Apartment Demand Is a Juggernaut

The slight increase in CPI-measured inflation (from 2.7% to 2.9%) may have been lower than expectations, but the persistence of price growth, along with recent jobs numbers showing a stronger-than-expected labor market, may lead to continued high interest rates. Amid this heating economy, apartment demand has been steadily growing throughout the past year and is now outstripping supply. Multifamily fundamentals look better than they have in years, but high interest rates will make careful asset selection an imperative in 2025.

Multifamily, the Nation, and the Economy

Dec. 2025 CPI: The Stubborn Road to 2% Inflation Continues

Bureau of Labor Statistics: “The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4 percent on a seasonally adjusted basis in December, after rising 0.3 percent in November . . . Over the last 12 months, the all items index increased 2.9 percent before seasonal adjustment.”

Multifamily and the Housing Market

Increased Rent Growth Forecasted in 2025, After Supply Wave Crests

Via RealPage: “Recent reports on new permits and starts suggest that construction will slow down in the coming quarters. Our RealPage forecast indicates that in 2025, over 470,000 new apartments will come online, led by New York, Phoenix, Dallas and Newark.”

Multifamily Markets and Reports

2025 Apartment Forecast: Rising Leasing Activity to Boost Fundamentals

Via Berkadia: “Healthy occupancy will support an increase in rent. Monthly effective rent is forecast to advance 2.8% year over year to an average of $1,909 by the fourth quarter of 2025.”

Commercial Real Estate and the Macro Economy

Commercial Real Estate Capital Markets Shift to Core Investments

Via Cushman & Wakefield: “As the tides shift throughout the capital markets, we’ve seen a 3x bounce-back in YTD annualized Core fundraising relative to last year . . . Closed-End funds have raised upwards of $10 billion this year, compared to $2.5 Billion last year.”

Other Real Estate News and Reports

Retail Market Statistics | Q4 2024

Via Colliers: “The national retail vacancy rate remained at 4.1% throughout 2024, driven by limited new development since the Great Financial Crisis and increased postpandemic demand.”

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