Developers in South Florida are increasingly listing multifamily development sites for sale rather than moving forward with construction, as market conditions have shifted over the past two years. Rising interest rates, higher development costs, and a surplus of new apartments have changed the outlook for new projects.
“I don’t think it’s a secret that the market cycle for new construction multifamily is ending,” said broker Tony Arellano. “Interest rates are higher, development costs are higher, concessions [to apartment tenants] are higher.”
The surge in listings comes after a period of rapid growth following the pandemic. The region saw significant demand from out-of-state residents and record rent increases, prompting developers to complete many new projects quickly. However, recent inflation and elevated interest rates have made building more expensive, while an oversupply has led to declining rents.
“All the big developers and players tell us [that] if it wasn’t shovels in the ground by a couple of months ago or last year, they are not going vertical,” said broker Sebastian Faerman.
Not all sellers are leaving because of increased costs or lower returns. Some specialize in buying land, securing entitlements, and selling at a profit. Others invested under Florida’s Live Local Act—which allows larger projects if 40 percent of units are below-market rentals—and now aim to sell those sites.
“Developers can’t tell you, ‘We are hurting … we need to get a buyer,’” said broker Miguel Pinto.
Pinto noted that some bought land at peak prices with too much debt and expected continued rent growth and lower interest rates during Donald Trump’s presidency—none of which materialized. Now these owners face non-income-producing properties with looming loan maturities and property tax bills.
“Some of these guys bought at the top of the market. They were overleveraged, and they thought everything was going to keep being peachy, that the rents would be peachy, that with Trump being in power, interest rates would have dropped,” he said. “None of that has happened.”
Even sites not publicly listed may be available for sale if approached directly. “If it’s not publicly for sale, it’s still for sale,” Pinto said. “Everyone is a net seller right now. All it takes is one call to their office.”
Clara Homes recently listed its Wynwood site for $10.9 million after previously planning a 147-unit apartment tower there. Founder James Curnin cited high inventory but insisted supply was not his main reason: “I just want to move to bigger and better things,” he said.
Data from CoStar Group show that 18,600 apartments were completed last year in South Florida—more than the number of net new leases signed—with similar trends seen since 2021. Most completions were high-end rentals in urban cores like Wynwood.
Rents reflect this shift: average monthly rent for a one-bedroom apartment in Wynwood is $3,049 this month—a 2 percent drop from last month and down 7 percent year-over-year according to Zumper data.
Evolve Companies also put two Miami development sites up for sale after receiving approvals but did not respond to requests for comment about their decision.
Developers who expanded into south Miami-Dade County—where land was cheaper—are now more likely to list those sites as well due to thinner resources or uncertain rental prospects outside established neighborhoods like Edgewater or Wynwood.
Some firms considered switching planned apartments to condos amid softer demand but found not every site suited such conversions or could attract enough equity partners given current financial conditions.
“When you have rates so high, you can put risk-free money in bonds or the money market at 5 [percent] or 6 percent. So why would you take a risk with a developer,” Pinto said. “One thing is you buying the property with investors, another is getting money from investors to start building right now. For multifamily, it’s very, very hard.”
However, some brokers see opportunity ahead as banks reenter capital markets and construction costs decrease slightly; CME Group forecasts suggest possible rate cuts by the Federal Reserve soon (https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html).
“If anything, we are actually starting to see higher transaction velocity, and that may be why people may want to test the market again,” said Chris Lentz of Cushman & Wakefield.
A recent example includes Swire Properties’ $45 million sale of a downtown Miami site proposed for condos and hotel rooms (https://www.therealdeal.com/miami/2024/06/17/swire-sells-brickell-key-site-to-kerzner-for-45m/). Still, most activity involves less prime locations where developers seek buyers amid changing conditions.
“They bought [land], thought they would build it,[and]the world turned on them,” Pinto said.“Things will shake out,and that’s when we will know who had a backup plan and the financial wherewithal.… As the old saying goes,’When the tide goes out,we see who is swimming naked.’”
