July 11th, 2025
7.11.25
🏢 Multifamily Market Update – Summer 2025
Reigniting Growth: The Supply Squeeze & Demand Surge Driving Opportunity
🔺 From Stagnation to Surge: Market Fundamentals Strengthen
After a prolonged period of sluggish growth, the U.S. multifamily sector is reawakening. A sharp pullback in construction activity—just as rental demand accelerates—is creating a strong supply-demand imbalance, setting the stage for long-term rent growth and enhanced investor returns.
🏗️ Construction Cools: Supply Pipeline Contracts Sharply
Multifamily development is slowing fast. According to the National Association of Home Builders (NAHB), permits fell 0.8% in May 2025, while starts plummeted nearly 30%, indicating a broad developer retreat. Rising financing costs, inflated material prices, and labor shortages continue to deter new projects.
Units under construction: Down 19% YoY to ~733,000 (Yardi Matrix)
Completion outlook: Peaked in 2024 at 663K units, expected to decline to 350K by 2027
Build timelines hit record highs:
Garden-style: 718 days
Mid-rise: 837 days
High-rise: 1,043 days
📈 Demand Revs Up: Leasing Activity Breaks Records
Rental demand is not just holding steady—it’s surging.
Same-store rent growth: +0.8% YoY (Newmark)
Absorption: 707,811 units—more than 3.5× the long-term average
Vacancy rates: Dropped to 5.0% in Q1 2025
Renting remains far cheaper: Monthly cost gap vs. ownership = $1,210
As affordability barriers to homeownership persist, more renters are staying put, fueling continued demand and tighter market conditions.
💰 Capital Markets: Gaining Momentum, Yet Caution Remains
Debt origination is on the rebound:
Q1 2025 originations: $61B, up 32% YoY
GSE dominance: Fannie & Freddie funded 41% of all multifamily loans
However, a refinancing wall looms, especially for banks and debt funds facing front-loaded maturities through 2027. While many lenders are extending terms, market volatility could trigger a repricing wave and a return to more active transaction flows.
📉 Interest Rates & Investor Sentiment Improve
With 5-year Treasuries below 4% and borrowing rates hovering in the mid-5s, cap rate spreads are creating attractive entry points.
Investor sentiment climbs: 65% of core buyers are now bullish (CBRE), up from 44% just two quarters ago
Pricing realignment: Sellers increasingly meeting the market
🏢 Multifamily Completions Hit 40-Year Peak
The U.S. multifamily sector saw a historic surge in completions, with 608,000 units delivered in 2024—the highest annual total in nearly four decades, per new data from the Commerce Department and NAHB.
Large-scale projects dominate: 54% of completed units were in properties with 50+ units—a shift from the traditional prevalence of smaller developments.
Rental dominance: An overwhelming 95% of 2024 completions were rental apartments.
Regional trends:
The South led the charge, completing 292,000 units (nearly half the national total).
The Northeast lagged, with just 68,000 units.
Analysts noted that the post-COVID construction boom led to short-term oversupply and rent stagnation in many metros. However, with new construction slowing in 2025, leasing momentum and rental growth are beginning to recover in select markets.
🚢 Tariff Delay Fuels Cargo Surge Outlook
A rebound in import cargo volumes is expected in July as businesses rush to beat tariff deadlines now extended to August 1, according to data from the National Retail Federation and Hackett Associates.
April boost: Cargo volumes rose as buyers moved ahead of initial tariff deadlines.
May/June lull: Volumes dipped after the delays, but a July surge is projected.
Geopolitical backdrop: President Trump expanded the tariff list to 21 countries, with duties between 20%–40% set to begin August 1, though he left room for changes based on diplomatic dynamics.
Warehouse demand near major ports remains sensitive to cargo fluctuations, but the uncertain policy environment continues to challenge logistics planning.
📉 Immigration Dip Threatens Economic Growth
New research from the Federal Reserve Bank of Dallas warns that a sharp drop in immigration could reduce U.S. GDP growth by up to 1 percentage point in 2025.
Labor supply impact: Fewer immigrants, due to tighter border controls and reduced work visa issuance, are shrinking the labor pool.
Growth revision: GDP growth forecasts are now expected to decline between 0.75–1.0 percentage points from prior estimates.
Long-term concerns: With foreign-born workers historically driving population and labor force growth, analysts caution that this demographic shift may raise wages and slow economic momentum.
The report highlights how restrictive immigration policies are influencing not just labor markets but broader macroeconomic conditions.
