In light of the recent two hurricanes that have impacted Florida, now is an essential time to examine the operating expenses of multi-family properties in Tampa Bay, with a special focus on property insurance. The increasing frequency and severity of natural disasters, including hurricanes and tornadoes, are pushing property insurance premiums higher, placing additional financial strain on property owners. This article explores the upward trend in property insurance costs, supported by real financial data from several multi-family properties in the Tampa Bay area, measured on a per unit basis.
Common Operating Expenses for Multi-Family Properties
Before diving into the case studies, here’s a look at the typical operating expenses for multi-family properties in Tampa Bay:
Category | 2023 | 2022 | 2021 |
Real Estate Taxes | $2,259.96 | $2,066.48 | $1,850.78 |
Property Insurance | $1,190.81 | $728.42 | $554.53 |
Utilities | $1,231.70 | $1,114.86 | $973.86 |
Repairs and Maintenance | $906.16 | $847.82 | $758.11 |
Management Fees | $623.81 | $579.29 | $465.09 |
Payroll & Benefits | $1,725.68 | $1,566.01 | $1,372.34 |
One of the most notable trends is the dramatic increase in property insurance, with some properties seeing their premiums more than double over the past few years. Let’s explore some specific examples.
Case Studies: Multi-Family Properties in Tampa Bay
1. Marisol Vista Apartment Homes – 1200 102nd Ave N, Saint Petersburg, FL
2021 Property Insurance (Per Unit): $1,267.05
2022 Property Insurance (Per Unit): $1,384.59 (9.3% increase)
2023 Property Insurance (Per Unit): $3,513.51 (a staggering 153.8% increase from 2022)
This property saw one of the most dramatic jumps in insurance costs, with the 2023 premium more than doubling compared to 2022.
2. Rio Vista Village – 200 78th Ave N, Saint Petersburg, FL
2021 Property Insurance (Per Unit): $963.89
2022 Property Insurance (Per Unit): $398.16 (a significant decrease)
2023 Property Insurance (Per Unit): $1,144.14 (a 187% increase from 2022)
After a decrease in 2022, Rio Vista Village experienced a sharp spike in 2023, with insurance costs nearly tripling compared to the previous year.
3. Osprey Pointe Apartments – 1900 54th Ave S, Saint Petersburg, FL
2021 Property Insurance (Per Unit): $887.15
2022 Property Insurance (Per Unit): $730.84 (17.6% decrease)
2023 Property Insurance (Per Unit): $1,681.56 (a 130% increase from 2022)
At Osprey Pointe Apartments, property insurance more than doubled between 2022 and 2023 after a modest reduction the previous year.
4. Sur Club Apartments – 3301 32nd Ave S, Saint Petersburg, FL
2021 Property Insurance (Per Unit): $554.53
2022 Property Insurance (Per Unit): $728.42 (31.4% increase)
2023 Property Insurance (Per Unit): $1,190.81 (63.5% increase)
Sur Club Apartments experienced a steep rise in insurance costs between 2021 and 2023, with premiums more than doubling over this period.
5. Eagles Point Apartments at Tampa Palms – 14551 N 46th St, Tampa, FL
2021 Property Insurance (Per Unit): $124,074
2022 Property Insurance (Per Unit): $137,194 (10.6% increase)
2023 Property Insurance (Per Unit): $168,187 (22.6% increase)
At Eagles Point Apartments, property insurance costs rose steadily, increasing by over 35% between 2021 and 2023.
6. Mobley Park Apartments – 401 E 7th Ave, Tampa, FL
2022 Property Insurance (Per Unit): $1,994.54
2023 Property Insurance (Per Unit): $2,053.74 (2.97% increase)
While Mobley Park Apartments has experienced more moderate increases, the trend remains upward.
Analysis: What’s Driving the Spike in Insurance Costs?
Several factors are contributing to the sharp increases in property insurance costs across these multi-family properties:
Increased Natural Disasters: The recent hurricanes, alongside a rise in tornadoes and tropical storms, have forced insurers to raise premiums to cover the growing risks of large claim payouts.
Strain on Insurance Providers: Many insurance companies have either left the Florida market or significantly increased premiums, reducing competition and driving up costs.
Rising Construction Costs: The costs of labor and materials have surged due to inflation, making it more expensive to rebuild or repair after a disaster, which further raises insurance premiums.
Conclusion
The recent hurricanes have highlighted the growing issue of rising property insurance costs for multi-family properties in Tampa Bay. Properties like Marisol Vista, Rio Vista Village, Osprey Pointe Apartments, and Sur Club Apartments have all seen dramatic increases in insurance premiums, with some properties experiencing over a 150% increase between 2022 and 2023.
These escalating insurance costs add substantial pressure to property owners who must balance these expenses with other operational costs. As natural disasters become more frequent and intense, property insurance is expected to continue rising, making it a crucial consideration for property owners and investors in the region.
Effective risk management and financial planning will be essential for navigating this challenging insurance landscape as property owners seek to protect their investments while managing rapidly growing operational costs.
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October 10, 2024, by MMCG Invest, LLC
Sources: Financial Statements reported in CMBS (Active reporting loans), MMCG database
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