Rents in metro Orlando reached unheard-of heights in 2021, but the new year is likely to bring a slower rate of increases, an expert says.
“The pace of growth in rent is likely to decelerate but it will continue to grow,” said Lisa McNatt, director of market analytics for real estate analysts CoStar Group.
According to CoStar, the average rent in the metro area is $1,650. That’s a nearly 25% increase over the previous year, a pace more than twice the national average increase of 11.5%.
With people from all over the country making the move to Central Florida, McNatt says renters should expect another 6-8% in increases in 2022. “As long as that multifamily demand exists, rates are going to continue to accelerate,” she said.
That is welcome news to developers. A study this year from software company Stessa called Orlando the second-best metro in the city to invest in rental property, behind only the Tampa region.
But for renters such as Kristin and Jeff Howard, it makes their prospects for finding a new place bleak. They are already paying $1,450 for an extension on their lease in their south Orlando townhome. The place is being advertised to new renters for $1,700.
“The landlord said he likes us so he’s only charging us this much,” Kristin Howard said.
The Howards own online vintage shop Kick Bright and will be opening a physical location in the Milk District in January. But both of them were laid off from their day jobs in November and need a cheaper place to live.
They say their search has been demoralizing. Some places are asking for $150 nonrefundable application fees.
“If you’re looking at three places, it’s $400-$500 just to apply,” Jeff Howard said. “You’re not guaranteed you’re going to even be approved.”
And that’s if they can even find open places. Vacancy rates for higher-end apartments, with an average rent of $1,870 per month like those in downtown Orlando, are at about 6.7%. Low cost apartments in the area, with an average rent of $1,100 a month, are less than 3% vacant.
“There is a complete lack of workforce and affordable housing,” McNatt said.
Developers are preparing for growth in the area. Though Orlando counts for less than 1% of the U.S. population, it accounts for 2% of all multifamily development projects underway, with 14,000 new units currently in the works.
But even if they all come online in the next year, they will likely command premium rents. To find anything affordable, McNatt says renters need to look outside the city at places such as Kissimmee.
“Big things are going to happen in Osceola County,” she said.
McNatt points to developments such as Margaritaville and WaterStar on U.S. Highway 192 as likely to spur some growth in Osceola.
She said that could prompt the conversion of some older hotels in Kissimmee into affordable apartments.
“You do have a lot of under-utilized hotels around here that you could do just a little adaptive reuse and turn them into workforce housing,” she said.
Housing advocates have pushed for such conversions, but an ordinance Osceola passed in November has made the process more costly for developers. It calls for such measures as keeping 20% of developable land as open space, which would limit the number of available units.
Looking at news such as Disney’s announced plans for a campus in Lake Nona, McNatt says renters should expect everything to continue upward.
“A lot of executives have decided they want to live here,” she said. “So they’re going to move their operations here and their people are going to follow.”
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