CBRE says multifamily captured largest share of commercial real estate investment to start 2025
The US multifamily sector kicked off 2025 with a strong first-quarter performance since 2000, supported by robust tenant demand and a slowdown in new supply.
The combination is driving vacancy rates below long-term norms and reviving investor appetite in the sector, according to CBRE’s latest research.
In the first quarter of 2025, multifamily net absorption reached 100,600 units, the highest first-quarter total since 2000, and more than triple the pre-pandemic average. It marked the fourth consecutive quarter where tenant demand outpaced completions.
As a result, the national vacancy rate declined by 20 basis points to 4.8%, slipping below the historical average of 5.0%. The strong showing came despite broader economic uncertainty and tighter capital markets.
“Multifamily fundamentals continue to strengthen due to strong renter demand and a diminishing construction pipeline,” said Kelli Carhart, head of multifamily capital markets at CBRE. “We expect the gains to continue this year and accelerate in 2026. While broader economic uncertainty may impact consumer sentiment and capital markets, multifamily remains one of the most resilient asset classes.”
Rent growth regains momentum
New completions have slowed sharply. After 450,000 new units were delivered in 2024, only 70,600 units came online in Q1 2025, according to CBRE. The firm anticipates the deceleration in new construction to continue throughout the year.
Reduced supply pressure, combined with healthy absorption, pushed average monthly rents up 0.9% year over year to $2,184. CBRE expects rent growth to gain further traction as the market stabilizes.
Multifamily investment is also recovering, with transaction volume reaching $28.8 billion in the first quarter, a 33% increase over the same period in 2024. The multifamily sector accounted for the largest share of all commercial real estate investment activity at 33%.
Regional highlights
The Midwest (3.3%), Northeast (2.7%), and Pacific (0.9%) regions led in annual rent growth. New York (8,600 units), Atlanta (7,000), and Phoenix (5,300) posted the strongest net absorption numbers. Out of 69 tracked US markets, 63 recorded positive net absorption.
Read next: Commercial real estate lending surges as market regains footing in Q1
CBRE also noted that 49 markets saw demand outpace new supply, down from 64 in Q4 2024. About 47 markets experienced quarter-over-quarter vacancy declines, compared to 63 in the prior quarter.
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