Pictured: Bold Lofts in Sarasota, FL. Construction on the 97-unit apartment complex is slated to be completed this August. Also pictured: Elan Rosemary & Cityside
Via Costar – by
CoStar Market Insights: Construction Remains At 25-Year High Despite Rent Growth Cooling
As with much of Florida, Sarasota was late to fully emerge from the Great Recession. However, unlike most of the state, multifamily developers did not hesitate in resuming activity here.
By the first quarter of 2014, the new supply pipeline had already increased to an extent not seen in 20 years, with more than 1,000 market-rate units underway. Additionally, Sarasota wasn’t just building more rapidly than most other Florida metros; it was doing so at nearly twice the national average.
Sarasota is not unaccustomed to building at a greater pace than the nation and has done so periodically over the last 25 years. What makes the current supply wave remarkable is the breadth and longevity of the construction.
The metro has now sustained a higher growth rate than the nation for 12 consecutive quarters, something it hadn’t achieved since the heady construction days of the mid-80s. Furthermore, Sarasota’s pipeline has maintained over 1,000 units underway for 10 consecutive quarters, the longest such streak in its history.
Though development is still robust with nearly 7 percent of stock currently under construction, the peak supply period appears to have passed, as new project starts have slowed over recent quarters. Despite the unprecedented length of elevated supply, Sarasota’s multifamily market fundamentals have not been greatly strained.
Fueled by one of the fastest household growth rates in the nation, demand largely has managed to keep up with the enlarged pipeline. The metro is just under 95 percent occupancy, a mark above the national average and well above Sarasota’s historical average occupancy.
That isn’t to say that the market hasn’t felt any impact, as the year-over-year growth has cooled to about half of its cyclic high of just over 7 percent in 2015.
This downward trend, however, is quite mild. Despite the supply-induced downward pressure, Sarasota’s multifamily growth remains among the best in the nation.
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