliferation of luxury developments have created a competitive and high-cost market. The lack of affordable rental options meanwhile poses a challenge for many residents, driving demand. iintoo’s latest multifamily offering in South Florida seeks to capitalize on these trends, providing residents an attainable alternative to luxury rentals, while offering investors a value-add, potential cashflow-generating offering in this region. Log in to our platform to see detailed information.

1. CoStar: Weston/Davie submarket report 2024
2. Zumper: National Rent Report June 2024
3. South Florida Sun Sentinel: Broward approves plan for new affordable housing
4. South Florida Sun Sentinel: South Florida needs more housing. But exactly how much vacant land is left?
5. Wall Street Journal: Top 10 Hottest Job Markets, The Business Journals: South Florida ranked 4th hottest metro for economic growth in the US
6. US Bureau of Labor Statistics
7. Fortune: Big Tech and billionaires suddenly can’t resist the lure of South Florida / Funds Society: JP Morgan announces growth plan in Miami
8. Greater Fort Lauderdale Alliance Economic Sourcebook
9. Central Palm Beach Chamber of Commerce
10. Axios: More people are moving to Miami