Multifamily Finds Balance Between Cooling Sales and Record Demand

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Good morning. Multifamily sales eased in Q2, yet record demand and tightening vacancies highlight the sector’s staying power. Investors are watching shifting regional trends and a supply slowdown that could set the stage for rent growth later this year.

Today’s issue is brought to you by Redwood—leading the build-to-rent boom with with proven performance and nationwide scale.

🎙️This week on No Cap: Jack and Alex sit down with MaryAnne Gilmartin to explore the twists, risks, and breakthroughs that took her from Brooklyn beginnings to leading skyline-defining projects in Manhattan.

Market Snapshot

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• Breakthrough winner: InvestNext named “Investment Management Platform of the Year” in the 5th annual PropTech Breakthrough Awards program. (sponsored)

• Affordable expansion: NYC approved a sweeping rezoning plan for Midtown South that will allow over 9,500 new housing units, including 2,800 affordable homes. 

• Investor fallout: Yieldstreet’s real estate bets have led to massive customer losses, with over $78M in defaults, and most projects either failed or are at risk.

• Funding pipeline: LaSalle raised $700M for a lending strategy targeting multifamily and industrial properties, capitalizing on strong borrower demand and limited bank financing.

• Sentiment shift: CRE confidence is rising as market conditions stabilize, capital access improves, and select sectors like multifamily, industrial, and data centers show growth. 

• Data dilemma: CRE leaders warn that moving the BLS jobs report from monthly to quarterly would increase uncertainty, hinder decision-making, and slow deal activity across the industry. 

• Redemption freeze: Trez Capital has suspended investor redemptions across five real estate funds due to high withdrawal requests, ongoing loan needs, and debt workouts.

• Impact investment: Greystone closed its first $103M LIHTC fund, backed by institutional investors, to finance nearly 1K affordable housing units across six states. 

• Waterfront boost: Domain and LMXD secured $114M to fund 1,025 new units in the next phase of Brooklyn’s Greenpoint Landing.

• Cost creep: Rising operating costs—especially insurance—are eating into multifamily margins and reshaping loan performance as revenue growth struggles to stay ahead. 

• Golden returns: Senior housing posted the highest year-to-date returns in the NCREIF Index at 4.00%.

• Developer downfall: Michael Shvo risks losing his $1B Miami Beach project as slow sales, stalled construction, and legal disputes with investors threaten his real estate comeback.

• Capacity crunch: With data center vacancy at a record low and demand surging from AI and cloud computing, tenants are locking in space years in advance, even as $1T in investment pours into power-constrained markets.

• AI anchored: Fremont's decision to preserve industrial space over tech offices has paid off, turning the city into a West Coast hub for advanced manufacturing and AI hardware. 

• Warehouse pushback: Developers are pushing forward with warehouse projects in California despite local bans and rising environmental regulations.

• Accounting illusion: Retailers using RIM accounting may temporarily overstate profits as new tariffs take effect, masking the real cost impacts in upcoming earnings reports. 

• Boxed out: Demand for small-format retail is rising, but oversized vacancies and limited new construction are leaving landlords with empty big-box space and few takers. 

• Retail slump: Houston’s retail market posted negative absorption for the second straight quarter, as high rents and big-box vacancies weigh on leasing activity.

• Policy ripple: OBBB may boost demand for outpatient facilities while pushing hospitals to cut costs and consolidate. 

• Phoenix exit: City Office REIT sold most of its Phoenix portfolio for $266M to help finalize a $1.1B merger with MCME Carell.

• Manhattan footprint: Amazon is doubling down on Midtown Manhattan, signing a lease for an additional 259K SF at WeWork’s 1440 Broadway. 

• Midtown move: EY is relocating its Atlanta office to Portman's new Ten Twenty Spring tower, downsizing from 110K SF to 95K SF in a $20M buildout.

• Stock strategy: Hotel REITs are increasingly favoring stock buybacks over property acquisitions, aiming to boost investor confidence and capitalize on undervalued share prices.

• Park pressure: Theme park operators push forward with major expansions despite weather woes, soft consumer demand, and labor challenges cutting into performance.

📈 CHART OF THE DAY