Property Management
If you’re a property manager who works with multifamily buildings, you may already have a broad-strokes understanding of the economic factors driving this sector. For example, you might have heard that 2024 saw a historically high volume of multifamily unit deliveries.
But when you know what’s in store for the multifamily sector, you’ll have the opportunity to account for these changes while managing your properties in 2025. On top of that, you’ll find it easier to make wise decisions if you invest in multifamily buildings this year.
According to Marcus & Millichap’s 2025 U.S. Multifamily Investment Forecast, property managers active in the multifamily sector this year should see:
Since last year’s multifamily unit delivery was ahead of demand, vacancy rates in the sector rose for the third year in a row. Now, this upward momentum appears to be slowing, which means multifamily construction should see a decline. Compared to 2024’s unit completions, 110,000 fewer units will be completed in 2025.
While multifamily construction is expected to decelerate in 2025, renter interest in units is increasing. This means multifamily supply and demand could become aligned, marking the first time this has happened in four years.
In half of all US states, would-be homeowners need to make more than $110,000 annually to afford a median-priced home. Due to this income barrier and other factors, a limited percentage of renters will likely purchase a home this year. That should continue to drive demand for multifamily buildings and other rental properties.
Between July and September 2024, renewal rates for Class A, B, and C multifamily buildings were above 52 percent (a state of affairs last seen in the third quarter of 2022). Increased moving-related costs will affect the number of household relocations in the near term, which dwindled over the past two years.
As of Q3 2024, there was a $510 price gap between rent for the average Class A and Class B units and a $320 gap between rent for the average Class B and Class C units. These gaps could make mobility between property tiers more difficult, which may contribute to higher rental demand stabilization/renewal this year.
While multifamily construction will slow across the United States in 2025, some regions will receive more new multifamily buildings than others. For example, multiple markets in the Sun Belt should see considerable inventory gains this year compared to historical standards.
Now that you better understand what the year ahead could look like for multifamily development, you might be interested in making some new investments in this sector. Since 2025 will present opportunities and challenges to multifamily investors, you’ll need to think carefully before making significant decisions.
Some investment-related factors you should take into consideration include:
For the most part, the multifamily market should remain healthy this year—but individual properties could still suffer. If you’re facing fierce competition from other multifamily buildings in your area, you could have trouble keeping your vacancy rates under control.
To make your buildings more appealing to prospective tenants, you can:
By implementing a resident portal, you can give your tenants constant updates on community events and increase awareness of and participation in these activities. Tenants can also use resident portals to submit work orders and pay rent.
The easiest way to create a resident portal is to choose a property management program with this feature. Additionally, your property management system should help you optimize your tenant application process, access reports from an intuitive dashboard, and customize unit work orders. If you’d like to benefit from these capabilities and others, take the first step by scheduling a demo of ExactEstate.