Single-family rentals in Orlando, Florida, may face fierce competition in the immediate future, as the metro area is expected to see low vacancies and substantial construction in the multifamily sector this year.
Predictions call for the vacancy rate to fall to 6.1 percent, the lowest level since 2006, according to Marcus & Millichap. Although few new units are expected to reach completion in the short-term, more than 10,000 are currently in the development pipeline. For now, the slow pace of construction is expected to feed into falling vacancies and may contribute to rent growth.
Asking and effective rents for apartments in the metro area increased during the beginning of the year despite job losses, and analysts say that further momentum is likely to be gained. About 5,400 positions were eliminated during the first quarter, but projections suggest 26,000 will be gained by the end of the year. Such a spike would represent a 2.6 percent increase in employment. Many of those jobs will come in businesses related to tourism.
A significant percentage of former homeowners are now renting in the area, which may suggest a source of some demand for single-family rentals. Combined with the level of job growth expected, investors and rental managers may have a chance to position themselves competitively.