🚀 Why 2025 could be landlords' rebound year

👋 Hello, Best Ever readers!

In this week’s newsletter, landlords gain leverage, rate cuts are coming (for now), and student housing is still booming.

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Let’s CRE!

🗞 NO-FLUFF NEWS: CRE HEADLINES

✂️ Trump vs. Rate Cuts: The Fed is likely to cut the federal funds rate by 25 bps today with another rate cut due for December, but President-elect Donald Trump's impending return to the White House likely puts the Fed on a path toward fewer rate cuts.

🥊 Voters vs. Rent Control: California voters decisively rejected Proposition 33, which would have let cities control rents on all housing types. The measure failed with 62% voting no and 38% voting yes, with over 5.4 million opposing votes counted.

🦹 Fannie vs. Fraud: Fannie Mae acknowledged multifamily loan fraud issues in its recent SEC filing, following several high-profile fraud cases including Aron Puretz's $54.7M and Boruch Drillman's $165M schemes targeting Freddie Mac and Fannie Mae.

☀️ Sun Belt vs. Affordability: Sun Belt cities are seeing reduced migration due to rising living costs, particularly housing. Cities like Orlando, Tampa, Austin, and Phoenix are reportedly losing their affordability advantage, with some Florida markets experiencing population declines.

🏢 Office vs. Multifamily: CRE posted consecutive quarterly gains in Q3 for the first time since 2022. Office and multifamily jockeyed for top position at 13% and 9% sales growth, respectively, while industrial remained flat and retail declined 27%. Overall sales volumes stabilized year-over-year and increased from Q2.

🏅 TOP STORY: POWER (BACK) TO THE LANDLORDS

The post-pandemic apartment construction boom sent shockwaves through the multifamily sector. The wave of new supply has pushed vacancies up and slowed rent growth, crunching landlords’ margins and eating into cash flow. Now, that tide appears to be turning.

The U.S. multifamily vacancy rate declined in Q3 for the first time in over two years, according to CBRE, dropping to 5.3% as renter demand finally outpaced new supply — factors that are expected to push vacancy down to its long-run average of 5.0% in coming quarters.

• A Nationwide Trend: 50 out of 69 markets tracked by CBRE experienced quarter-over-quarter vacancy rate decreases, up from 45 markets in Q2.
• The Outlier: Austin faces the nation's highest vacancy rate at over 15% (including new buildings), driven by a construction boom following corporate relocations like Tesla and Oracle.
• Looking Ahead: A record 672,000 new apartment units will be completed in 2024, but deliveries are expected to drop by 50% in 2025 and decrease further in 2026.

📣 “The first drop in vacant units in more than two years signals a crucial turning point in the multifamily sector,” CBRE’s Kelli Carhart said. “This boost will lead to increased investment activity in 2025 as improving fundamentals continue to drive investor confidence capital deployment.”...