Orlando’s Apartment Market Remains Weak
The pandemic-induced economic slowdown has weakened Orlando’s apartment market. Steep job losses in the tourism-dependent economy have muted apartment demand, prompting operators to cut effective asking rents to hold onto occupancy. Since May, the market has recorded year-over-year rent cuts of around 3% to 3.5% each month. These were Orlando’s weakest pricing performances since the Great Recession, when rents dropped an average of 3.3% from 2007 through 2009. In contrast, in the five years prior to the COVID-19 pandemic, Orlando was averaging 5% rent growth annually. Likewise, in the five years leading up to 2020, Orlando occupancy primarily registered around 96% to 97%, but with the dual effects of the pandemic and elevated new supply, occupancy came down 100 basis points (bps) in the past year to 95% in October, falling below the national average (95.7%). In the coming year, Orlando is expecting its highest apartment completion volume in more than 25 years. Although some projects could face delays due to the pandemic, the volume of new units coming online will be significant and continue to dampen fundamentals.