🚨Multifamily remains resilient with occupancy rates over 95% despite high supply levels, sustaining moderate rental growth of approximately 1.5% YoY [Source: Yardi Matrix]. Data centers see unprecedented demand driven by cloud computing and AI, with 1.6% vacancy and significant absorption. In contrast, office sector distress is notable, with CMBS delinquencies peaking at 11.7%, surpassing GFC levels. This divergence demands focused capital strategies favoring resilient sectors.
Multifamily Occupancy: ~95% national average.
Data Center Vacancy: 1.6%, record low.
Office CMBS Delinquency: 11.7%, all-time high.
- Loan Performance: Multifamily CMBS delinquencies are at 6.9%, driven by a few large urban loans, but overall fundamentals remain strong. Data centers maintain low loan default rates due to stable cash flows from long-term tenants.
- Demand Dynamics: Multifamily absorption keeps up with supply, driven by high single-family costs. Data center pre-leasing shows robust future demand, while office faces high vacancy and sluggish leasing activity.
- Asset Strategies: Multifamily strategies should emphasize rent stabilization and cost management. Data centers require investing in tech and power infrastructure. Offices need innovative backfill strategies or conversions to mitigate high vacancy risks.
- Capital Markets: Multifamily and data center capital is widely available with competitive rates. Office lending is selective, with high premiums for risks.
Rates: Resilient sector cap rates stable; office rates increasing.
Favored assets: Multifamily and data centers favored for stability.
Financing stance: Favor strong sectors for refinancing opportunities.
Spreads/structure caveat: Office transactions face wider spreads.
🛠 Operator’s Lens
Refi: Stabilized multifamily can refinance at favorable terms; ensure rate accuracy.
Value-Add: Data centers tie CapEx to tenant needs for enhanced ROI.
Development: Keep office projects flexible for possible alternative uses.
Lender POV: Favor multifamily and data centers; cautious on office loans
Continued office distress could drive more conversions in urban areas.
Multifamily and industrial sectors might experience capital influx.
Potential policy changes on office conversions or multifamily regulations.
Trepp — CMBS Loan Delinquencies (Aug 2025). Canonical URL. - CBRE — Data Center Insights (2025). Yardi Matrix — Multifamily Market Report (Aug 2025).
Multifamily Occupancy Trends & Rent Growth (2024–2025)
