EXECUTIVE SUMMARY

The U.S. multifamily market is transitioning from a record supply and demand cycle toward a more balanced, but increasingly divergent, recovery phase. While elevated deliveries continue to pressure occupancy and rent growth in portions of the market, particularly across supply-heavy Sun Belt metros, forward-looking fundamentals are improving. Future supply is declining rapidly, affordability dynamics have strengthened, demand is bolstered by delayed homeownership and liquidity is beginning to recover following several years of repricing.

This uneven and differentiated market rebound supports a multi-pronged strategic response that integrates acquisitions, operating execution, and selective next-cycle ground-up development pipeline control. In our opinion, the next phase of the cycle will be defined less by broad market appreciation and more by submarket selection, basis discipline, and executable asset-level value creation business plans. The strategic framework is informed by five critical market dynamics:

• The supply wave is ending rapidly. Multifamily deliveries are projected to decline by more than 60% over the coming years as construction starts have fallen to their lowest levels since the GFC. This dramatic supply contraction creates a thinning future delivery pipeline and positions well-selected markets for accelerating rent growth and for compelling next‑cycle development opportunities as competitive supply diminishes.
• Affordability dynamics are becoming increasingly supportive of rent growth. Income growth has outpaced rent growth across many markets since 2019, supporting future rent increases.
• Demand is bolstered by durable sector tailwinds. While employment growth has cooled, the asset class continues to benefit from the rent‑versus‑own affordability gap, delayed homeownership, and shifts in lifestyle preferences expected to drive sustained demand for rental units.
• Replacement cost dislocation and pricing gaps are creating selective acquisition opportunities. Construction costs have outpaced the increase in multifamily values since 2019, creating acquisition opportunities at a discount to replacement cost that vary by market and product type, while the gap between public and private market valuations remains near levels historically seen only during the Global Financial Crisis (GFC).