- Multifamily sales hit $36.7B in Q2, with capital flows favoring major metros like New York and Los Angeles.
- The share of investment targeting top cities reached a nine-year high, as Northeast and Mid-Atlantic markets gain traction.
- Owners are holding apartments longer, slowing overall deal flow despite investor demand for supply-constrained locations.
Major Market Rotation Accelerates
Multifamily investment is making a clear migration back to large US cities, according to Newmark’s Q2 Multifamily Capital Markets report. After a period of broad-based deployment, capital is increasingly targeting traditional major metros—Boston, Chicago, Los Angeles, New York, San Francisco, and Washington, D.C.—which now comprise 32.7% of recent sales activity.
According to Globe St, this marks the largest share for these cities in nearly a decade and signals a reversal from pandemic-era preferences for Sun Belt and secondary markets. The report suggests investors are gravitating toward markets with stricter supply pipelines and stronger property performance, pivoting away from overheated regions facing an influx of new deliveries.
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The Details
Multifamily investment volume reached $36.7B in the second quarter, up 0.9% YOY and marking the second-strongest Q2 in the past four years, per Newmark data. Trailing 12-month sales climbed 11.1% to $174B, while first-half totals were 38.3% above the long-term average, signaling resilience despite high borrowing costs and valuation uncertainty. Major metros narrowed their market share gap to just 34.7 percentage points compared to non-major markets—its closest since 2016. Dallas led with over $6.8B in 12-month deals, followed by Los Angeles and Atlanta, though Dallas posted a YOY decline. Outlier surges hit Palm Beach County (up 282%) and Northern New Jersey (up 198%), highlighting capital’s search for relative value.
Sun Belt Surge Fades as Northeast Rebounds
The reshuffling comes as the Southeast and Southwest capture 40.9% of trailing 12-month sales. However, both regions are losing share from pandemic highs.
Meanwhile, US multifamily absorption is strengthening as new supply slows, improving the demand outlook as construction pipelines retreat. The Mid-Atlantic and Northeast’s combined share rose 6.8% YOY to 25.7%. That is 23.6% above these regions’ historical norm.
The West accounted for 19.7% of activity, with the Midwest at 13.8%. The shift highlights diverging fundamentals and renewed interest in supply-constrained regions.
Why It Matters
Investment flows do not fully capture broader market liquidity constraints. Newmark reports holding periods at their longest since 2009 for REITs and institutional apartments. Borrowers facing refinancing risk increasingly extend maturing loans instead of selling into a valuation-challenged market. This strategy limits available inventory as capital targets resilient markets.
Meanwhile, more investors accept moderate discounts for older assets and redeploy capital into new opportunities. Years of accrued income help preserve overall returns despite those discounts. Trailing-year volume reached $174B but remains below earlier cycle peaks. Sector momentum is rebuilding but remains sensitive to Fed policy, interest rates, and supply-demand balance. Many Sun Belt markets must absorb elevated deliveries before regaining their previous growth premium.
For CRE professionals, market selectivity has returned, while underwriting discipline continues tightening. Gateway cities are recapturing investor interest last seen during the late 2010s. Northern New Jersey and Palm Beach County also highlight the cycle’s regional volatility. Sharp market swings increasingly define investment performance rather than uniform national trends.
What’s Next
As owners continue to hold assets longer and refinance where possible, transaction volumes may climb only gradually through the remainder of 2026. Markets with robust rent growth and limited new supply—particularly in the Northeast and major metros—are positioned to command stronger pricing as capital competition intensifies. Meanwhile, investors will remain sharply focused on pipeline risks in the Sun Belt and may increasingly pursue distressed or value-add strategies in markets where valuations lag fundamentals. The balance of capital is likely to tilt further toward supply-constrained urban cores, particularly if stability persists and interest rates moderate later this year.
