Core Multifamily Sentiment Strengthens in Late 2025

Core multifamily buyer sentiment rose in Q4 2025, with optimism increasing as underwriting metrics and cap rates remained largely stable.

March 6, 2026

Jordan B.

Core multifamily buyer sentiment rose to 76% positive in Q4 2025, up from 64% in Q3.
Going-in cap rates for core multifamily increased slightly to 4.75%, while exit cap rates held at 4.95%.
Underwriting assumptions for rent growth modestly declined; IRR targets remained steady in most major markets.
Buyer and seller sentiment improved most in Sun Belt markets like Atlanta and Charlotte.

Key Takeaways

Sentiment Trends Support Multifamily Strength

Core multifamily sentiment climbed in Q4 2025, according to CBRE’s quarterly survey. More industry pros—76%—registered positive outlooks toward core multifamily acquisitions, up sharply from both the prior quarter and one year ago. This improved mood contributed to a 9% year-over-year bump in multifamily investment volume for 2025, with a similar increase anticipated for 2026.

Bar chart showing survey respondent sentiment for core and value-add multifamily assets, with buyers largely positive on core (about 75%) while sellers are mostly neutral, and value-add buyers showing moderate optimism with sellers again primarily neutral.

Stable Underwriting Amid Modest Cap Rate Movements

Key core multifamily underwriting metrics stayed steady in Q4. The average going-in cap rate edged up 2 bps to 4.75%, while the exit cap rate remained unchanged at 4.95%. The unlevered IRR target for core multifamily held at 7.70% for the third straight quarter. A narrower 20-bp spread between going-in and exit cap rates was recorded, although CBRE projects this spread will gradually widen in coming years, but not reach historically typical levels soon.

Bar chart showing quarterly changes in core multifamily underwriting metrics from Q1 2023 to Q4 2025, including unlevered IRR targets, going-in cap rates, and exit cap rates, with most movements staying within ±30 basis points and moderating through 2024–2025.

Market-by-Market Dynamics

Underlying metrics were steady across most tracked markets. IRR targets for core assets did not change in 16 out of 19 analyzed cities. Denver and Philadelphia posted minor IRR target increases, while Los Angeles saw a decrease. Slight cap rate compression for core assets took place in Charlotte, Miami and Philadelphia. Other markets, such as Denver, Indianapolis and Los Angeles, saw slight increases. Changes across all markets remained under 25 bps.

Table showing multifamily underwriting metrics across major U.S. markets, including rent growth assumptions, unlevered IRR targets, going-in cap rates, and exit cap rates for both core and value-add assets, with averages of 2.7% rent growth, 7.70% core IRR targets, and 4.75% average core going-in cap rates.

Value-Add Assets and Outlook

For value-add multifamily assets, buyer sentiment eased to 63%. Going-in cap rates rose 3 bps to 5.26%, and exit cap rates held at 5.38%. The spread between them tightened to just 12 bps. Unlevered IRR targets for value-add assets dropped further, continuing an eight-quarter compression trend, reaching 9.36%. Annual rent growth underwriting for both core and value-add slipped modestly in line with slowing rent growth reported broadly in late 2025, even as multifamily investment activity has begun to rebound in recent months as buyers return to the market following easing monetary policy.

Looking Ahead

While bid/ask spreads continue to narrow, some owners remain hesitant to sell despite improved market liquidity and more attractive financing conditions. However, with positive trends in core multifamily sentiment and expectations of further investment activity, more owners may ultimately be drawn to transact as 2026 progresses, particularly in markets with increased buyer optimism such as the Sun Belt.