🔮 10 emerging multifamily markets to watch

👋 Hello, Best Ever readers!

In this week’s newsletter, small markets emerge, developers luck out, delinquencies soar, and industrial cools.

Today’s edition is presented by Capital Gains Tax Solutions. Selling a property shouldn't mean losing 20-50% to taxes. Let Capital Gains Tax Solutions create your personalized exit plan and calculate your savings today.

👉 Also, join us and our special guest Brad Johnson, co-founder and CIO of Vintage Capital, at 7pm EST on April 23 for a FREE live event: Lessons Learned from 10+ Years in the Mobile Home Park Space. Register here to save your seat today.

Let’s CRE!

🗞️ NO-FLUFF NEWS
CRE HEADLINES

Saving Grace: Multifamily developers who completed projects before new tariffs could end up big winners. With construction slowing and 1.1M units delivered in 2023-24, landlords anticipate 5% annual rent increases as high mortgage rates keep potential homebuyers in apartments longer.

AI Onshoring: Nvidia plans to build over 1 MSF of AI supercomputer manufacturing facilities in Houston and Dallas. The expansion aims to enable domestic production amid new tariffs on Chinese goods, with mass production expected within 12-15 months.

Delinquencies Soar: Multifamily CMBS delinquencies surged 98 basis points to 5.44% in March, up dramatically from 1.84% a year ago. Community banks saw apartment loan delinquencies jump 39% in Q4 2024, with annual loan losses soaring 126% to $691.8 million. 

Over the Borderline: Texas-Mexico border industrial markets face uncertainty amid new tariffs. The region saw trade value surge 40% to $540B last year with 18% inventory growth, but Trump's tariffs threaten to stall leasing activity in previously booming border towns.

Record Absorption: Multifamily absorption hit a Q1 record with 138,000 units absorbed in early 2025, led by Atlanta, Phoenix, and Dallas. Supply is moderating with 116,000 Q1 deliveries and 431,000 expected for 2025, down 26% from 2024, supporting projected 2.3% national rent growth.

🏆 TOP STORY
10 EMERGING MULTIFAMILY MARKETS TO WATCH

The multifamily market remained steady in 2024, despite challenges. Using the latest data on employment, deliveries, construction pipeline, occupancy, and investment metrics, researchers have identified 10 emerging small markets that overperformed compared to the U.S. average in 2024.

These 10 markets show strong growth potential as we move through 2025, even as tariffs throw a wrench into just about everything.

• Tucson, AZ, leads as the top emerging multifamily market despite having the lowest occupancy rate (92%) among the top 10. The Tucson metro saw limited employment growth at 0.7% in 2024, but delivered 2,323 units with another 2,441 under construction. Investment activity was strong, with the price per unit increasing 131.4% to $307,287, significantly outpacing the national average.

• Rounding out the top five are White Plains, NY, ranking second (boosted by NYC spillover with 97% occupancy and the highest average price per unit at $389,786), followed by Madison, WI (dropping from first place last year but maintaining 96% occupancy despite job losses), Central East Texas (benefiting from growth between Dallas-Fort Worth and Austin with 1.6% employment growth), and Knoxville, TN (showing steady progress with 1.8% employment growth and 96% occupancy).

• The rest of the top 10 features Sun Belt and Midwest markets, but starts in the South with Lexington, KY, in sixth place, bolstered by its robust manufacturing and 96% occupancy. North Central Florida comes in at No. 7 with the highest delivery volume at 3,616 units; Columbia, SC, ranks eighth with 1.6% employment growth; and Columbus, GA, places ninth with the most affordable units at $81,630, less than half the U.S. average. Lafayette, IN, caps the list at No. 10, featuring the highest occupancy at 98% and a staggering 276% increase in price per unit.

Each top 10 market represents a different state, with the Sun Belt accounting for the majority. Occupancy remained strong despite new deliveries, exceeding 95% in six markets, with Lafayette (98%) and White Plains (97%) leading the pack. Most markets saw significant price-per-unit increases, far outpacing the national average of 3.3%.

