- CRE Daily
- Posts
- CoStar Cuts Multifamily Forecast as Rent Growth Turns Negative
CoStar Cuts Multifamily Forecast as Rent Growth Turns Negative
CoStar’s revised outlook shows national rent growth slipping into negative territory and vacancy remaining stubbornly high into 2026.
Jordan B.
November 14, 2025
Together with
Good morning. CoStar has downgraded its near-term multifamily outlook, with rent growth now expected to turn negative and vacancy staying elevated into 2026. A shrinking construction pipeline could help rebalance supply and demand, but not before more near-term pressure.
Today’s issue is brought to you by AirGarage—start treating parking like a financial asset, not just a facility to maintain.
We’re tracking whether CRE investors are leaning in or pulling back—across multifamily, industrial, retail, and office. Take the Q4 Fear & Greed Survey.
Market Snapshot
|
| ||||
|
|
Revised Outlook
CoStar Cuts Multifamily Forecast as Rent Growth Turns Negative
Despite early signs of recovery, the U.S. multifamily market is poised for a slower climb back to stability, as CoStar cuts its near-term rent and vacancy projections.
Rent growth turns negative: CoStar has revised its U.S. multifamily outlook, now projecting a 0.1% rent decline in Q4, a sharp drop from the previously forecasted 1.5% increase. The update reflects a more cautious view amid weaker economic signals and slower absorption in oversupplied markets.
Vacancy stuck: Renter demand is expected to outpace new supply in Q4 2025 for the first time in four years, but vacancy won't decline meaningfully until 2026. The national rate is projected to hold at 8.2% through year-end, easing to 7.9% by late 2026 as excess supply is gradually absorbed.
Easing pressure: New apartment deliveries are expected to fall sharply, down 28% in 2025 and 55% in 2026. This slowdown in new supply should help demand gain the upper hand by 2027, but CoStar cautions that the pace of recovery will remain gradual.
Luxury shows resilience: Luxury (4- and 5-star) multifamily assets are seeing better traction. Their vacancy rates fell from 11.9% in late 2024 to 11% in Q3, with further improvement expected by year-end. Strong demand in lease-up phases suggests this tier is more insulated from market softness.
Structural headwinds: Even with tighter supply ahead, multifamily faces macro headwinds. CoStar cites a sluggish labor market and reduced immigration as long-term drags on rental demand, potentially capping rent growth at just 1.5% annually through the decade’s end—well below historical norms.
➥ THE TAKEAWAY
Long road to normal: The multifamily sector may be in for a slow, uneven recovery—especially in the lower- and mid-tier segments. Investors betting on a quick rebound should temper expectations, as fundamentals may not normalize until 2027 or beyond.
TOGETHER WITH AIRGARAGE
Is parking revenue leaking? Rethink pricing.
Parking is often treated as an operational afterthought — but for most properties, it’s one of the simplest levers for improving NOI.
The issue is that pricing usually doesn’t keep up with real demand. Rates stay static while usage patterns and neighborhood activity change, which means revenue quietly gets left on the table.
This playbook outlines a practical approach to demand-based pricing and real-time utilization data, so you can increase revenue without hurting occupancy or guest experience.
If you’re responsible for property performance, it’s a useful way to start treating parking like a financial asset, not just a facility to maintain.
*This is a paid advertisement. Please see the full disclosure at the bottom of the newsletter.
✍️ Editor’s Picks
How parking revenue impacts property value: Optimizing pricing and utilization can lift NOI and influence cap rate outcomes, yet most operators overlook it. (sponsored)
Unit limit: NYC developers are flooding the city with 99-unit apartment buildings to skirt costly labor rules tied to a new housing tax break.
Banking pulse: Despite scattered credit hits, regional banks showed strong loan demand and steady credit quality in Q3.
CEO shakeup: RealPage abruptly replaced its CEO as rent-fixing lawsuits intensify, signaling turbulence ahead for the embattled property tech firm.
Built-in risk: Big builders are luring buyers with ultra-low mortgage rates, but at the hidden cost of inflated home prices and rising underwater loans.
Veteran value: Cushman & Wakefield plans to hire 600 more veterans in 2026, citing their impact on culture and performance.
Delivery doubts: CoreWeave cut its 2025 revenue forecast by $200M after data center delays stalled a major AI contract.
Investor caution: Single-tenant investment sales fell 10.5% in Q3 to $9.9B as cap rates stabilized and private buyers drove most deal activity.
