Multifamily real estate investors are preparing for a year marked by a flood of new apartment deliveries and tighter lending conditions. Although these factors are expected to weigh on the market, analysts highlight strong wage growth and shifting renter preferences as factors that could support household formation and drive multifamily demand.

Institutional investors are taking note as rising home prices squeeze affordability and slower apartment construction limits supply, said Ben Jackson, director of capital formation at Leste Group. He expects larger players to increase their exposure to multifamily properties, while higher absorption rates could fuel acquisitions, signaling a shift toward more stable, income-producing assets. Jackson also pointed out how private equity and private credit firms are stepping in as banks maintain a cautious stance on commercial real estate, opening the door for alternative capital providers to play a larger role in financing and refinancing deals.

Developers are responding to shifting renter demand by incorporating sustainable amenities like solar power systems and EV chargers to attract environmentally conscious Gen Z tenants. Simon Herrmann, senior vice president at PearlX, noted that younger, environmentally conscious renters are reshaping multifamily development strategies. Value-add renovations and new projects now incorporate green features to meet this growing demand.