The multifamily sector is evolving rapidly and staying ahead of market trends is crucial for investors. To gain deeper insights into the expectations and challenges shaping 2025, we launched the first edition of our Inaugural Multifamily Investment Sentiment Survey, where more than 200 of our top clients provided insights to help us better understand their anticipated opportunities, challenges, and trends for the sector, including market expectations, investment sentiment, and portfolio strategies.
Investors Remain Confident in Multifamily Despite Headwinds
Investors are eyeing a more optimistic future, with current valuations presenting compelling long-term investment opportunities. Multifamily transaction activity is expected to increase as confidence improves, though fundamentals will remain soft due to the continued influx of new supply. Encouragingly, absorption rates are now outpacing deliveries, suggesting that vacancies have peaked. National apartment occupancy currently stands at nearly 95%, aligning closely with the long-term average.
Despite an improving outlook, distressed sales are expected to rise, particularly for value-add and development projects from 2020 – 2022 that involve high leverage, short-term debt, and non-institutional ownership. However, the long-term fundamentals of rental housing remain strong, supporting sustained multifamily investment performance.
While challenges such as elevated interest rates, rising insurance and labor costs, and concerns over potential oversupply persist, investor confidence remains intact. 65% of investors plan to moderately expand their portfolios this year, while 18% anticipate aggressive growth. Encouraged by signs of moderate market improvement, many investors continue to pursue strategic opportunities despite economic and operational hurdles.
We are encouraged by investors’ expectations that the overall investment climate in the multifamily sector will improve over time. A majority (57%) expect the landscape to be at least ‘somewhat better than today’ in both the second half of this year and the first half of 2026.
Key Investor Insights for 2025
The optimism expressed by investors was also strongly reflected in our 2025 Multifamily Powerhouse Poll, where Berkadia mortgage bankers and investment sales advisors shared similar expectations for the market. To further explore investor expectations for the coming year, our inaugural survey revealed the following:
- Fannie Mae and Freddie Max (multifamily GSEs) are expected to remain the most active lending sources.
- Investor sentiment on government regulations remains largely neutral (43%), with 39% holding a favorable outlook on their impact on the multifamily sector.
- The top three geographic regions for multifamily investment in 2025 are expected to be the Southeast (24%), Texas (16%) and Midwest (16%).
- Class A properties are expected to remain the most attractive investment type, consistently ranking as a top choice.
- Cap rates are projected to remain stable, with exit cap rates underwritten 25 – 50 basis points higher than going-in rates.
- Core-Plus investments are anticipated to deliver the best risk-adjusted returns in the multifamily sector.
The multifamily market continues to present dynamic opportunities and challenges. While economic uncertainties persist, both our clients and Berkadians share a positive outlook and see it as a compelling investment opportunity. In the year ahead, both plan to keep a close watch on Federal Reserve rate cuts, the 10-Year Treasury yield, and other macroeconomic factors shaping multifamily transactions and the broader CRE financing landscape.
To see additional perspectives and expectations from Berkadia’s clients, check out the full report here.
– Ernie Katai, Executive Vice President – Head of Production, Berkadia