Miami Is Set Up For a Surge in Airbnbs


Skift Take

The increase in the past four years is more than what was seen in the 30 years leading up to 2020.

At a time when local governments all over the globe are trying to regulate and restrict short-term rentals, Miami is ready to welcome a surge of Airbnbs in the next couple of years.

The downtown of Miami has over 12,000 condo units in development. And yes, a significant portion — approximately 64% – of these condos are designed as small, furnished units intended for rental on Airbnb and similar sites. 

In its third quarter 2023 review, South Florida-based real estate firm ISG World found that investing in small condos that can be rented out has become increasingly popular among buyers, especially those from Latin America and other parts of the U.S.

Short-Term Rental Condo Pre-construction Developments in South Florida

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Source: ISG World

As of 2023, a total of 17,908 units in 92 condo buildings went into pre-construction phase. Of these, 8,467 units in 26 condo buildings can be used as short-term rentals. Most of these units are concentrated in the downtown area — accounting for 64% of the 12,275 condo units planned or in the pre-construction phase. 

Edgardo Defortuna, CEO and Founder of Fortune International Group, a Miami-based real estate firm, said the typical turnaround time for these projects is 3 to 4 years.  

Short-Term Rentals Units In Pre-Construction Phase

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Source: ISG World

“The short term rental market is really an explosive market both in terms of demand and inventory,” said Robert Thorne, CEO of Urban Network Capital Group, which is developing a short-term rental condo near Brickell Station, an upscale-area in Miami popular for rentals and office buildings. “We find that banks favor financing the short-term rental projects too, because they also recognize the demand, which makes us very happy because it kind of gives us security that what we’re building is what is needed in the market at the time.”

In December 2023, Thorne’s Urban Network Capital Group and another company. Vertical Developments, secured a $24.5 million construction loan for Visions at Brickell Station, a condo-hotel project that will offer 111 studio and one-bedroom units by 2025. Over 50% of them are already pre-sold. 

Foreign Buyers

Recent developments highlight the continued interest in this niche market, with projects like 600 Miami Worldcenter and Natiivo Fort Lauderdale attracting both buyers and lenders. 

Miami Realtors’s data showed that international buyers made up 47% of home purchases in South Florida in the year ending in July, with 62% of those buyers originating from Latin America and the Caribbean.

“Many of the investors are foreign buyers. A lot from Latin America, and some Europeans,” Defortuna said. “For them, the product fits their needs and desires well. They have the ability to use it and also they generate some income in the times that they’re not here.”

Thorne noted that South Florida has always been popular among Latin American investors but the surge now is real. “South Florida has always been in demand, but now more so than ever, we have buyers extensively from Colombia, from Mexico, from Argentina, Chile, Brazil now coming back to the market,” Thorne said. 

Why?

Because Miami is desirable, and hotels fall short.

“I’ve been here for over 40 years and every year the city expands. More people have come in after Covid,” Thorne said. “We have become the most desirable place to live and the most desirable place to visit. Having said that, having said that the hotel market does enough doesn’t offer enough stay opportunities, making rentals attractive for investors.”

Vacation Rental Squeeze

During the pandemic, between 2021 and 2022, some 58.9 million overnight visitors spent $13.8 billion on vacation rentals in Florida, Oxford Economics said in an economic impact study. These travelers generated 49.2 million room nights across 221,600 properties. The South Florida Business Journal published a study in May 2023 that found that Miami has the most Airbnb short-term rental listings per 100,000 people in the country.

In 2023, listings for short-term rentals averaged 23,500 per month, a 14% jump from the previous year, according to AirDNA, a vacation-rental data firm, which counts all listings with at least one available night. But the oversupply did lead to a drop in revenue per available room, which fell 3%, thanks to the competition. 



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