Berkadia Poll: Expectations of Increased Multifamily Activity in 2025
(Image courtesy of Berkadia)
Berkadia, Ambler, Pa., released its latest Multifamily Powerhouse Poll Outlook, finding that respondents expect increased multifamily transaction activity this year, driven by improving economic outlook.
The majority–59%–of respondents expect renter demand to exceed apartment supply in 2025. Class A, Class B and affordable housing were ranked the three most likely rental housing types to attract investor interest, and outside of multifamily, single-family rental/build-to-rent and affordable housing are anticipated to be the most popular sectors.
Sixty-two percent of respondents think that transaction activity will increase as an impact of the new presidential administration, with another 22% reporting they believe it will remain steady.
“Despite ongoing challenges like inflationary pressures, high interest rates, and rising distressed opportunities, investors continue to recognize significant opportunities in the multifamily sector,” said Berkadia Executive Vice President and Head of Production Ernie Katai. “Although market fundamentals are expected to remain soft through 2025 with new supply coming online, the core drivers of rental housing remain solid, and investor confidence in the sector remains high.”
Inflation indeed is a concern for commercial real estate investment, respondents said, with the majority saying it will “very significantly” (16%) or “significantly“ (47%) affect transaction activity.
Private investors are expected to drive the most acquisition activity in the investment sales market; respondents also believed private investors will lead disposition activity throughout the year. In terms of lending sources, the multifamily GSEs are expected to be the most active this year.
Respondents, at 71%, believe cap rates will be flat at the end of 2025, and most respondents anticipate the 10-year Treasury yield to fall between 3.5-4.5% at the end of 2025.
Respondents overwhelmingly, at 81%, believe distressed opportunities will increase.
In addition to being cited as a fairly attractive sector, affordable housing is top-of-mind for many. Forty percent of respondents believe that existing affordable housing property acquisitions within that category will be the most attractive for investors over the next few years, followed by rehabilitation of existing affordable properties at 23%.
Technological trends also play a big role in the current landscape. Respondents reported clients are most interested in real-time market analytics and predictive performance modeling. Generative AI is primarily being used for market trend analysis, financial modeling and investment screening.
