What Happened to Multifamily?
A Look at Florida’s Shifting Market in 2025
Jesse King | November, 2025
For more than a decade, multifamily has been one of the strongest-performing asset classes in commercial real estate. Investors viewed apartments as dependable, resilient, and consistently backed by population and job growth, especially in high-migration states like Florida. Heading into 2025, many industry forecasts projected a healthy rebound for the sector after a period of supply pressure and interest rate turbulence.
But the momentum never fully materialized.
A Slower-Than-Expected Recovery
While 2025 was expected to be the year multifamily demand caught back up with supply, absorption across most markets remained unexpectedly slow. Thousands of new units delivered statewide over the last three years, but leasing velocity didn’t accelerate at the pace many anticipated.
This slower absorption had a clear ripple effect: rent growth flattened, and in some areas of Florida, the market experienced rent contraction for the first time in years. With the increase in supply, renters found themselves with a myriad of potential options to lease. This competition for tenants has led to apartment operators giving increased concessions and lowered rents in an attempt to maintain higher levels of occupancy. For a sector that saw record-setting growth throughout the early 2020s, this correction felt dramatic, but it wasn’t without cause.
The Factors Shaping Florida’s Multifamily Market
Florida’s multifamily performance in 2025 has been primarily influenced by three key forces:
1. Domestic Out-Migration
For the first time in recent memory, Florida experienced parts of the population shifting away from certain metros. While the state overall continues to grow, some high-cost or high-congestion submarkets saw a slowdown in in-migration and an increase in residents moving to more affordable areas, both within and outside the state. With an estimated cost of living increase of 27% over the last six years, many have found themselves priced out and moving to states such as Georgia, Tennessee, and Texas. In fact, Florida has seen net domestic migration shrink from ± 314,000 in 2022 to ± 64,000 in 2024. Fewer incoming households meant less demand for newly delivered units.
2. A Cooling Jobs Market
Employment remains relatively strong, but the blistering pace of job growth seen from 2020–2023 has cooled. Per the National Association of Colleges and Employers, more than half of the employers surveyed rated the job market for the upcoming 2026 class as poor to fair. As college graduates make up a significant source of apartment demand, this is troubling news. While current renters and renewals are doing well, it has left prospective renters with a hesitant feeling as they are slow to commit to anything major like a new lease. This moderation played a major role in tempering absorption during 2025.
3. Additional Economic & Policy Forces Impacting Multifamily in Florida
Beyond domestic migration and a cooling job market, broader national policies have added new pressure to the multifamily sector in 2025, especially those related to tariffs, immigration, and deportation enforcement. Each plays a meaningful role in shaping construction costs, operational expenses, and overall demand.
Tariffs Driving Up Construction Costs
Recent tariffs on imported building materials, such as steel, lumber, electrical components, and manufactured goods, have contributed to higher construction and renovation expenses nationwide. When material inputs rise, developers face tighter feasibility margins, delayed project starts, and higher break-even rents. This is especially impactful in Florida, where the volume of new multifamily supply magnifies cost fluctuations.
Even modest increases in tariffs can affect GDP by slowing construction activity, delaying projects, and reducing the number of units delivered. Fewer deliveries in turn soften absorption expectations but increase replacement costs for aging inventory.
Immigration Policies and Their Effect on Labor & Demand
Immigration plays a two-sided role in the multifamily market:
- Labor Supply: A significant portion of Florida’s construction workforce is immigrant-based. Stricter immigration policies and increased deportations reduce the available labor pool, pushing construction wages upward, and further inflating project costs.
- Housing Demand: Immigrant households make up a meaningful share of renter populations. Reduced immigration inflow or heightened deportation activity can slow household formation and reduce demand for new multifamily units in certain submarkets.
This creates a dynamic where construction becomes more expensive while renter demand may soften, a difficult combination for new development.
Impact on GDP & Broader Market Conditions
When immigration declines, labor participation shrinks, slowing economic productivity. Economists widely recognize that reduced workforce growth places downward pressure on GDP. Meanwhile, higher tariffs raise input costs for businesses, contributing to inflationary pressure. Together, these two forces influence interest rates, capital markets’ sentiment, and ultimately, the viability of multifamily development and operations.
Florida’s multifamily sector feels these impacts acutely because the state is both construction-heavy and migration-dependent. When either of those pipelines are constricted, it reverberates through absorption, rent performance, and development strategy.
So Where Does Multifamily Go From Here?
While 2025 brought challenges, the long-term outlook for multifamily in Florida remains stable. Population growth, business expansion, and ongoing development activity continue to signal strong future demand, but the sector is entering a more balanced, less speculative cycle. New starts across the US have dropped by nearly half since 2023 and as supply continues to burn off, albeit at a slower rate, the outlook for multifamily over the next couple of years remains positive. Orlando has even posted an overall occupancy gain, though modest (.03% year over year).
For investors, owners, and developers, understanding the forces behind this year’s slowdown is key. The multifamily story hasn’t ended; it’s simply evolving to adapt to the circumstances of today’s environment.
