Investors are cautiously optimistic about the multifamily market in 2025, expecting moderate growth and improving market conditions despite ongoing economic and operational challenges.
Sixty-five percent of investors plan to moderately expand their multifamily portfolios this year, according to Berkadia’s inaugural multifamily investor sentiment survey. A majority also expect rent growth to increase moderately, by between 1% and 3%. Operational challenges cited include insurance costs, cost of labor, maintenance and repairs, and regulatory compliance.
The report was conducted in January and included feedback from 240 clients about their anticipated challenges and expectations for the multifamily sector in 2025.
Recommended For You
Half of the respondents predict the 10-year Treasury yield will fall between 4% and 4.5% by the end of the year, and most anticipate a gradual improvement in the investment climate and expect optimism to continue into 2026.
Persistent headwinds continue to impact investment decisions, the report found. Investors pointed to elevated interest rates, rising insurance and labor costs and concerns about potential oversupply as their key challenges. The multifamily sector is expected to continue to be supported by strong rental demand and improving market conditions. Sixty-three percent of investors expect renter demand for new apartments to outpace supply in 2025.
“Despite inflation and operational challenges, improving market conditions and compelling valuations are driving increased transaction activity," said Berkadia EVP and head of production Ernie Katai. “With fundamentals stabilizing and long-term demand remaining robust, the sector is primed for increased transaction activity.”
About a quarter of investors indicated they expect the Southeast to be the most favored region for multifamily investment in 2025, followed by Texas and the Midwest, said Berkadia. CRE players also favor core-plus and value-added strategies for risk-adjusted returns.
The most active lending source for 2025 is expected to be government-sponsored enterprises (GSEs), the report found. Banks, private funds and debt funds, life companies and HUD follow GSEs. The study also found that most investors are keeping exit cap rates the same as going-in rates when underwriting, while others are expecting them to be 25-50 basis points higher.
Forty-three percent of investors expect government regulations to have a neutral impact on the multifamily sector, while 39% are anticipating a positive impact.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Kristen Smithberg
Kristen Smithberg is a Colorado-based freelance writer who covers commercial real estate, insurance, benefits and retirement topics for BenefitsPRO and other industry publications.
