The broader CRE landscape could see further pricing volatility, especially as distress levels tick upward and financing challenges persist. Multifamily, however, remains more stable, but current, more modest rent growth trends could be a challenge for markets/regions still working through the historic wave of apartment development. Many investors are looking past the current environment into a potential under-supply of apartments in 2026, and the continued divergence among different regions and markets will reward investors who can find opportunity in this current uncertainty.

Multifamily, the Nation, and the Economy

May 2025 National Multifamily Report: Another Month of Steady Rent Gains for Multifamily

Yardi Matrix: “While overall rent growth remains concentrated in the Northeast and Midwest, a hopeful sign is that markets with weak recent performance—such as Denver, San Francisco, Dallas and Austin—recorded varying degrees of positive growth in May.”

• U.S. Senior Living & Care Investor Survey and Trends Report (Cushman & Wakefield) 
   
• May 2025 CPI: Inflation at 2.4% YoY, up from 2.3% (Bureau of Labor Statistics)
  
• May Hiring Brings Positives for Retail, Multifamily CRE But Not Borrowers (Marcus & Millichap)

Multifamily and the Housing Market

Class A Occupancy Recovers, Though Still Trails B and C Assets

RealPage: “Occupancy in stabilized Class A apartments hit 95.7% in May, the highest rate seen since June 2022, according to data from RealPage Market Analytics. That reading ranked a hair below that of Class B occupancy (95.8%) and a hair above the Class C rate (95.6%). That Class A reading also marked the highest annual gain across the price spectrum.”

• Home Purchase Sentiment Jumps in May (Fannie Mae)
   
• House Price Appreciation by State and Metro Area: First Quarter 2025 (NAHB)
   
• Home insurance shortfalls may turn cheap homes into costly futures (Cotality)

Multifamily Markets and Reports

Emerging Cap Rate Spreads and Trends

Marcus & Millichap: For apartments, the full range is between a 4.7% cap rate for class A assets in primary markets and 7.2% for class c tertiary: 250 basis points. For retail it’s 260 BPS. For office it’s 290, industrial as high as 310 BPS because of how much variation in build types and age, and for hotels it’s crazy high, 500 BPS difference between the small-market class C property and a primary market class A property.

• Homes for Sale Top 1M for First Time in Six Years (GlobeSt)
    
• Housing Market Outlook: Brighter Days To Come (National Mortgage Professional)
   
• Asking Rents Are Falling in 28 Major U.S. Metros—the Most Since 2023 (Redfin)

Commercial Real Estate and the Macro Economy

CMBS Distress Rate Reaches 11% –Breaking a Streak of 3 Consecutive Reductions

Via CRED iQ: “CRED iQ’s distress rate . . . increased by 70 basis points to 11.0% in the latest reporting period. The trend reversal, which is further supported by increases in delinquencies and special servicing underscores the heightened volatility of CRE sector. These upticks highlight the need for vigilance as underlying pressures persist.”

• Industry Sector Insights (CBRE)
   
• Special Servicing Rate Rises Again in May, Driven by Office Surge (Trepp)
   
• Rotate capital now. Conviction beats perfection. (CBRE)

Other Real Estate News and Reports

Mid-2025 U.S. Economic & CRE Outlook: Uncertainty Looms

Via Cushman & Wakefield: “The starting point for commercial real estate matters, and the sector entered 2025 on relatively solid ground—with certain segments even gaining momentum. Multifamily, for instance, continues to benefit from strong demand dynamics. Favorable demographics and a resilient labor market suggest that this strength should carry forward in the quarters ahead.”

• Live Nation To Invest $1B In Music Venues Across The U.S. (Bisnow)
    
• Portfolio Strategy in Healthcare Real Estate: Using Data to Achieve Success (CBRE)
   
• Mid-year 2025 Law Firm Perspective (JLL)