Q&A With JLL’s Kai Pan: Navigating Multifamily Valuations in a Dynamic Market

Kai Pan is head of the JLL Valuations Multifamily Sector.

MBA NewsLink: As we look back at 2025, what were the biggest challenges facing multifamily valuations last year, and how did they impact lending decisions?

Kai Pan: The most significant challenge last year was still the disconnect between buyer and seller price expectations. However, we continue to see robust, energized capital targeting multifamily, reinforcing its position as a cornerstone investment for institutional owners. For example, JLL Value & Risk Advisory provided valuation services for the $1 billion student housing portfolio deal for the Morgan Stanley and Global Student Accommodation partnership. Despite the portfolio’s prime locations at Tier 1 universities like the University of Virginia and Texas A&M University, achieving consensus on valuation required extensive market analysis given the uncertain environment.

We’re seeing both investors and lenders narrow their focus toward deals that align with very specific risk and return profiles, resulting in a clear split between favored and less-favored asset classes. The result was a market where transactions required much more nuanced valuation approaches, particularly for asset classes where comparable sales became increasingly scarce. By the end of the year, we did see the gap tighten as buyers and sellers capitulated on pricing, which indicates a more stable valuation market in 2026.

MBA NewsLink: What trends are you observing in multifamily valuations as we start 2026, particularly around technology and data analytics?

Kai Pan: We’re seeing a fundamental shift toward more sophisticated data integration in all aspects of commercial real estate. Investors and lenders are leaning more on AI models for analyzing rent growth patterns, demographic shifts and market absorption rates in real-time. Operators are now incorporating innovative technology–everything from AI-powered leasing, smart home automation and predictive maintenance to drive property performance. For valuers that embrace data and AI, all this means more robust due diligence capabilities and faster turnaround times on appraisals for lenders.

MBA NewsLink: How are changing demographics and housing preferences affecting multifamily property valuations?

Kai Pan: The demographic shifts are creating both opportunities and challenges for value creation. We’re seeing continued demand for rental housing from millennials and Gen Z, as most markets remain renters’ markets. Buildings with modern amenities and strong tenant engagements are commanding higher occupancy and rental performance, while older properties without these features are seeing increasing NOI deterioration and value compression. Geographic preferences are also evolving and the pandemic-era flight to suburbs is normalizing, but we’re still seeing sustained demand in markets that offer lifestyle amenities and job diversity. For lenders, this means valuations increasingly depend on a property’s ability to adapt to multitude of future risks to operating performance, not just its current cash flow.

MBA NewsLink: What’s your outlook for multifamily valuations in 2026, and what should lenders be preparing for?

Kai Pan: 2026 will likely be a year of cautious optimism with continued market bifurcation. We expect to see valuations stabilize in Class A segment as interest rate volatility diminishes, but Class B and C segments may continue experiencing pressure. The key for lenders will be focusing on properties with strong operational fundamentals and markets with favorable supply and demand trends. We anticipate rental rate growth in select markets by late 2026 as new supply reaches its peak. Lenders should also prepare for more sophisticated underwriting requirements, as regulators and investors demand greater appraisal accuracy reflecting real time market dynamics and asset performance. The institutions that leverage data-driven insights and maintain disciplined underwriting criteria will be best positioned to capitalize on the opportunities that market dislocation creates.

MBA NewsLink: Any final thoughts for our readers in the banking and lending community?

Kai Pan: The multifamily sector remains fundamentally strong due to ongoing housing supply constraints and demographic tailwinds, but success in 2026 will require more sophisticated approaches to both valuation and underwriting. Lenders who adapt their processes to leverage data-driven insights, anticipate shifting tenant preferences, and maintain underwriting discipline will be best positioned to succeed.

The market is rewarding precision, and overlooking local market dynamics can jeopardize returns, making investment in technology and talent now critical for future advantage.

(Views expressed in this article do not necessarily reflect policies of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes submissions from member firms. Inquiries can be sent to Editor Michael Tucker or Editorial Manager Anneliese Mahoney.)