Small Multifamily Market Shows Signs of Recovery in Q424

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Good morning. The US small multifamily sector is recovering, with rising valuations, loan origination volumes, and occupancy rates in Q4, driven by strong demand for affordable housing despite higher interest rates.

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Market Snapshot

Signs of Recovery

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• Source better deals: Learn how to source, analyze, and secure high-value commercial real estate deals better and build a more profitable portfolio.

• Self-storage slowdown: Rising interest rates, long construction timelines, and weak rent growth are slowing self-storage development, with new supply forecasted to slow through 2029.

• Trade war implications: MSCI’s analysis suggests rising tariffs and a stronger dollar could lead to a 15% drop in global equity and bond portfolio values, with intl markets facing larger losses.

• Economic uptick: The Fed reports modest economic growth since mid-January, with concerns over Trump's tariff policies driving uncertainty, potentially leading to slower growth and rising inflation.

• A new symphony: Highwoods Properties unveiled a massive renovation of Symphony Place tower in Nashville, including new amenities like a rooftop park, private club, and wellness facilities.

• DEI backlash: CRE groups focused on DEI are facing increasing pressure as backlash against these programs grows, with some organizations struggling to maintain support.

• Rent recovery: The US apartment market showed signs of recovery with 0.3% MoM rent growth in February 2025, signaling the end of six months of rent declines.

• DEI overhaul: The NMHC and NAA proposed sweeping changes to 32 federal programs affecting multifamily housing, targeting Section 8 reforms, energy standards, and eviction procedures.

• Condo cooldown: US condo investments fell 13% YoY in Q4, hitting its lowest level since 2012, with Florida seeing steep declines due to rising insurance costs and new maintenance laws.

• Bankruptcy expertise: Greg Corbin, founder of Northgate Real Estate, thrives in NYC's distressed CRE sector, specializing in bankruptcy and restructuring, with a focus on rent-regulated assets.

• Automaker moves: Tesla (TSLA) plans a 1M SF battery factory near Houston, while Honda shifted its hybrid Civic production from Mexico to Indiana due to tariffs, impacting supply chains.

• REIT rejects bid: Warehouse REIT (WHR) rejected a £470M all-cash takeover offer from Blackstone (BX) and Sixth Street Partners, the fourth failed bid amid strong rental growth and reduced debt.

• Expanding to Nashville: Lovett Industrial enters Nashville with the development of the 107.5K SF Innovation Way Logistics Center, slated for completion by June 2026 in Hendersonville, TN.

• $15B sales plan: Target (TGT) plans to grow sales by $15B by 2030 through expanded grocery and beauty offerings, chef collabs, and enhanced omnichannel experiences, with over 300 new stores.

• Spinning off: Seven & i Holdings (SVNDY) plans to spin off its North American business amid a $47B takeover bid from Canadian rival Alimentation Couche-Tard, a major strategic shift.

• Dress for less: Ross Stores (ROST) plans to open 90 locations in 2025, continuing its off-price retail growth with a focus on value-driven shopping amid economic concerns.

• Future of offices: Experts weigh in on how the office market is evolving post-COVID, with ongoing changes in demand and occupancy impacting CRE strategies.

• Manhattan visits drop: January office visits in NYC were 66% of pre-COVID levels, with colder weather and congestion pricing impacting attendance, while Class A buildings outperformed.

• Silicon recovery: New York Life and Lincoln Property Co. (LNC) are acquiring distressed office debt in San Francisco, signaling a rebound driven by expanding AI firms and RTO momentum.

• Office conversion: Williams Equities is marketing its 79 Madison Avenue property for $130M, with plans to convert the office building into luxury condos, the first such transformation in the NoMad area.

• Looming uncertainty: While business travel rebounded in Q4, rising costs, inflation, and tariff threats are creating caution in hospitality, with profits growing slower than expenses in 2025.

📈 CHART OF THE DAY