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Multifamily Rent Growth Cools to Start 2026

Multifamily Rent Growth Cools to Start 2026

As new supply weighs on high-growth Sun Belt metros, rent performance is shifting toward smaller and less supply-heavy markets.

Nina Dale
February 25, 2026

Together with

Good morning. Multifamily rent growth slowed to 1.4% year over year in January, extending the market’s normalization trend. Performance remains positive nationally but increasingly uneven across metros.

Today’s issue is sponsored by Terrakotta—all your deal intel in one free, Chrome extension built for CRE.

🎙️Must Listen: Matt Brody of Canyon Partners unpacks private credit’s playbook for navigating maturities, quiet distress, and today’s choppy real estate market.

CRE Trivia 🧠

Where did George Washington speak when he first fulfilled the constitutional duty to report on the state of the nation?

(Answer at the bottom of the newsletter)

Market Snapshot

S&P 500

GSPC

6,890.07

Pct Chg:
+0.77%

FTSE NAREIT

FNER

824.74

Pct Chg:
+0.12%

10Y Treasury

TNX

4.035%

Pct Chg:
+0.008

SOFR

30-DAY AVERAGE

3.66%

Pct Chg:
-0.00

*Data as of 2/24/2026 market close.

Rent Pulse

Multifamily Rent Growth Cools to Start 2026

Rent gains remain positive nationwide, but the pace continues to cool as the market normalizes.

National trends: The Zillow Observed Rent Index shows multifamily rents rose 1.4% year over year in January 2026, down from 1.6% in December. Growth remains far below the 2021–2022 surge, signaling continued normalization as momentum softens.

Broad but slower: Rent growth breadth improved to start the year, with 67.6% of metros posting monthly gains and 86.8% recording annual increases. Still, the share of rising markets remains below the near-universal growth seen during the post-pandemic surge.

Uneven performance: Virginia Beach led with annual rent growth above 6%, while Chicago, San Francisco, Honolulu, and Albany posted gains near or above 5%. In contrast, Cape Coral, North Port, Austin, Colorado Springs, and Tampa recorded the sharpest declines, highlighting ongoing softness in high-supply Sun Belt markets.

Standouts and soft spots: January’s strongest monthly gains were concentrated in smaller metros like Baton Rouge, Winston-Salem, and Little Rock, with Virginia Beach also among the leaders. Meanwhile, Fayetteville, North Port, Tampa, Salt Lake City, and Augusta saw the steepest declines, underscoring how local supply—not national trends—is driving performance.

➥ THE TAKEAWAY

Steady but slower: Multifamily rent growth is cooling, not collapsing. Most markets remain positive, but supply-heavy metros—especially in the Sun Belt—face continued pressure. Expect performance to hinge more on local fundamentals than national momentum.

TOGETHER WITH TERRAKOTTA

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*This is a paid advertisement. Please see the full disclosure at the bottom of the newsletter.

✍️ Editor’s Picks

Research upgrade: DealGround helps brokers move from research to outreach in minutes instead of weeks. (sponsored)
Credit complement: Combining private real estate debt with middle market direct lending can enhance yield while lowering portfolio volatility through diversification.
Cut caution: Fed Governor Christopher Waller signaled no urgency for another rate cut, tempering expectations for near-term monetary easing.
AI campus: Patmos secures $100 million C-PACE loan to complete data center in downtown Kansas City, making it the largest Missouri C-PACE financing to-date. (sponsored)
Lease compression: Moody’s warns AI-driven demand is shortening data center lease terms, increasing rollover risk and weakening landlord cash flow visibility.
AI hedge: Dividend REITs are outperforming amid AI volatility, with data centers and senior housing leading a potential 2026 rebound.
Price spread: Home prices rose in 73% of metros year over year, while slight income gains and rate shifts modestly improved affordability.

🏘️ MULTIFAMILY

VIDA vision: Mission Development has broken ground on a 300-unit mixed-income community across from Texas A&M–San Antonio, bringing new workforce housing to the city’s growing Southside.
Austin pivot: Once among the most affordable rental markets, Austin is poised for rent increases as new supply slows and demand stabilizes.
Growth belt: The South commands the build-to-rent pipeline with nearly 42,000 units underway, as Sun Belt markets dominate nationwide development.
Distress overhaul: Falls Management Group faces bankruptcy as lender Thirdeye Partners moves against distressed Houston multifamily assets.

🏭 Industrial

Storage outlook: Self-storage fundamentals face moderating rent growth and elevated supply, pressuring near-term performance.
Modern premium: Demand for newer industrial assets hit a multiyear high, widening performance gaps between modern and aging properties.
Detention deals: ICE’s $38 billion warehouse buying spree is delivering big premiums to industrial owners while igniting bipartisan backlash and derailing deals.
Louisiana lift: Amazon will invest $12B in Louisiana data centers, expanding its infrastructure footprint and boosting regional development.

🏬 RETAIL

Income engine: Convenience stores now dominate net lease deal flow as investors pursue durable cash flow and recession-resistant tenants.
Grocery grab: ShopOne acquired two shopping centers in North Carolina’s Triangle region, expanding its grocery-anchored retail portfolio.
Budget behavior: Walmart’s grocery penetration hit a record 72%, as financially strained shoppers continue shifting to mass and dollar retailers despite moderating inflation.

🏢 OFFICE

Value collapse: Lenders have moved to foreclose on SL Green and RXR’s Worldwide Plaza after a major tenant’s exit triggered loan defaults, wiping nearly 80% off the tower’s value.
MOB momentum: Medical office investment volume surged 122% in Q4, signaling renewed capital appetite for healthcare properties.
Pricing rebound: Office sale prices posted their first annual increase since 2021, hinting at early stabilization in transaction metrics.

🏨 HOSPITALITY

Bottom line: Following a balance sheet overhaul and fresh investment, Aimbridge is refocusing on owner returns, performance gains and disciplined growth.
Scale strategy: Hyatt is targeting 500 underserved U.S. markets to expand its select-service “Essentials” brands, leaning on lower-cost conversions to accelerate growth and capture new loyalty members.

A MESSAGE FROM CREXI

Institutional-Quality Silicon Valley Asset at Compelling Basis

Rare, institutionally owned Hyatt Place Fremont / Silicon Valley offered for sale via Crexi auction March 23–25.

151-key Hyatt asset strategically positioned to capture corporate, technology, and project-based demand
Attractive basis relative to replacement cost in one of Silicon Valley’s most supply-constrained lodging submarkets
Ability to retain or relicense under Hyatt Place or Hyatt Select (subject to approval)
Immediate access to I-880 & I-680 with connectivity across the Bay Area

Starting bid: $3,500,000

*This is a paid advertisement. Please see the full disclosure at the bottom of the newsletter.

📈 CHART OF THE DAY

Office tenants largely stick to familiar submarkets when relocating, though downtown districts are regaining momentum among firms willing to make bigger moves.

CRE Trivia (Answer)🧠

The first address was delivered in the Senate Chamber of Federal Hall in New York City.

Multifamily Rent Growth Cools to Start 2026

As new supply weighs on high-growth Sun Belt metros, rent performance is shifting toward smaller and less supply-heavy markets.