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Apartment Demand Continues to Outpace Supply

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Looking into the rearview mirror of Q1 shows a reacceleration of apartment demand as record deliveries over the past 2-years have been absorbed. Demand exceeded the concurrent supply as the country delivered nearly 577,000 apartment units in the first quarter of the year. This marked the highest supply level in over 50 years, except for the previous quarter's record of approximately 589,000 units. Looking ahead, the supply volume is expected to decrease further in the next quarter, reinforcing our view that the supply peak has passed.

• ​Record Multifamily Absorption Signals Strong Start to 2025 (Globest)​
• ​Despite economic uncertainty, multifamily performance remains strong (Multifamily Dive)​

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Tariff Effect on Lender & Investor

Trepp: On the lending side, existing loans may face increased credit risk or delinquencies upon a general economic downturn, which could put stress on banks with high concentrations of CRE assets. Lenders may tighten underwriting standards, shorten maturities, or raise interest rates in response to a dimmer and more uncertain economic outlook.

On the investor side, the uncertainty surrounding tariffs and trade disruptions could initiate a flight to quality. Particularly, foreign investors who may reduce their involvement in U.S markets

• ​Commercial Real Estate in The Crossfire (Trepp)​
• ​Builder Confidence Falls on Cost Uncertainty (NAHB)​
• ​Tariffs expected to raise new home costs by $9,200 (Realtor.com)​

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The CRE Deal Room™ with Adam... Jan 21 · The CRE Deal Room 40:16   ​

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