📬 In Summary:
The real estate market is recalibrating after a record-breaking year of multifamily construction. Meanwhile, trade dynamics are shifting quickly amid evolving tariff policies, and immigration headwinds are adding new challenges to economic forecasting. Stakeholders across sectors should monitor these intersecting trends as they plan for the remainder of 2025.
One Click for Pricing Guidance on Fannie/Freddie/HUD
📈 Seattle Multifamily Market Rebounds as Institutional Capital Re-engages
Seattle’s multifamily investment landscape has decisively turned a corner. Following a muted Q1, the second quarter of 2025 saw $1.34 billion in transactions for assets priced $25 million and above — a record-setting Q2 and nearly 5x the volume of Q1. At this pace, the market is on track to match or exceed 2023’s full-year totals by midyear, marking a definitive return of institutional appetite.
🔍 Key Drivers Behind the Recovery
A convergence of market stabilizers is driving renewed deal activity:
Bid-ask spreads are narrowing, enabling more deals to transact.
Valuations are leveling off, restoring price certainty for underwriting.
Seller expectations have recalibrated, allowing for price discovery and increased market liquidity.
Together, these factors are creating a transaction-friendly environment for capital deployment.
🧲 Capital Repositioning: Distress & Opportunity
Institutional players are re-entering the market with precision, often via dedicated platforms targeting recapitalizations and distressed asset takeovers. With limited new supply in the pipeline, well-capitalized investors are positioning themselves to acquire stabilized, cash-flowing assets with embedded upside.
🏗️ Supply Constraints Create Tactical Entry Point
Multifamily development activity is tapering off, particularly in submarkets facing cost and entitlement headwinds. As a result:
Investor demand is shifting toward core and core-plus assets with stabilized income streams.
Occupancy and rent growth trends are improving, especially in the CBD and Eastside tech corridors.
A supply-demand imbalance is forming, suggesting meaningful NOI growth potential in 2026–2027.
📌 Notable Q2 Transactions
Waterton expanded its Seattle footprint by over 750 units, acquiring assets in Edmonds and Belltown for a combined $225M+.
A Kennedy Wilson-led JV acquired The Danforth, a high-rise in First Hill, for $173M — trading at a 4.5% cap rate with a significant discount from 2019 pricing.
🌆 Why Seattle Remains a Strategic Buy
Despite prior volatility, Seattle remains a core market for long-term capital:
Strong fundamentals, driven by a diversified tech-weighted employment base.
Among the nation’s top metros for projected GDP and population growth through 2029.
Return-to-office momentum is bolstering urban multifamily demand, particularly in transit-connected submarkets.
💬 Strategic Outlook
With capital actively seeking placement and valuation uncertainty receding, Seattle is reasserting itself as a priority market for institutional multifamily investors. Now is the time to:
Re-engage with buyers seeking near-term yield and mid-term appreciation.
Surface off-market opportunities before competition intensifies.
Guide sellers on realistic pricing, as market liquidity accelerates.
📍Seattle is back on the institutional radar — and first movers are already locking in tomorrow’s returns at today’s pricing.
One Click for Pricing Guidance on Mezz/Debt Fund/CMBS
⚠️ Foreclosure Opportunity: Equity Auction for Historic Newark Redevelopment
A high-profile adaptive-reuse asset in Downtown Newark is heading to the auction block following a construction loan default — offering a rare equity acquisition opportunity for investors with an appetite for urban repositioning plays.
🏛️ Indigo Residence: Equity Interest Heads to Auction
The Indigo Residence — a converted micro-apartment complex formerly operating as the Hotel Indigo — is now the subject of an equity foreclosure. Key details include:
Lender: Parkview Financial (Los Angeles-based private lender)
Loan Size: $21.5M original principal, now exceeding $23.5M with accrued interest and fees
Auction Date: August 12, 2025
Process Managed By: Newmark, via structured equity sale
Auction Scope: Sale of the developer’s interest in Broad Street Ventures Urban Renewal LLC (the project ownership entity), not the real estate itself
📝 Buyers of the equity can assume control of the asset and potentially resolve or recapitalize existing debt.
