Permitting and construction decline in the Orlando multifamily market

Orlando multifamily market overview

The Orlando multifamily market is showing signs of a slow and steady recovery. Vacancy has begun to tighten in phases. Class B and Class C properties reached their vacancy peak at the end of 2024 and have improved steadily since. Vacancies in the Class A segment did not begin to improve until this year, but the rate in the top tier has improved modestly since peaking at the end of 2025. Renter demand outpaced new deliveries during the quarter, reversing a pattern that largely defined the past two years. Reinforcing this trend is a labor market that regained momentum after a weak 2025, with Orlando now accounting for roughly half of Florida's job growth.

Investment activity has gained momentum in recent years and sales velocity in the first half of 2026 was elevated compared to levels from prior periods. Class B properties have accounted for a larger share of year-to-date transactions than their historical share. Multifamily sales this year have been primarily located in the North, East, and Osceola County submarkets. Cap rates have remained stable since the start of 2025 even as pricing has moved lower. Pricing now sits well below the 2022 peak, while steady cap rates and growing transaction activity point to improving investment market conditions.

Looking ahead for Orlando

The forward supply picture in Orlando is improving as project completions are set to decline again this year, easing the pressure that has weighed on occupancy since 2023. Permitting has fallen to roughly half its five-year average pace and is on track for a sharp decline in 2026, signaling construction activity will likely be reduced for the next few years. Demand is expected to remain healthy, supported by a local employment market that is gaining momentum. Vacancies and rents are forecast to remain near current levels through the end of this year with the prospect of improving performance more likely in 2027.

To this point in 2026, investment activity has been concentrated primarily in Class B assets, but the sales mix will eventually broaden to include newer assets as conditions improve. Class A properties have historically represented about 25% of total transaction activity, but that figure has fallen in recent periods. Transactions will likely occur in larger numbers as newer assets move through lease-up, a factor that should be supported by further improvements in Class A vacancy rates. Investors will likely factor in the local market’s strong economic growth when assessing acquisition opportunities.

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