As we step into 2025, we are excited to release our eighth annual Multifamily Powerhouse Poll Outlook, where our investment sales advisors and mortgage bankers share their expert perspectives on the evolving commercial real estate (CRE) market. This year, we have closely examined the impact of ongoing economic factors such as inflation, interest rates, and policy shifts under the Trump administration, forecasting how these elements will influence investment opportunities. By tapping into these insights, we can guide our clients through the complexities of the market in the year ahead.
Navigating Uncertainty: Optimism for Multifamily Amid Challenges
The CRE financing environment in 2024 faced significant headwinds, driven by ongoing inflationary pressures, elevated interest rates, and tighter lending standards. These factors made it increasingly difficult for investors to secure the capital needed for real estate ventures. The most recent Federal Reserve meeting in January confirmed these trends continuing into 2025, with Chair Jerome Powell signaling that rates may remain elevated for an extended period, continuing to constrain borrowing capacity. Similarly to last year, the majority of Berkadians expect that inflation will have a significant or moderate impact on commercial real estate activity in 2025.
However, despite these ongoing pressures, there is reason for optimism. 62% of Berkadians anticipate an increase in CRE transaction activity under the Trump administration. This confidence is particularly strong within the multifamily sector, where 59% of Berkadians and 63% of our clients agree that new apartment supply is unlikely to outpace renter demand in 2025.
Even amidst inflation, multifamily remains one of the most resilient sectors within CRE, with long-term performance prospects looking strong.
Affordable Housing: A Key Priority and Investment Opportunity
Affordable housing continues to be a central issue for investors, developers, and policymakers alike. The Affordable Housing Crisis is not just a localized issue, it’s having nationwide implications for equity, access and economic stability. To address the Affordable Housing Crisis, the majority of Berkadians believe modifying tax credit policy and increasing local and state government intervention will provide the most effective solutions in affordable housing. While institutional investors, regulatory changes for Fannie Mae and Freddie Mac (the GSEs) and increased investor prioritization are seen as moderately helpful.
40% of Berkadians believe that over the next one to two years, investors are expected to find existing affordable housing property acquisitions the most attractive opportunity, a slight decrease from 2024 (44%), followed by rehabilitation of existing properties.
As market conditions stabilize, investor interest in affordable housing is expected to grow, particularly as inflationary pressures ease and lending conditions become more favorable.
Data-Driven Hotspots
To make the most of the opportunities in 2025, it’s essential to identify key hotspots from our poll. Below, we highlight the locations, strategies, and property types that are generating increased interest and momentum as we move through the year.
- Hottest Location: The Southeast, Southwest and Midwest are expected to be the top geographic regions for multifamily investment in 2025. Internationally, regions like Asia-Pacific and the Middle East are expected to drive the most living sector investments into the U.S., followed by Europe and Canada.
- Hottest Institutional Investment Strategy: Over the next one to two years, Berkadians ranked Core, Core-Plus, and Value Add acquisitions to be the most attractive opportunities followed by distressed and recapitalization opportunities. Though, 81% of Berkadians expect to see an increase in distressed opportunities in 2025.
- Hottest Property Types: Majority of Berkadians believe that outside of multifamily, the single-family rental, build-to-rent, and affordable housing asset classes are the most appealing sectors for investors. 70% of Berkadians predict that Class A property types will attract the most attention from international investors.
How AI and Technology are Reshaping CRE
The integration of AI and emerging technologies into CRE has reached an inflection point. Generative AI and other emerging technologies are poised to transform transactions in the years ahead, and this revolution is only just beginning. In fact, Berkadia’s internal and secure AI-based virtual assistant, “Berkie”, has already made strides in assisting our investment sales advisors and mortgage bankers on a daily basis, putting us at the forefront of the industry.
While AI in CRE is still emerging, our clients are increasingly focused on its role in investment decisions, with real-time market analytics and predictive performance modeling as top priorities. Berkadia is dedicated to long-term investments in technology, ensuring we continue to shape the CRE industry and provide ongoing support to our clients throughout their journey.
These findings from the 2025 Powerhouse Poll revealed trends and opportunities for investors and have provided valuable insights that will help them to navigate the ever-changing CRE landscape in the year ahead. Despite enduring challenges, our outlook remains optimistic, and we look forward to providing our clients with data, research and perspectives as they navigate a complex environment in 2025.
To see additional perspectives and expectations from Berkadia’s producers, check out the full report here.
– Ernie Katai, Executive Vice President – Head of Production, Berkadia