WHAT IT ALL MEANS

These emerging markets represent opportunities in areas with steady growth outside major metros. Spanning 10 states, this illustrates that investment potential exists beyond traditional hotspots, with many markets benefiting from spillover effects from larger cities. With new deliveries expected to decline in 2025, these secondary markets offer high return potential through tight occupancy and price appreciation that continues to outpace national averages.

💰 CAPITAL GAINS TAX SOLUTIONS
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Don't settle for outdated strategies. The Deferred Sales Trust advantage gives you flexibility, time, and control while allowing your wealth to compound as you slowly pay taxes over time.

But don’t wait! You must act before closing escrow. So, if you have an upcoming sale with at least $1M in proceeds or gains, let Capital Gains Tax Solutions create your personalized exit plan and calculate your savings today.

💰 CRE TRENDS
INDUSTRIAL’S BULL RUN IS WANING

Industrial has been on a heater since the post-pandemic logistics boom. Now, the sector appears to be cooling. Vacancy rates jumped 30 basis points to 7% in Q1 2025, returning to historical norms as 45 million square feet of speculative space flooded the market. Two-thirds of markets have reported rising vacancy, signaling a market recalibration after years of landlord dominance.

• Rent growth is also cooling, though still positive at 4.3% YOY but flat QOQ, with 40% of markets reporting annual declines.

• Size disparities persist, as smaller warehouses (under 100,000 SF) maintain a tight 4.1% vacancy while big-box facilities exceed 10%.

• Absorption remains positive, as the market absorbed 23.1 MSF in Q1, primarily in the logistics space.

• The construction pipeline contracted 33% YOY to 270.8 MSF.

With tariff uncertainty looming and the construction pipeline thinning, the latter half of 2025 will reveal whether this rebalancing represents a healthy correction or the beginning of a more significant market shift.

🌎 FREE LIVE EVENT WITH VINTAGE CAPITAL
LESSONS FROM 10+ YEARS IN THE MHP SPACE

Join us and our special guest on Wednesday, April 23, for a FREE live event — Lessons Learned from 10+ Years in the Mobile Home Park Space.

In this webinar, Brad Johnson, co-founder and CIO of Vintage Capital, will share invaluable insights from his experience as both an operator and allocator in the mobile home park sector.

👉 Register below to join us at 7pm EST on April 23.

🏘️ DEAL OF THE WEEK
$4.5 MILLION IN ADDED VALUE IN JUST TWO YEARS

David Lilley and his team at Reap Capital added $4.5 million in value to this multifamily property in just two years.

Here's how they did it 👇

🏢 Property Details: This 136-unit Class C multifamily property was purchased in May 2021 and is located in Dallas, Texas. It had 87.5% occupancy at the time of purchase.

💸 Finances: The property was purchased for $12.56 million. The team raised $2,252,087 in capital and secured bridge financing with a three-year term plus two additional one-year extensions at 4.35%, with a 0.75% rate cap for two years.

💼 Business Plan: The team completed value-add improvements, including a new roof, exterior paint, and landscaping. They renovated 76 classic units and replaced property management with Reap Management.

🍾 Results: The property was sold in June 2023 for $17 million, delivering a 1.86x equity multiple and 37.24% IRR. Occupancy had improved to nearly 95% at the time of sale.

👉 If you have a deal you'd like us to feature, share it with us!

🎓 EXPERT RESOURCES
FREE DOCUMENT DOWNLOAD

57 RESIDENT APPRECIATION EVENT IDEAS

Resident appreciation parties foster an inclusive community where residents engage with neighbors and management, forming deeper relationships. This leads to longer stays, better property care, on-time payments, positive reviews, and referrals. That, in turn, leads to higher occupancy, less turnover, and increased NOI. Click below for a list of 57 resident appreciation party ideas to attract and retain high-quality residents.