- Multifamily deal volume is climbing as sellers move ahead of 2026 and buyers with flexible capital step in.
- Private investors now lead pricing as institutional “core” capital remains selective.
- Cap rates have stayed stable in 2025, with top-tier assets still trading in the mid-4% range.
- Underwriting includes slightly higher rent growth and cautious exit caps, showing disciplined optimism.
Deal Flow Climbs Without Core Buyers
According to Globe St, multifamily transactions are ending 2025 on an unexpected upswing. Rent growth and net operating income have slowed, but a wave of sellers is still moving ahead with listings. Many want to close before 2026. According to CBRE’s Kelli Carhart, multifamily deal activity is “up significantly” compared to last year.
Private buyers have responded quickly. With flexible capital and long-term views, they’re helping move deals that might otherwise stall.
Cap Rates Hold in a Shifting Market
Despite two years of volatility, cap rates have held steady. In many markets, premium assets continue trading in the mid-4% range. Most buyers still prefer returns above 5%, but strong demand keeps yields from rising.
Private investors have become the key drivers of these transactions. Many couldn’t compete for Class A properties in past years. Now, with less competition from core funds, they’re securing top assets at a discount to replacement cost.
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Investors Adjust, But Remain Disciplined
Underwriting assumptions have shifted only slightly. Last year, most buyers assumed annual rent growth of 3% or less. This year, those figures have edged up to between 3% and 3.5%.
Exit cap rates also reflect a cautious tone. Buyers often model them as flat or 25 basis points higher than entry, depending on the market. These terms are helping close deals, even if they fall short of institutional return targets.
This shift has opened doors for new players. Private capital now shapes many sales once dominated by institutional funds.
“They’re leaning in and buying great real estate,” Carhart said, noting these buyers don’t rely on internal rate of return (IRR) targets to justify pricing. Instead, they focus on long-term asset quality.
Core Capital Watches from the Sidelines
Institutional capital hasn’t disappeared—it’s watching. Core and core-plus investors remain active in bid processes but rarely win. With higher capital costs and lingering valuation issues in older portfolios, many prefer to wait. Recent improvements in core capital fundraising suggest a broader recovery is underway, but most firms still aren’t deploying aggressively.
Carhart believes core capital could re-enter more fully in late 2026. Several ODCE funds have posted positive returns for multiple quarters, and redemption queues are easing. These are early signs of recovery.
Still, the gap between book values and current asset pricing limits their ability to buy. Until core funds reconcile legacy valuations, they’re unlikely to lead market activity.
Who’s Setting the Market Now
CBRE expects strong multifamily deal volume in 2026. Rent growth is moderating, but demand for quality assets remains high. Investors continue to underwrite conservatively, with moderate rent growth and modest exit cap increases.
Private buyers, with fewer constraints and more flexibility, now define the clearing price. Sellers anchored to peak valuations are meeting buyers willing to transact at levels that still reflect strong fundamentals.
The result? A stable market where deals continue—even without core capital at the center.
