by Mike Colpitts 
New apartment construction is booming in the U.S. and apartments quadruple in Naples as new residents move to the region.
- New apartment developments are also booming in Fort Myers, where new units prices are declining as a result.
- The area has grown to become the “migration magnet” of the nation even as home prices decline.
The growth is being driven by the migration of new apartment construction in the U.S. even as it sees a slowdown from 2024. Apartments quadrupled in Naples, however, as the high end luxury market drives the rental market with seniors flocking to the area to get out of colder climates.
U.S. apartment construction remains strong with more than 500,000 units being completed this year, according to online rental website RentCafe.com. An estimated 506,353 units are expected to be completed across the nation by year’s end.
Naples has at least a half a dozen apartment developments under construction. Even more units are underway in Fort Myers, where new large apartment complexes seem to be popping up all over. The growth in Southwest Florida is being driven by the migration of new residents, many of whom are waiting for housing prices to decline further before they make the move to buy a home.
“Southern metros typically offer streamlined approval processes and fewer regulatory hurdles, making it easier to bring multifamily projects to market,” said Doug Ressler, senior analyst at Business Intelligence, Yardi Matrix. “At the same time, elevated home prices and a shortage of attainable for sale housing are pushing more residents toward rentals. For many households, single-family ownership is simply out of reach, fueling demand for rental housing.”
However, home prices have been declining in the Fort Myers area for more than two years. Fort Myers Beach prices topped out even before Hurricane Ian hit the area more than three years ago. The average price of a home in Fort Myers has now dropped below $328,000.
Naples nearly quadrupled its apartment completions in one year, while Chicagoland saw the steepest drop in deliveries (-60.4%), according to RentCafe. The South is estimated to have more than half of all new apartment developments built nationwide this year due to the region’s status as a “migration magnet” supported by job growth and economic expansion in the last decade.
The unemployment rate is still low in most of the South below 3.5%, and many job openings are advertised for those seeking employment as the apartment market grows to fill the need for new residents.
Major Texas metros like Dallas, Austin and Houston are leading the boom. But smaller markets in Florida are narrowing the gap. Major developers, including many of the nation’s largest publicly held REIT’s (Real Estate Investment Trusts) are targeting the South due to its business-friendly environment, relative affordability and less restrictive zoning laws.
As long as REITS pay out more than 90 percent of their profits they do not pay federal income taxes. The law was passed by Congress more than twenty years ago and allows the industry to pile up enormous profits. The rents they charge tenants are some of the highest in the industry.
One-bedroom units make up 43% of apartments in the U.S. and two-bedroom apartments represent an equal 43%. Three or more bedrooms are 10% of the total number of apartments in the nation’s apartment market.
Units built between 1983 and 1992 are primarily comprised of two-bedroom apartments for a total of 1,162,400. They’re followed by one-bedroom apartments (totaling 1,034,100); apartments with three or more bedrooms (totaling 133,700); and studios (totaling 71,700).