Multifamily Market Insights: Record Leasing Demand and Investment Trends

Newmark’s Q1 Report: Multifamily Sector Insights



Leasing Demand Surges



In the first quarter, leasing demand for multifamily units reached impressive levels. A total of 103,826 units were absorbed, marking the largest first-quarter total since 2000. This figure significantly outpaced the long-term average of 38,005 units for the same period. Moreover, the rolling four-quarter demand soared to 317,241 units—the highest since Q2 2022.


Southern Markets Lead the Way



The South remains a powerhouse for multifamily leasing demand. In Q1, this region accounted for 58.2% of all leasing activity. Notably, the top five markets driving demand included Dallas, Phoenix, Austin (Texas), Atlanta, and Houston. On a trailing 12-month basis, three Texas markets—Houston, Dallas, and Austin—occupied the top four spots.


Record-High Deliveries



Q1 witnessed an all-time high in multifamily unit deliveries, with 135,652 units completed. Anticipate continued high delivery rates in Q2 and Q3, followed by a deceleration in Q4.



Starts and Permits Decline



Rolling four-quarter starts and permits dropped significantly—25.9% and 35.3%, respectively—compared to the peak in Q3 2022.



Vacancies and Rent Growth



Nationally, vacancies increased by 66 basis points to 5.9%. However, the rate of growth is slowing on an annualized basis. Quarterly rent growth declined slightly to -0.1%, but Newmark expects it to rebound throughout the year, reaching 2% year over year as new supply slows in the second half.



Multifamily Debt and Lending Trends


Multifamily debt originations totaled $33.1 billion, the lowest since 2015. Encouragingly, Q1 originations were down only 7% year over year, suggesting a potential bottoming-out of activity. Government-sponsored enterprises and banks remained the primary lenders, despite their own declines (17% and 39%, respectively). Additionally, commercial mortgage-backed securities surged with a remarkable 517% year-over-year increase.


Maturing Loans and Investment Sales


Between now and 2026, $669 billion in multifamily loans will mature, with banks responsible for 46% of debt maturities. Investment sales volume for Q1 totaled $20.6 billion, a 25.3% decline year over year. On a rolling four-quarter basis, volume dropped to $113 billion—the lowest point since Q4 2014 and 42.2% below the long-term average.



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