Sun Belt Apartment Recovery Turns Sharply Uneven

The region's building boom is unwinding at very different speeds from Austin to Tampa.

Nina Dale
October 14, 2026

In partnership with

Sun Belt Apartment Recovery Turns Sharply Uneven

Good morning. The Sun Belt's apartment glut is finally draining, just not evenly. Starts have fallen about 75% from their 2022 peak even as cooling migration and September's rate hike cloud the path back.

CRE Trivia 🧠

Which full-block Chelsea building, completed in 1931 as a freight terminal for the Lehigh Valley Railroad, used giant elevators that hoisted loaded trucks and rail cars to its upper floors?

IN PARTNERSHIP WITH REAL PROPERTY CAPTIVE

Blackstone’s Insurance Structure, Available to the Middle Market

Blackstone and Starwood don’t just buy insurance. They own it through captives, along with 90% of the Fortune 500.

Real Property Captive, a “for owners, by owners” group captive, brings that same structure to middle market owners with $100M to $3B portfolios. We cut out the middlemen and pool members into one program, giving each the buying power of a large institution.

Members come in around 35% below current rates and share in underwriting profit. Policies are fronted by an A rated carrier and clear Fannie, Freddie, HUD, CMBS and any other lender requirement.

*This is a paid advertisement. Please see the full disclosure at the bottom of the newsletter.

Market Snapshot

S&P 500

GSPC

7,805.45

Pct Chg:
-0.023%

FTSE NAREIT

FNER

802.65

Pct Chg:
-0.25%

10Y Treasury

TNX

5.215%

Pct Chg:
-0.029%

CME Term SOFR

1-Month

3.92%

Pct Chg:
-0.00

*Data as of 10/13/2026 market close.

Pipeline Watch

The Sun Belt Works Off Its Glut at Three Speeds

The Sun Belt multifamily market is slowly recovering from its post-pandemic supply glut, but slowing migration and uneven demand are keeping some markets behind.

The big picture: The pandemic boom added 673,000 apartments and pushed rents up 30% between 2021 and 2024. Now, Yardi expects major oversupplied markets to return to positive rent growth by the end of 2027.

By the numbers: Sun Belt construction starts have plunged 75% from their 2022 peak. National apartment deliveries are projected to fall from 696,000 units in 2024 to 421,000 in 2026, with another 24% decline expected in 2027.

Multifamily completions in Sun Belt cities for 2024 and 2025, with estimates for 2026 and 2027. | Source: Commercial Observer

Migration slows: Florida's net domestic migration has fallen 80% from its 2022 peak, while Texas saw a 44% annual decline in 2024. Rising housing costs, insurance premiums, and reduced immigration are weighing on renter demand.

Leaders and laggards: Austin and San Antonio are leading the recovery as absorption outpaces completions. Phoenix absorbed 17,000 units in the first half of 2026, while Dallas-Fort Worth still faces a pipeline exceeding 40,000 apartments.

The supply squeeze: With construction slowing sharply, markets like Phoenix, Charlotte, Fort Worth, and Austin could face their tightest apartment conditions in years by 2028, potentially supporting stronger rent growth.

➥ THE TAKEAWAY

Timing is everything: The Sun Belt's construction slowdown could create attractive investment opportunities as excess inventory clears. Markets with strong absorption and shrinking pipelines are positioned to rebound first, making local supply-and-demand fundamentals more important than ever.

A MESSAGE FROM OLLO AI

Using AI isn't the same as trusting it

Almost every CRE firm uses AI now. Far fewer trust it with real decisions.

Ollo's new report draws on a survey of 100+ CRE professionals to show where adoption actually stands, why the in-house "AI person" can only take a firm so far, and how two firms cut underwriting and reporting time with forward-deployed AI.

*This is a paid advertisement. Please see the full disclosure at the bottom of the newsletter.

