This year, investors contemplating a real estate purchase may want to turn their attention to the south, where beautiful natural lands, appealing demographics, and an undersupply of multifamily housing position Hobe Sound, Fla., as an attractive option.
Sitting about 25 miles north of West Palm Beach, Hobe Sound is home to championship golf courses, pristine beaches, and various parks. The area, served by West Palm Beach/Palm Beach (PBI) Airport, offers an array of active lifestyle choices for everyone, from young professionals to families to retirees.
While the overall region has seen a boom in proposed retail shops, restaurants, and warehouse stores, Florida’s Treasure Coast has seen limited growth so far in multifamily housing developments. However, that is likely to change as occupancy in existing multifamily dwellings surges. The number of households in South Florida is expected to increase by 44,000 per year over the next five years, according to rebusinessonline.com. In the last five years, there were 44,275 multifamily units built, with near-record absorption.[1]
Perhaps most important of all, Florida’s business-friendly environment, with no state income tax or estate tax, continues to draw investors as well as relocators, according to recent news articles. Such a tax climate provides an opportunity for individuals to minimize their tax exposure. Florida ranks 4th on the top 10 best of 2021 State Business Tax Climate Index by The Tax Foundation. The Foundation’s Index enables business leaders, government policymakers, and taxpayers to gauge how their states’ tax systems compare, showing how well states structure their tax systems.[2]
Florida has a 6% sales tax, and corporations that do business in Florida are subject to a 5.5% income tax. However, LLCs, sole proprietorships, and S corporations are exempt from paying state income tax.[3]
Overall, it’s no surprise Florida commercial real estate seemingly remains as popular as ever, with one of the hottest current sectors being multifamily. A 2020 National Movers study showed Florida ranked 9th in the top 10 states for inbound migration.[4]
West Palm Beach and other South Florida markets are also seeing a wave of new residents leaving expensive cities for Florida’s low-tax environment and warm climate. And companies in large, costly markets like New York City are expanding or relocating to Florida altogether.[5] Additionally, as the pandemic’s work-from-home shift continues, people across the country that have wanted to make a move away from snowy winters may consider this an optimal time.
Consequently, we believe the combination of the undersupply of multifamily units in this area, along with a growing population and demographics, could make Hobe Sound a desirable location for future investment opportunities.
Occupancy rates climb
A look at a sampling of cities shows multifamily deliveries were almost evenly distributed between Miami metro (2,391 units), Ft. Lauderdale (2,648 units), and nearby West Palm Beach-Boca Raton (2,134 units). According to recent data, occupancy increased the most in the West Palm Beach-Boca Raton area, soaring to 96.6 percent.[6]
The silver tsunami continues to roll
Meanwhile, the widespread appeal of multifamily units for millennials and young professionals and their Baby Boomer parents continues to play an influential role in today’s housing market. For investors, Hobe Sound’s natural beauty and activities, accessibility, and growth potential could entice these demographics and more, making it a potentially promising future investment.
Your opportunity
If you’re an investor looking for potentially attractive development projects, check out some of our ongoing multifamily developments and reach out to explore similar opportunities we have coming soon.
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SOURCES
[1] (Nelson, rebusinessonline.com, 2021)
[2] (Statetaxindex.org, 2021)
[3] (Depersio, Investopedia, 2021)
[4] (Funcheon, bisnowcom, 2021)
[5] (Doyle, multihousingnews.com 2021)
[6] (Gagiuc, multihousingnews.com, 2021)