Yardi Matrix moves Sun Belt rent recovery target to 2027 as metro vacancies diverge

Yardi Matrix now expects positive rent growth across every major high-supply market by year-end 2027, a year later than its earlier call, Commercial Observer reported on Oct. 13. The data firm said construction starts had fallen sharply and absorption of new units had improved across most oversupplied markets, with the recovery still to come.

Sun Belt rents rose 30 percent from 2021 to 2024 while new inventory grew by 673,000 units, according to Yardi Matrix. The oversupply traces to a nearly decade-long construction boom that accelerated during the pandemic, when migration to warmer climates and cheap financing pulled capital into the region.

Miami's vacancy rate was 6.4 percent in August, down from 6.8 percent in July, according to Gay Cororaton, chief economist at Miami Realtors + RWorld. Cororaton described the region's data as uneven; Port St. Lucie's vacancy rate edged up to 7.5 percent from 7.2 percent, and Tampa's reached 8.5 percent.

The Federal Reserve raised its policy rate by a quarter of a percentage point in September. Commercial Observer described the move as small but sufficient to change the math for developers and investors with projects already in the pipeline. Fed watchers cited by the publication said another hike could arrive before the midterm elections.

John Orsak, an executive vice president at Dallas-based Lincoln Property Company, said from his Phoenix office that he sees considerable variation across Southwest markets and reads the shift in monetary policy as a sign the post-boom environment will be less volatile. “It cuts both ways, in the sense that we've got ourselves into this oversupply situation because of cheap money, and we're going to chew through that, and we're going to get back to a balanced market,” he said. Orsak added that 2027 and 2028 may even produce an “air pocket,” with some increased demand because of more expensive money. “Everyone is moving in the same direction. They're just at different points on the curve.”