Multifamily developers have faced significant challenges in the last couple of years. The construction pipeline has shrunk in the wake of high interest rates, limited construction capital and an uncertain economic climate. The end of 2024 marked the lowest number of new construction starts in a decade.
As economic conditions improve this year and rates begin to stabilize, multifamily developers are cautiously optimistic about new activity. According to Mark Bridge, EVP and senior director at Matthews Real Estate Investment Services markets like California that are adopting pro-development legislation and providing incentives for new construction should benefit. While things are looking up, he says there are still some headwinds to new development.
Multifamily Deliveries Will Slow in 2025
In 2024, a record number of new multifamily properties were delivered to the market. The activity stemmed from the low interest rates in 2021 and 2022, which helped expand the multifamily development pipeline.
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