As Migration Surges, Some Florida Apartments Get Bigger
From 2010 to 2018, Florida and Texas each drew in more than three times as many new residents than any other state in the nation. But where those new residents settled once they arrived is what separates the two migration magnets.
More than 2.2 million people relocated to Florida since 2010, according to the most recent Census data. Texas took in more than 1.8 million. In the Lone Star State, most of those migrants flocked to big metropolitan areas. Big cities in Florida also claimed their share, but nearly half of the new arrivals filtered into smaller cities. This trend makes the Sunshine State a special case, and influences the local apartment markets.
When looking at the metros that saw the largest absolute net migration from 2010 to 2018, Florida takes 13 of the nation’s top 50 spots, more than double every other state that appears on the list. And it’s not just the large markets that are seeing the most new residents. Markets rarely considered heavyweights for economic development, such as North Port-Sarasota-Bradenton, Cape Coral-Fort Myers and Lakeland-Winter Haven, also made the cut.
Many Florida areas that fall outside of the nation’s 50 largest apartment markets grew by substantial margins from 2010 to 2018, benefitting apartment performance. In fact, of the Florida markets that saw the most migration, only Miami-Fort Lauderdale-West Palm Beach, Tampa, Orlando and Jacksonville are considered major markets.
These remaining, smaller markets are all tracked by RealPage, except for The Villages, because of its small population and insignificant apartment presence of less than 1,000 units. Generally speaking, the eight remaining markets – North Port, Cape Coral, Lakeland, Port St. Lucie, Deltona, Palm Bay, Naples and Ocala – have experienced solid market fundamentals this cycle. Cumulatively, these markets have outperformed U.S. rent growth every quarter since mid-2012 and U.S. occupancy every quarter since the tail end of 2014.
In the year-end 1st quarter 2019, these eight markets saw 3.7% rent growth, compared to 3.2% nationally.
In looking at net migration as a percent of total population growth, we can learn a lot about individual markets. In seven of the nation’s top 50 net migration markets, migration matched or eclipsed total population growth since 2010. Six of those seven markets are in Florida, with Myrtle Beach as the outlier. In fact, only Orlando, Miami and Jacksonville have seen less than 90% of their overall population gain as a result of net migration – and all those markets are between 74% and 78%.
In a handful of these Florida markets, migration accounts for all of total population growth. In some cases, migration actually exceeded population growth, indicating new residents more than made up for deaths outnumbering births in the existing population. This is most common in retiree-heavy markets where the replacement rate (births) is low and the population skews older. Because these markets have seen average or below average job growth this cycle, it’s plausible to assume that new residents are not dependent on job availability. This is especially true in markets such as Deltona and Palm Bay, which have only seen their employment base expand by 8% to 9% since the recession.
What does that mean for the apartments built since 2010? They’re getting bigger to accommodate this new population – by more than 10% on average in some markets.
In all these markets, the pre-2010 units have a larger footprint than the national norm, with premiums ranging anywhere from 11 to 108 square feet. Since 2010, new properties built in these markets have grown considerably.
This trend of larger (and growing) units supports the hypothesis that retirees prefer additional space for their belongings, despite downsizing from the upkeep and maintenance of a single-family home.