✍️ Editor’s Picks

Stop buying impressions: Start building familiarity. RealtyAds' AI finds the brokers and decision-makers who matter, then keeps your property in view. (sponsored)
Yield reset: A WSJ survey of 71 economists now sees the 10-year Treasury ending 2026 at 5.1%, up from the 4.4% they expected in July.
Loan shift: A new DSCR mortgage underwritten on a property's rent rather than the borrower's income is reaching everyday investors, the Wall Street Journal reports.
Future money: A luxury Beverly Hills condo project is leaning on up to $550M in bonds repaid by special taxes on its own future residents, the Wall Street Journal reports.

🏘️ Multifamily

Rent floor: RealPage projects national apartment rents rising about 2.4% through Q3 2027, with nine of 50 metros topping 3% and none facing outright declines.
Campus homes: LA Unified advanced plans for 598 income-restricted apartments on two surplus campuses, turning idle school land into recurring ground-lease income.
Equity gap: Walker & Dunlop's Willy Walker says debt is plentiful but equity is scarce, with $1.5T of multifamily loans due to refinance over the next four years.
Debt pivot: Social-housing providers are gearing up to borrow more, S&P found, as most expect flat or lower federal funding and 54% weigh a public debt sale within a year.

🏭 Industrial

Valley boom: Bakersfield ranks first among US industrial boomtowns, CommercialCafe found, with six of the top 10 metros clustered in California's Central Valley.
Power play: Soar AI lined up a $1B equity facility to convert industrial sites into AI data centers, starting with a 154 MW Ohio campus scaling toward 480 MW.
Zoning wall: Entitlement risk is reshaping where warehouses get built, CommercialSearch reports, as moratoria and buffer rules harden along the residential edge.
Infill scarce: Santee is emerging as a rare East County industrial hub, where a 290,000 SF project rises on a former drive-in site amid 1.5% vacancy.

🏬 Retail

Vacancy low: National retail vacancy slipped to 4.3% in Q3, Colliers found, as net absorption reached 10.5M SF, the strongest quarterly figure since 2023.
Traffic holds: Retail visits rose 1.8% year over year in September despite gas prices topping $4.45 per gallon, while fast-casual dining grew 2.2% and quick-service restaurant traffic fell for a seventh straight month.
Store surge: Ross Stores lifted its fiscal 2026 plan to about 115 new openings and reaffirmed a long-term path to 2,900 Ross and 700 dd's locations.

🏢 Office

Trophy rises: BXP's $2B tower at 343 Madison Avenue topped its podium and sits about half pre-leased, with asking rents near $200 a foot ahead of a 2029 opening.
Basis buy: Real Capital Solutions and Dunton bought Denver's 243K SF Terrace Tower at a fraction of replacement cost, its first trade since 2012.
Extension fatigue: The extend-and-pretend playbook is reaching its limits, GlobeSt reports, as a 2026-to-2028 maturity wall meets office loans still sitting underwater.
Seattle steadies: Seattle's office market is firming, with CBRE logging 514K SF of Q3 net absorption, its strongest quarter since 2021, as new construction thins.

🏨 Hospitality

Portfolio bid: TKO offered $2B for Service Properties Trust's 93-hotel, 21,110-key portfolio, a bid that tops the REIT's entire public market value.
Second cities: Southeastern secondary markets are attracting hotel development as population growth, business expansion, diverse demand and lower construction costs offset a nationwide slowdown in new supply.
Casino overhaul: Jeffrey Soffer plans to replace Hallandale Beach’s Big Easy Casino with a 165K SF gaming and entertainment complex featuring restaurants, bars, live music and a four-story parking garage.
Stocks lift: The Baird Hotel Stock Index rose 1.3% in September after two monthly declines, lifting YTD gains to 14.4% as hotel brands outperformed the broader REIT market.

📈 CHART OF THE DAY

U.S. REITs snapped a seven-week losing streak, gaining 1.3% and lifting YTD returns to 9.0%, widening their lead over European REITs as easing Treasury yields and stronger growth prospects fueled a rebound.

CRE Trivia (Answer)🧠

The Starrett-Lehigh Building. The warehouse became an early modern landmark, shown in MoMA's 1932 International Style exhibition, and its freight elevators are now part of its appeal as creative office space.