The U.S. commercial real estate (CRE) market has come under pressure from rising interest rates and an uncertain economic outlook. The multifamily sector has experienced what feels like a full market cycle in the span of just three years. With uncertainty swirling around the CRE space, we take a deep dive into the outlook for the rental market.
Key takeaways
- The multifamily market and U.S. commercial real estate overall are being challenged by the sharp rise in interest rates.
- Apartment rent growth has softened recently following the surge in 2021 and 2022.
- New construction activity has climbed rapidly in certain markets—mostly in the Sun Belt—leading to fears of a supply glut.
- The primary demand supports for multifamily remain in place—a strong labor market, a secular housing shortage and demographic tailwinds.
- We believe the risk-return backdrop favors lenders over borrowers for investors seeking income and the ability to take a more defensive posture.
Read the complete research note to learn more.