🏘️ MULTIFAMILY
Campus expansion: Morgan Stanley and Global Student Accommodation acquired a $1B, 6,200-unit student housing portfolio.
Controlling costs: Los Angeles passed a permanent 4% cap on annual rent hikes for nearly 624,000 rent-stabilized units.
Slow start: Fall 2026 student housing pre-leasing kicked off with just 3.3% of beds leased by October, the slowest October performance in over a decade.
Debt refresh: A JV led by Joyland, Meral, and Loketch secured a $220M loan from Blackstone to refinance two newly delivered Williamsburg multifamily buildings.
Stability signal: Seattle’s multifamily deliveries tripled absorption in Q3, yet rent growth and investment sales held firm.
Queens rezoning: The NYC Council approved a rezoning of 54 Long Island City blocks to allow up to 14,700 new apartments, with 30% designated affordable.
Mixed outlook: Affordable housing developers face headwinds from high costs and policy shifts, yet most expect growth in 2026.
🏭 Industrial
Discount pressure: Self-storage REITs reported rising street rates and growing optimism in Q3, despite occupancy levels remaining at multi-year lows.
Demand driver: After a historic boom and recent cooldown, North America’s big-box industrial market is stabilizing, with normalized development pipelines and solid tenant demand.
Refi of the day: Cabot Properties secured a $167M loan to refinance a 10-property, 2M+ SF industrial portfolio across seven major U.S. markets.
AI infrastructure: Anthropic plans to spend $50B building its own U.S. data centers, starting in Texas and New York.
Shallow bay bet: CIP Real Estate and Almanac Realty refinanced a 42-property, 6.1M SF shallow-bay industrial portfolio for $820M.
Storage deal: Affinius and Axonic Capital provided $45M in construction financing for San Francisco’s first new self-storage project in two decades.
Job perks: Data center developers are going all-in, offering perks like private jets and remote housing, to counter a severe shortage of electricians and skilled labor.
🏬 RETAIL
Smarter spending: U.S. retail remains stable but faces pressure from macro headwinds, prompting retailers to prioritize experience, value, and adaptive reuse.
Streaming space: Netflix is opening its first permanent “Netflix House” at a Philadelphia mall, blending immersive entertainment and retail to draw crowds and revive empty department store space.
Retail ruin: Lenders have seized San Francisco’s largest mall—now just 9% leased—and are moving to sell the once-$1.2B property.
🏢 OFFICE
Cap crunch: Rising rates are reigniting office deal gridlock as cap rates drift higher and buyers, sellers, and lenders struggle to align.
Loan lifeline: Rudin extended its $425M CMBS loan on a historic Manhattan tower and unveiled a $100M renovation plan aimed at boosting occupancy.
Office overhaul: Orange County is undergoing a major office transformation, with nearly 9M SF being repurposed.
Amenity boost: A JV between Town Lane and Trinity Capital secured an $81M loan from Barings to acquire and reposition a 15-story Charlotte office tower with $20M in upgrades.
🏨 HOSPITALITY
Stock slide: Hotel stocks fell 1.8% in October, as weak demand and a dim Q4 outlook weighed on the sector.
Market reentry: Blackstone is nearing a $130M deal to buy the Four Seasons San Francisco, signaling renewed confidence in the city’s luxury hotel market.
Sonder fallout: Sonder abruptly ceased operations after losing its Marriott deal, prompting two NYC landlords to sue for $10M+ each over lease breaches and guest chaos at their properties.
Record height: A former 50-story Holiday Inn in NYC’s Financial District has been swiftly converted into student housing, becoming the tallest dorm in the world.
A MESSAGE FROM ARBOR REALTY TRUST
Top Markets for Multifamily Investment Report Fall 2025
As headwinds fade and transaction volume climbs, Arbor Realty Trust & Chandan Economics deliver actionable insights into the most opportunity-rich U.S. multifamily markets.
Our biannual report is your roadmap to the top locations for capital deployment.
*This is a paid advertisement. Please see the full disclosure at the bottom of the newsletter.
📈 CHART OF THE DAY
Office availability is declining in 80% of major U.S. markets as RTO momentum builds, led by surprising rebounds in tech-heavy hubs such as San Francisco and San Jose.
You currently have 0 referrals, only 1 away from receiving Multifamily Stress Test Model.
What did you think of today's newsletter? |
Reply