Multifamily units saw a significant number of completions in 2024, the largest one-year increase since 1974, according to Trepp, a provider of commercial real estate data, insights and technology solutions. This increase in supply has resulted in a jump in vacancy rates and downward pressure on rents.
Multifamily owners face a great number of challenges from operating expenses, which have increased from 16.5 percent to 99.5 percent during the past five years, says Trepp. Repairs and maintenance costs increased by 16.5 percent, real estate taxes have increased by 16.6 percent, utilities have risen by 21 percent and property insurance expenses have double throughout the past five years. Due to a reset in floating-rate debt, financing issues pressure owners. The Sun Belt markets see the highest percentage of underperforming loans.
Hope is on the horizon, however, as multifamily construction is gradually slowing, as the construction pipeline consists of 750,300 units under
