Alternate Investing is the Place to Be!

Another week of Real Estate movement!

This edition is 773 words, a 3.09 minute read

Mortgage Rates

Multifamily Declines

Multifamily development has continued to decline during the third quarter, with new construction starting bottoming out at an annualized rate of 325,000 units, according to Yardi Matrix's third-quarter multifamily forecast. However overall activity is declining at a slower rate than previously expected.

Construction starts are down 50% from 2022 and early 2023, but because completion timelines are elevated, the construction pipeline is still sizable. Multifamily completions are expected to remain elevated next year and into early 2026 before they begin to cool off during the second half of 2026.

The U.S. multifamily market recorded 153,000 net apartment absorptions in Q3, a 72% increase from pre-pandemic levels for the same quarter. Vacancy dropped 20 basis points to 5.3%, nearing the long-term average of 5.0%.

Declining new construction and slower transaction volumes are putting pressure on rental markets, particularly in areas with growing inventories. Markets with limited new apartments saw modest rent increases compared to regions with high completion rates.

Landlord-Built v Tenant-Built Transaction Trends

Landlords are taking note of the competitive benefit of offering pre-built spaces ready for immediate occupancy rather than focusing on post-lease buildouts or tenant improvements. Tenants are seeking high-quality spaces that will help attract employees back to the office while minimizing lengthy intervals between signing and move in, according to an office sector analysis by CompStak.

Since 2019, the share of leases executed in landlord-built transactions grew each year to reach 46.6% this year. At the same time, tenant-built transactions steadily declined from 2019 dropping from 88.4% to 44.6%.

Tenants appear to favor the shorter lease signing to commencement period typical with landlord-built transactions. Landlord-built deals are about 33% faster, which means less time space remains unoccupied resulting in faster rent payments and positive outcomes for landlords, said CompStak. The longer execution-to-commencement periods within the tenant-built space are likely due to construction timelines and materials procurement challenges, although these issues have cooled since mid-2022.

Number of Renters continues to Rise

In Q3, renter households grew by 2.7%, reaching 45.6 million, a rate nearly three times faster than homeownership growth. This shift represents 1.18 million new renters, the second-highest growth since 2015.

Median asking rents rose a modest 0.6% from last year, while home prices surged 6% over the same period. As only 2.5% of homes have sold in 2024 so far, homeownership is increasingly out of reach for many.

Apartment completions reached 647,000 units in 2024, the highest number since 1994. Elevated mortgage rates and high home prices are pushing more young people and families toward long-term renting.

2025 Markets to Watch

Rising housing costs in previously popular Sun Belt cities like Orlando, Tampa, Austin, and Phoenix have reduced their affordability advantage, leading to slowed in-migration or even population loss. High insurance costs in climate-vulnerable areas are also deterring new residents.

Remote work is shifting migration patterns, with 30% of households moving for remote work choosing new cities, and 13% moving out of state. Meanwhile, apartment lease renewals have surged in 2023 and 2024 as high home prices discourage buying.

Immigration is now the main driver of U.S. population growth, accounting for 75% of growth in the 2020s, up from 45% in the 2010s. Major cities on the East and West Coasts have seen population boosts from international migration, helping stabilize workforce numbers and real estate demand.

You’re in the right place!

In the past decade, private investments exploded from $4 trillion to $14 trillion. Primarily led by institutional capital, investors poured money into private markets in their search for differentiated returns. This makes sense as alternative investments have consistently outperformed global public markets on 10-, 15-, and 20-year time horizons.

Now, the investor base is expanding to individuals. Bain estimates that assets under management in alternatives from individuals has risen to around $4 trillion and projects potential growth to $12 trillion in the next decade, a rapid expansion. Adding alternatives to portfolios requires careful consideration and we believe most individuals will opt to work with experienced advisors in that process.

Real Estate is one of those alternatives reaping rewards to investors, rest assured that continuing your education alternative investment topics is the first step to being ahead of the curve. Interested individuals should focus on three big themes in alternatives investing: the longer-term time horizons; sizing investments in amounts that effectively can be put aside; and diversification, across a portfolio and within alternative sleeves. This applies to individuals across wealth categories as new open-end funds expand access for high-net-worth investors.

That’s all for this week folks! As usual be sure to share with friends who would enjoy our content!

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The information provided in this newsletter is for informational and educational purposes only and does not constitute financial, investment, or real estate advice. The content is based on the opinions and research of the authors and may not reflect the most current market conditions or developments. The analysis of properties is done without consideration of each platform’s fees. Always conduct your own research and consult with a qualified financial advisor or real estate professional before making any investment decisions. The authors and publishers of this newsletter disclaim any responsibility for decisions made based on the information contained herein.