🔥 The rental market is heating up. Here's where.

👋 Hello, Best Ever readers! It’s Juneteenth, the day we honor the effective end of slavery in the U.S. If you don’t know the story, here’s a super quick read.

In today’s newsletter, rental markets heat up, Trump vs. energy, opportunity zones get a lifeline, renting gets expensive, and much more.

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Let’s CRE!

🗞️ NO-FLUFF NEWS
CRE HEADLINES

⚡ Energy Fallout: President Trump's rollbacks of federal energy efficiency programs will likely increase multifamily utility costs by billions, hitting tenants with higher energy bills while creating compliance challenges for landlords managing energy standards.

🤠 Texas on Top: Houston leads Texas apartment markets with a net demand surplus of 8,034 units, ranking second nationally behind New York. Dallas, Houston, and Austin all ranked in the top five nationally for demand, while Dallas achieved a 3,500-unit surplus.

💰 Big Opportunity: The Senate Finance Committee's tax bill would make opportunity zones permanent with new designations every 10 years starting in 2026. The program provides tax benefits for investments in distressed communities across 8,764 census tracts nationwide.

⛅ Southern Slowdown: Southern apartment occupancy fell 170 bps to 94.8% in May, sitting 80 bps below the national average. San Antonio posted the lowest nationwide occupancy at 93.1%, with 12 of 15 worst-performing markets located in the South.

📉 Office Shrinkage: U.S. office supply will contract in 2025 for the first time in 25 years as demolitions and residential conversions accelerate. Office inventory is expected to lose 23.2 MSF while adding only 12.7 MSF of new space.

🏆 TOP STORY
THE NATIONAL RENTAL MARKET IS HEATING UP

The national rental market is becoming more competitive, with the Rental Competitiveness Index (RCI) score reaching 74.6, according to RentCafe. With more renters choosing to stay put rather than move, the tight market is driven by high lease renewal rates of 63.8% (up from 62.4% last year) and limited new construction, despite 2024 seeing peak apartment development.

Miami has emerged as the nation's hottest rental market with an RCI score of 96.7 — 22.1 points above the national average — driven by apartments filling in just 36 days, each vacant unit attracting 21 renters (double the national average), and 74.7% of renters renewing leases, pushing occupancy to 96.6%. The city continues attracting corporations, startups, and wealthy individuals.

Here’s a snapshot of what’s happening across the nation:

• Florida leads all regions with an RCI of 80.9, driven by retirees and younger professionals attracted by job opportunities and tax benefits. Broward County ranks third nationally (RCI 85.0), while Orlando and Tampa remain highly competitive despite increased construction.

• The Midwest holds strong as the second-most competitive region, with Suburban Chicago maintaining its No. 2 national ranking (RCI 85.1), though Miami has widened the gap significantly. The region benefits from diverse economies and relative affordability compared to coastal markets.

• California markets tightened following the devastating wildfires, with Los Angeles seeing lease renewals jump 5.1%, one of the highest increases nationally, as displaced residents compete for limited housing. Silicon Valley and San Diego also saw increased competition despite modest supply growth.

• The Northeast maintains seven spots in the top 20, with Manhattan's RCI surging 8.4 points as the city's post-pandemic recovery accelerates.

Houston emerged as the top trending market, with its RCI score jumping 10.4 points to 75.3, driven by oil industry strength and reduced new construction. Charleston, SC, followed as the second-fastest riser, benefiting from major corporate investments, including Google's $2 billion data centers.

THE BOTTOM LINE

The 2025 rental season reflects a fundamental shift toward a supply-constrained market where renters are increasingly staying put, creating intense competition for the limited available units. This trend particularly benefits landlords in tier-one markets like Miami, while emerging markets like Houston present new investment opportunities.

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💰 CRE BY THE NUMBERS
RENTING VS. BUYING, MULTIFAMILY ABSORPTION, AND MORE

🏠 71% 

Qualifying to rent required 71% of median U.S. household income in 2023, nearly double the 37% needed in 2004. The housing affordability crisis drives rental demand as homebuying requires 152% of median income, benefiting multifamily properties in lower-cost markets.

📈 100,600 

Multifamily net absorption reached 100,600 units in Q1 2025, the highest first-quarter total since 2000. Strong tenant demand outpaced new completions for the fourth consecutive quarter, driving vacancy rates below historical averages to 4.8%.

📉 1.7% 

U.S. multifamily asking rents fell 1.7% YoY in May, marking the 22nd consecutive monthly decline. Trump administration policies on international students dampened rent growth, while steel tariffs may reverse declines as construction costs rise.

📊 -46 bps 

Multifamily CMBS delinquencies fell 46 bps to 6.57% in May, while special servicing rates dropped 17 bps. Multifamily loan performance improved significantly despite overall CRE distress rising across multiple lending sources.

🏗️ 4.7% and 1.5% 

Single-family permits declined 4.7% YTD through April to 320,259 units, marking the fourth consecutive month of declines. Multifamily permits fell 1.5% as residential construction slows nationwide, with Houston and Dallas leading despite overall weakness.

🏘️ DEAL OF THE WEEK
$525,000 PROPERTY PROJECTED TO 2X IN VALUE

Andrew Freed and the team at Freedom Management recently closed on this nine-unit deal in North Adams, Mass., which is projected to double in value after CapEx improvements.

Here's how they’re doing it 👇

🏢 Property Details: This purchase includes two side-by-side multifamily properties, a five-unit and a four-unit, located in North Adams, Mass.

💸 Finances: These properties were purchased for a total of $525,000, which was fully funded with the proceeds of a refinance Andrew and his team did of an 11-unit building they own just a block away. No out-of-pocket capital was required.

💼 Business Plan: The team is planning to invest $260,000 to fully renovate six of the units and upgrade the electrical, heating systems, decks, foundation, and plumbing.

🍾 Results: Once the renovations and upgrades are complete, the team projects that the property valuation will increase to $1.1-1.2 million while grossing at least $15,000 monthly in rent, resulting in serious equity and strong cash flow.

💪 Takeaways/Learnings: "It’s a big lift, but it’s going to be a beauty once it’s stabilized,” said Andrew. “The kicker? We bought it with zero out-of-pocket capital — fully funded by the refi proceeds from an 11-unit building we own just a block away. That’s how you stack real estate.”

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

🎓 EXPERT RESOURCES
FREE DOCUMENT DOWNLOAD

4 NON-OBVIOUS WAYS TO RAISE MONEY FOR YOUR DEALS

Most strategies for raising capital are pretty straightforward at this point. But there may be tactics you haven’t yet uncovered or aren’t even aware you’re using. Here are four not-so-obvious ways to increase your money-raising efficiency.