Cresting Revenues in Florida Apartments Now at a Trough

Revenue change in Florida markets hit a recent low in January, a far cry from the extreme peaks of 2021 and 2022.

Among the nation’s largest 150 apartment markets, 17 are in Florida. Those 17 markets saw revenues decline an average of 3.4% in the year-ending January, according to data from RealPage Market Analytics. In comparison, U.S. revenues were unchanged for the year. Just for a few further comparisons, the 16 California apartment markets in the top 150 saw revenues fall an average of 0.7%, while the 11 Texas markets averaged declines of 2.6%.

Revenue loss is quite a change for Florida, which until recently was logging record high annual revenue growth that topped out at nearly 20% in February 2022. Back then, the work-from-anywhere trend was in full force, and quite a few households relocated to small affordable beach towns with strong lifestyle appeal. As such, rental housing in some Florida markets started bursting at the seams as residents moved from larger, more expensive areas.

Developers took note of the trend and tried to fill the need with increasingly large construction pipelines. As inventories started to surge in these areas, revenues started to cool.

Florida’s declining revenues in the year-ending January are mostly on the rents side of operations (-2.3%), while occupancy also came down in the past year (-110 basis points).

Also weighing heavily on the Florida apartment market, the cost of insurance has increased notably. While average insurance prices across the U.S. have more than doubled since the onset of the COVID-19 pandemic, some of the most extreme cases of rising insurance costs are in Florida apartment markets. Some of the biggest increases in insurance costs since 2019 were in Tampa, Miami, West Palm Beach and Jacksonville.

Florida markets with the worst revenue declines in the past year were inevitably some of those small beach towns that saw demand increase in 2021 and 2022 and are now feeling the aftershocks of increased inventory growth.

Cape Coral was the state’s worst performer, with revenues coming down 12% in the past year. Notably, Cape Coral’s existing inventory base has grown by 12% since 2021. Declines were also steep – at around 7% to 8% – in Naples, Deltona and North Port. Inventories in those markets were up by roughly 7% to 11% in the past two years. For comparison, the U.S. inventory base increased an average of 5.5% in that time frame.

Crestview is the only apartment market on this list to see inventory grow by a comparatively small volume – of just 3.1%. But in the past five years, inventory growth in this small market in Florida’s panhandle has been more significant at 8.9%, so it’s just taking this market more time to absorb all that stock.

On the other hand, some larger Florida apartment markets logged less severe revenue declines in the past year. These markets are used to inventory growth and didn’t get hit as hard as some smaller markets.

Miami only saw a 0.3% setback in revenues in the year-ending January, while the declines were also mild in the other two South Florida markets and in Tallahassee. All of these markets logged similar inventory increases between 5% and 6% in the past two years.