Lessors of Residential Buildings NAICS 531110

Dec 17, 2025 - Multifamily Distress Rises

• Multifamily properties saw distress climb to 10.8% in November, up 50 basis points, as floating-rate debt and rising expenses pressured the sector, according to CRED iQ and reporting by Multifamily Dive. The increase followed months of improvement in apartment CMBS loans, which had dropped 270 basis points from March to October, though Trepp reported delinquencies eased to 6.98% in November after briefly topping 7%. Overall commercial real estate distress reached 11.63%, with offices leading at 17.55%, hotels at 10.33%, and retail at 9.08%. CRED iQ warned investors with multifamily and office holdings to monitor exposure, noting nearly 60% of distressed loans stem from maturity defaults. Analysts say adaptive reuse could provide relief, with rising office and hospitality delinquencies creating opportunities for conversions into housing.
• Amid a softening job market and waning consumer confidence, multifamily rents and demand are weakening, according to Yardi Matrix. The average advertised US rent fell $8 in November to $1,740; year-over year rent growth fell 30 basis points to 0.2%. While oversupply in some markets has slowed rent growth over the last two years, weakness was confined to gluts in specific cities, including Austin, Dallas, Denver, and Phoenix. However, between September and November, advertised rents have been down in 90% of the Matrix top 30 markets. Single-family build-to-rent also saw rents drop in November, falling $10 to $2,185 from October and 0.5% compared to November 2024. In addition to mounting imbalances in supply and demand, a slowing labor market, and souring consumer sentiment, rent growth and rental demand are being pressured by increased immigration enforcement.

• U.S. renters are benefiting from a tenant-friendly market, with slowing rent growth, generous concessions, and record leasing incentives, according to The Wall Street Journal. A surge in apartment construction, delayed by supply-chain issues, has led to a glut of new units, especially in Sunbelt and Mountain West. National average rent fell 0.3% in September, the steepest drop for that month in over 15 years, according to data firm CoStar. Young renters face job market challenges, with unemployment for ages 20 to 24 at 9.2%, prompting many to delay moving out or seek roommates. Landlords are offering months of free rent, gift cards and other perks to fill vacancies. Some analysts now expect rent growth to remain subdued through 2027, as more units come online and demand softens.
• Multifamily developer confidence improved in the third quarter of 2025 but remained in negative territory, according to the National Association of Home Builders’ (NAHB) latest Multifamily Market Survey. The Multifamily Production Index (MPI) rose six points in Q3 2025 to 46 compared to the third quarter of 2024. The Multifamily Occupancy Index (MOI) decreased by one point to 74 over the same period. An MPI or MOI reading of 50 or more indicates that multifamily production or occupancy, respectively, is growing. While the MPI index indicates weakness in the multifamily construction market, the softness is mostly concentrated in mid-to-high-rise and condominium development, while developers of low-rise and subsidized rental properties are more optimistic.