Investor Interest in CRE Grows, Especially Multifamily: ValTrends Webinar 2Q 2025

Commercial real estate (CRE) is attracting more investor attention, especially the multifamily sector, as uncertainty sparked by changing federal policies continues to roil financial markets. That’s according to the “ValTrends First Look” webinar on April 24, hosted by Peter Muoio, PhD, Senior Director, SitusAMC Insights, and Jennifer Rasmussen, PhD, Vice President, SitusAMC Insights. 

“The uncertainty created by federal policies regarding tariffs, immigration, cutting federal spending, and return to work -- and the market turmoil -- are the key issues of the moment,” Muoio said. “CRE is an alternative asset not subject to as much market gyration. So there’s a degree to which flows into CRE could be positive as a result of some of the policies issues going on.” 

The ValTrends webinar utilizes proprietary research and recent survey data of institutional and regional CRE executives to provide a snapshot of capital and space markets in the months ahead. Here are the key highlights: 

Interest in the apartment sector surged to a record as investors seek a safe haven. Seven in ten investors ranked multifamily the best sector, up from 33% in the fourth quarter of 2024. That’s an all-time record, and the highest level of any property sector in the poll’s 35-year history. Apartment was also saw the highest transaction volume in March at $9.2 billion. 

“There are a lot of barriers to home ownership -- limited homes for sale, increasing consumer debt, tighter lending standards, high mortgage rates and elevated home prices,” Rasmussen said. "This is forcing many potential homebuyers to the sidelines -- good news for rental demand.” 

Meanwhile, apartments are the most affordable they've been since mid-2021, while single-family affordability is near record lows. (Existing home sales fell 5.9% in March, more than expected.) Demand trends are positive, with a record 34% of U.S. households renting in 2024, almost 200 basis points above the long-term average. With dwindling apartment completions (albeit from record highs) and relatively strong absorption, both occupancies and rents are expected to rise. 

The U.S. Economic Policy Uncertainty Index hit its second highest level since 1985. The index, which represents a combination of news coverage of policy-related economic uncertainty, tax code uncertainty and economic forecaster disagreement, posted its highest level behind the record set during the Covid-19 pandemic. Uncertainty is also playing out in consumer sentiment data, with the expectations index falling to 57.0 in March, the lowest level in 12 years. “That's well below the threshold of 80, which usually signals a recession ahead,” Rasmussen said. 

Other economic data remains steady – for now. Inflation is rising at the slowest pace in three years, though still stubbornly above the Federal Reserve’s 2% target rate. Though financial markets have been volatile, the 10-Year Treasury is hovering around January levels. The March employment report was mixed, with stronger-than-expected payroll increases but a slight tick up in the jobless rate. Potential changes in business and consumer spending have not shown up yet in the data.   

“We’re waiting and seeing on a lot of this,” Muoio said. “But the potential impact of federal policies on inflation has put the Fed in a conundrum of when and to what degree to act -- and in what direction.”  

Western population growth improved. SitusAMC’s proprietary Dynamic Population Tracker shows that while growth is relatively weaker in the west than other parts of the country, it's picked up in  Los Angeles, Orange County, San Diego, San Francisco, Oakland and San Jose. 

“Part of this is normalization post-Covid, with more people in hybrid rather than truly remote work,” Muoio noted. That trend also appears to be boosting population growth in large metros such as New York, Boston and Chicago. The Tracker provides a weighted growth ranking of the top 51 metros in the U.S. on a monthly basis incorporating a variety of inputs, including labor force, household employment, change of address, electrical hook-up, bank deposits and moving company data. 

Texas, Nevada and California will bear the brunt of changing immigration policy. Those states, along with New Jersey and Florida, have the highest population of undocumented workers, representing 5% to 9% of the workforce. Agriculture, construction, hospitality and food services are the most likely industries to suffer. “There’s a potential impact here not only of forced out-migration, but people may step back from the workforce,” Muoio said, worried about possible deportation.  

The office sector is bearing the brunt of Department of Government Efficiency (DOGE) cuts. To date, the government has terminated 643 leases comprising more than 7.5 million square feet of office space, with sizeable impacts on Washington D.C., California, Ohio, Georgia and Washington state. The pace of lease termination slowed in March to just 6% of the February pace. The most recent termination was an Equal Employment Opportunity Commission (EEOC) building in San Jose on April 4. Just over 30% of total remaining Government Services Administration (GSA) office space and 28% of annual rents on government leases are still eligible to be terminated in 2025, according to Trepp. Separately, return-to-work mandates should have limited impact, as only 10% of the nation’s 2.8 million federal civilian employees worked fully remote (less than half the rate in the private sector).  

View the ValTrends Look Ahead webinar presentation here Our 24-page ValTrends report will come out at the end of the quarter. Click here to be notified as soon as the report is available, and we'll send a link to download it for free. For more information on SitusAMC Insight’s research, analytical tools or data products, visit our website.