🏗️ Asset Profile: Micro-Unit Redevelopment in a Historic Shell
Located at 810 Broad Street, the asset has undergone two major transformations:
Originally a 1912 Cass Gilbert-designed building
Renovated into a Hotel Indigo in 2014
Converted in 2022 into 106 micro apartments backed by Parkview’s construction loan
Unit Program:
98 studio units (avg. 357 SF), fully furnished
8 one-bedroom units
22 affordable units (conforming to local housing mandates)
📍 Strategic Downtown Newark Location
The Indigo Residence benefits from exceptional urban positioning:
Direct access to PATH, NJ Transit, and Amtrak
One block from the Prudential Center
Surrounded by corporate offices, universities, and public institutions
Rooftop views of Lower Manhattan and the Hudson waterfront
🧩 Sponsorship Overview
The sponsor — Broad Street Ventures Urban Renewal LLC — is a JV between Summit Assets and Winchester Equities, operating under the Baldwin Equities brand. The platform launched in 2018 with a focus on urban redevelopment and residential repositioning.
💡 Investment Perspective
This non-traditional foreclosure sale offers a chance to acquire a fully renovated, income-generating urban asset at an attractive basis — potentially below replacement cost. The auction format allows value-driven investors to:
Gain control of a strategically located multifamily asset
Explore recapitalization, lease-up, or repositioning strategies
Participate in Newark’s evolving micro-unit and adaptive-reuse trend
🧭 Broker Guidance
Investors should monitor the August 12 auction closely and be prepared for competitive bidding from value-add and special situation funds. With debt markets stabilizing and Newark's rental fundamentals improving, this could represent a timely entry point into a market with high upside and historically limited institutional participation.
📍 This is a control acquisition play — not a distressed sale of bricks and mortar, but a bid for the keys to the entity holding a fully modernized downtown asset.
One Click for Pricing Guidance on Multifamily Equity
🏢 Mapletree Tests Market With Two LA Multifamily Dispositions at Institutional Discounts
Mapletree Investments, a Singapore-based global real estate investment manager, has launched the marketing of two Class A multifamily properties in Los Angeles — both offered at material discounts to their prior acquisition basis. The assets are being marketed independently by Newmark, with pricing expectations significantly below peak valuations.
📍 Asset #1: mResidences Olympic & Olive | Downtown LA – South Park Core-Plus Opportunity in a Trophy Urban Location
Units: 210
Occupancy: ~97%
Vintage: 2016
Location: 1001 S. Olive St., heart of South Park
Original Purchase Price (2017): $110M ($547K/unit)
Target Pricing: ~$70M ($350K/unit) → ~36% discount
In-Place Cap Rate: ~4.75%
Investment Highlights:
Modern unit mix (studios to 2BRs), averaging 705 SF
In-place rents: $2,377/mo or $3.37/SF
Design Features: Quartz countertops, stainless steel appliances, in-unit W/Ds
Amenities: Rooftop lounge, pool deck w/ jacuzzi, fitness & business centers, attended lobby
Retail Component: 4,000 SF, fully leased
Parking: 216 structured spaces
💡 Broker Commentary: A rare opportunity to acquire a core Downtown asset at well below replacement cost, with stabilized cash flow and strong institutional tenancy. Appeals to core-plus investors seeking durable yield and basis advantage in a recovering urban market.
📍 Asset #2: mResidences Miracle Mile | Miracle Mile Submarket Boutique Asset With Clear Value-Add Upside
Units: 60
Occupancy: ~94%
Vintage: 2008
Location: 5659 W. 8th St. & Masselin Ave
Original Purchase Price: $41M ($683K/unit)
Target Pricing: ~$35M ($580K/unit) → ~15% discount
In-Place Cap Rate: ~4.5%
Value-Creation Potential:
Oversized units averaging 1,287 SF
Current rents: $3,878/mo ($3.01/SF)
Pro forma rent lift: +$725/unit through selective upgrades
Planned Enhancements: Interior renovations, amenity reprogramming, resident lounge conversion
💡 Broker Commentary: Positioned in one of LA’s most culturally anchored and supply-constrained submarkets, the asset offers scale, location, and underutilized rent potential. Tailored for investors targeting light value-add strategies with operational upside and strong exit visibility.
📊 Portfolio Takeaway
This dual offering signals pricing capitulation by a major institutional owner in response to shifting capital markets. For investors, it presents a strategic re-entry point into Class A multifamily in one of the country’s most resilient urban markets — at pricing not seen in nearly a decade.
🧭 Strategic Implications
Strong candidates for private capital, 1031 exchange buyers, and boutique investment managers seeking LA exposure at a basis well below 2015–2019 peak levels
Flexible business plans: from core-plus hold to value-add execution
Potential for favorable loan assumptions or structured debt given stabilized in-place income
