Unlike in the office sector, the challenges in U.S. multifamily are cyclical rather than secular in nature, wrote Ralph Rosenberg, KKR’s global head of real estate, examining whether U.S. multifamily housing is in for a period of significant defaults and distressed deal flow, similar to that of the office sector in a recent report.
The influx of new supply is likely to taper off after 2025, when KKR is optimistic about rent growth given the structural shortage of housing and unfavorable cost dynamics for new construction in the United States. As owners come under more pressure to sell assets, there is opportunity coming to buy high-quality properties below replacement cost while achieving attractive long-term yields. Scaled platforms with strong networks, on-the-ground knowledge of different markets, and ready capital will be in the best position to capitalize on the new market conditions.
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