Projected Population Growth Supports Orlando’s Expanding Multifamily Pipeline

Florida has been capturing an outsize share of population growth since even before the start of the pandemic, and Orlando has been a key beneficiary in the race for new residents.

Orlando has added 124,000 new residents through in-migration since the first quarter of 2020 and nearly 57,000 people in 2022 alone, leading to a rate of population growth of 2.1%. Orlando is expected to gain more than 155,000 new residents through in-migration between 2023 and 2027, with the resulting rate of population growth of 1.5% roughly triple the forecasted rate for the U.S. at large, according to projections from Oxford Economics. That population group will be tied to a rate of job growth that is projected to be the second fastest in the nation, behind only Austin, Texas.

This means the current construction pipeline, still elevated and near a record high, appears both justified and necessary. It also means that there will likely be solid in-place demand for owners, providing some assurance that better days are ahead. Once the spread between new apartments completed and the number of people moving to the area begins to widen in 2025 amid a projected slowdown in construction, a better rate of rent growth should be achievable.

Annualized rent growth is expected to exceed 3% by early 2025 with steady growth in the 3% to 4% range through 2027, CoStar forecasts. That’s a big difference from the negative 1.3% rate of annualized rent growth the market is experiencing as of July 2023.

As of now, there are 26,000 new units under construction across the Orlando market, many of which are being built in areas along the periphery where a larger number of new residents are moving due in part to better overall affordability. Osceola County, in particular, is experiencing a brisk pace of growth, adding more than 8% of its population between 2020 and 2022, which has resulted in one of the fastest paces of new multifamily development relative to overall inventory.

The biggest potential headwind to multifamily demand is the number of housing permits that are being issued in Orlando. The metropolitan area recorded the highest number of new housing permits in Florida during the first five months of 2023, accounting for 14% of all permits issued in Florida, according to data from the U.S. Census Bureau.

However, with the median house price pushing close to $420,000 in Orlando, ranking the market in the top 20, and with average wages forecast to grow at less than 4% from 2023 through 2027, many would-be homebuyers will be forced to rent in the near term. Also, owner-occupied households only account for about 40% of the area’s total housing units, so unless that number grows significantly, there should be steady demand for rental housing in Orlando.

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