NMHC 2025: Multifamily Investors Play the Waiting Game

Multifamily investors are in wait-and-see mode, but long-term optimism remains strong, writes economist Jay Parsons. Here are his key takeaways from NMHC’s Annual Meeting.

Han-Gwon Lung & Jordan B.
January 31, 2025

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Good morning. The multifamily investment industry's biggest event highlighted a "waiting game" mentality—short-term uncertainty due to interest rates, but long-term optimism for fundamentals and demand.

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Market Snapshot

S&P 500

GSPC

6,071.17

Pct Chg:
+0.53%

FTSE NAREIT

FNER

774.54

Pct Chg:
+1.04%

10Y Treasury

TNX

4.533%

Pct Chg:
+0.021

SOFR

30-DAY AVERAGE

4.328

Pct Chg:
0.0%

*Data as of 01/30/2024 market close.

MULTIFAMILY OUTLOOK

6 Key Takeaways from NMHC's Annual Meeting

Multifamily investors are in wait-and-see mode, but long-term optimism remains strong, writes economist Jay Parsons. Here are his key takeaways from NMHC’s Annual Meeting.

Market in Limbo: Deal flow remains sluggish as interest rate uncertainty keeps buyers and sellers apart. Investors widely expect momentum to return in late 2025, but for now, sellers are holding firm on pricing while buyers wait for discounts that have yet to materialize.

Signs of strength: Despite transaction slowdowns, apartment demand is solid, supply growth has peaked, and many believe rent growth could turn positive this year—even in high-supply markets. Institutional capital remains focused on high-quality assets in top-tier locations, pushing cap rates into the mid-4% range. Meanwhile, distress is concentrated in older, cap-ex-heavy properties with weaker economic occupancy.

Capital is ready—but deployment is tough: Fundraising remains challenging, but there’s no shortage of dry powder. Investors are widening their buy boxes, targeting value-add deals and select new developments. What are the most favored value-add opportunities? Well-located, 20- to 40-year-old assets in high-income suburbs with strong demand drivers.

New development finds its footing: Construction activity won’t spike anytime soon, but institutional investors are eyeing suburban garden-style projects that can pencil out at today’s costs. Larger developers with in-house trades and supply-chain efficiencies are best positioned to succeed. Meanwhile, banks are cautiously re-entering the lending space, with loan-to-cost ratios creeping back to 60-65%.

Regulatory risk reshapes “Core” markets: High-regulation cities like Los Angeles, San Francisco, and New York are losing institutional favor, pushing capital toward "gateway-adjacent" markets such as Northern New Jersey and suburban Bay Area. Sun Belt markets—including DFW, Charlotte, and Orlando—continue to dominate five-year investment outlooks, while Houston is gaining traction for 2025 due to lower supply growth.

Operational efficiency takes center stage: From AI-driven leasing tools to cost-saving centralization strategies, owners are doubling down on efficiency. While insurance premiums held steady in 2024, recent hurricanes and wildfires have sparked concerns for 2025. Rising operational costs remain a key pressure point for many operators.

➥ THE TAKEAWAY

Patience is key: Multifamily investors are in a holding pattern, waiting for rate stability and/or market corrections. While the near term remains clouded in uncertainty, dealmakers hope rebounding fundamentals open the door to better buying opportunities in the second half of 2025.

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✍️ Editor’s Picks

Chrysler takeover: A judge ruled against Aby Rosen, stripping RFR of its Chrysler Building lease after $21M in unpaid rent, allowing Cooper Union to take control and plan its future.
BTR surge: The build-to-rent market is booming, with over 110K single-family rentals under construction nationwide, led by Phoenix, Dallas, and rising demand driven by affordability challenges.
Treasury tug of war: The 10-year Treasury yield’s future remains uncertain, with a bear case predicting inflationary pressures from tariffs and deficits, while the bull case hinges on Fed rate cuts.
Fed stays put: The Fed held interest rates steady, citing a strong job market and “elevated” inflation, while Chair Jerome Powell declined to speculate on Trump’s policy impact or commit to near-term cuts.
Wildfire rebuild: LA will hire an outside firm to oversee the reconstruction of 5.5K homes lost in the Pacific Palisades fire, aiming to streamline recovery efforts and maximize federal aid.

🏘️ MULTIFAMILY

Big conversion: Metro Loft and David Werner secured a $135M loan from Northwind Group to convert the former Pfizer HQ into 1.5K rentals, making it NYC’s largest office-to-residential transformation.
Syndicate like a pro: Learn to secure debt financing, build investor networks, and structure syndications with confidence with CRE Daily’s MBA.
Multifamily outlook: The multifamily market is set for modest growth in 2025, with Miami and Orlando leading rent growth. High homeownership costs and steady job creation keep demand strong.
Beverly Hills build: Developer Jamshid Zaman plans a six-story, 24-unit apartment complex at 8800 Burton Way, replacing a rental car lot. Pending city approval, completion is expected in 2027.
Houston auction: Omninet Capital is auctioning the 711-unit Bellaire Oaks Apartments with bids starting at $34K per unit, marketing it as a value-add opportunity after $8M in renovations.

🏭 Industrial

Logistics slowdown: US logistics rents fell 7% in 2024—the first fall in 15 years—driven by rising vacancies and excess supply, though Prologis (PLD) expects a rebound as new construction slows.
DFW expansion: MDH Partners acquired 1 MSF from Hillwood in Southern Dallas, part of a $1B industrial buying spree that has grown its North Texas portfolio to over 2 MSF.
St. Louis surge: Industrial leasing in St. Louis hit a 4-year high with nearly 2 MSF leased in Q4, while vacancy rates fell and net absorption turned positive, despite a slowdown in new construction.

🏬 RETAIL

Retail shift: San Francisco leaders are proposing a law to ease restrictions on chain stores along Van Ness Avenue, aiming to fill long-vacant storefronts and revitalize the struggling retail corridor.
Publix play: Kite Realty (KRG) expanded its South Florida retail footprint by purchasing the Publix-anchored Village Commons Shopping Center in West Palm Beach for $68M.
Retail resilience: South Florida retail asking rents rose in Q4 despite high restaurant turnover, with strong demand for shopping centers keeping vacancy rates relatively stable.

🏢 OFFICE

Project canceled: Swire Properties has scrapped plans for the 68-story One Brickell City Centre office tower in Miami due to weak preleasing, opting to sell the site instead.
Federal cuts: The GSA is considering slashing its office footprint by over 53 MSF through 2028, putting billions in rental income and property values at risk, with DC, NYC, and LA facing steep losses.
Chase Center refi: The Warriors, Uber (UBER), and Alexandria Real Estate Equities (ARE) paid $100M toward a $600M loan on two Mission Bay office buildings, paving the way for a $500M refinancing by spring.
Nashville boom: Downtown Nashville office rents hit a record $36.34 PSF in Q4, with leasing activity strong despite rising availability, as new premium office space fuels further growth.

📈 CHART OF THE DAY

According to the CREFC, market sentiment among top CRE finance executives hit a record high in Q4, with 95% expecting deal volumes to rise in 2025, despite concerns over prolonged high interest rates.