Multifamily Webinar: Heard on the Hill and on the Street

EXECUTIVE SUMMARY

The multifamily recovery is underway, but it is uneven. Supply is thinning, rent growth is returning in select markets, and Washington is moving quickly on housing policy. For owners making financing, operating, and buy-sell decisions, the divergence between markets has rarely mattered more.

In the latest PGIM Multifamily Webcast, Mike McRoberts, Head of Agency Lending at PGIM, is joined by Lee Menifee, Head of Americas Research at PGIM’s Real Estate business, and James Sonne, Head of Government Affairs at PGIM, to examine the forces shaping the sector. The following is a summary of the conversation.

• Market outlook: Vacancy rates remain elevated and average rent growth is near flat, but the supply pipeline is thinning after an outsized wave of 2023 and 2024 deliveries. Conditions are expected to improve steadily through the end of the decade, led by markets such as New York, Chicago, and the Bay Area, while Sunbelt markets face a longer path to stabilization. Concession burnoffs will generate net operating income growth beyond what headline rents alone suggest. 

• Policy and Washington: The 21st Century Road to Housing Act passed with rare bipartisan support, and its implementation – particularly Treasury's forthcoming rules on institutional investor ownership—bears close monitoring. GSE reform is unlikely before the midterms. The agencies, with volume caps raised to $88 billion each, continue to provide ample liquidity.

• Implications for owners: Stabilized assets with strong rent rolls remain liquid and are attracting competitive buyer interest. Assets still in lease-up present a more nuanced case: demonstrating stabilization before a sale may yield meaningfully better pricing. Transaction volumes are expected to recover gradually, with the pace tied closely to the direction of rates.