Redeeming Real Estate:
​Market Trends & Strategies.
According to CBRE's U.S. Real Estate Market Outlook 2025, the multifamily sector is poised for a cyclical recovery, solidifying its position as the most preferred asset class for commercial real estate investors. Despite recent challenges from rising interest rates and a surge in new supply, robust renter demand is expected to enhance occupancy rates and accelerate rent growth. Notably, by mid-2025, multifamily construction starts are projected to be 74% below their 2021 peak and 30% below the pre-pandemic average. This decline in new construction, coupled with sustained renter interest, is anticipated to reduce vacancy rates and drive above-average rent growth into 2026. The strong renter demand has already absorbed a significant portion of the recent supply influx, underscoring the sector's resilience and attractiveness to investors.

Yardi Matrix's December 2024 National Multifamily Report indicates that the multifamily sector concluded 2024 on a positive note, despite a slight decline in advertised asking rents by $4 in December, bringing the national average to $1,742. Year-over-year rent growth remained positive at 0.6%. The market successfully balanced strong demand with a high level of new supply throughout the year. Looking ahead, 2025 is expected to bring changes, including a decrease in supply growth, potential economic policy shifts affecting demand, and the likelihood of sustained higher interest rates.

U.S. Real Estate Market Outlook 2025

As we approach 2025, the U.S. real estate market is showing signs of recovery and growth. According to Cushman & Wakefield, the stabilization observed in 2024, coupled with a more positive macroeconomic outlook, improved business and consumer confidence, and easing interest rates, sets a strong foundation for the year ahead. The stage is set for the property sector to rebound more meaningfully going into 2025. Additionally, the capital markets remained subdued for most of 2024, but green shoots are emerging as we head into 2025. REIT prices are up 30-50% from a year ago, debt costs have improved by 100-125 basis points (bps), CMBS issuance is up well over 150% from a year ago, and most importantly, real estate is generally looking fairly priced again. This positive trajectory suggests that 2025 could be a promising year for investors seeking opportunities in the U.S. real estate market.