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Welcome to The Multifamily Download, a weekly newsletter where I provide institutional insights to help you build an exceptional Multifamily career.

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Today at a Glance:

• ULI: 2026 Emerging Trends
• Weekly Listen: Howard Marks

Emerging Trends

The annual ULI / PWC Emerging Trends in Real Estate report was released this week.

This report is viewed as the 'gold standard' by many in the institutional Real Estate world.

Today's newsletter will highlight a few components of the report related to Multifamily, or that I found interesting.

Note: You will find links to the 2026 Emerging Trends in Real Estate report at the bottom of today's newsletter.

As I've written about on more than one occasion, I'm learning that one of the most important variables to success in the Multifamily business is knowing how to skate where the puck is going.

I hope this newsletter makes you a better skater in 2026.

Before we jump in, I want to extend a special thank you to Paul Fiorilla for writing the Multifamily content in Chapter 2 in this year's report.

The 2026 Emerging Trends in Real Estate report has five primary sections:

• Introduction
• Navigating The Fog
• Property Type Outlook
• Markets to Watch
• Emerging Trends in Canadian Real Estate

Let's dive in.

Introduction

To set the stage and offer context, I think it's important to preview the types of respondents.

Below is a breakdown that shows the concentration by industry sector (top) and title (below) of the respondents.

Nearly 60% of the respondents are owners/developers (33.2%), advisors / asset managers (18.6%), or private equity investors (8.0%) with more than 64% of respondents holding either a title of either C-Suite (47.0%) or Vice President (17.3%).

While these credentials are helpful, I would caution you against over-indexing on either the information in the report or on my analysis and opinions below.

Please do your own research and evaluate the information through your own experience and expertise.

Independent, critical thinking is essential for creating enduring success in the Multifamily investment business.

Navigating The Fog

The report begins by highlighting the prevalent uncertainty in today's macroeconomic and geopolitical climates.

Looking forward to 2026, tariffs, migration, and interest rates were all on respondent's minds.

If you'd like to dig into the literary commentary then I would encourage you to review the report at your leisure.

My favorite quote from this section is below from an independent real estate consultant.

The perspective above underscores the reality that is ahead of us: Investing in Real Estate successfully is done both locally and hyper-locally.

It has always been this way, and I believe this will become readily apparent in 2026 as the tide goes out on many unsuspecting 2020-2022 bridge borrowers with loan maturities.

I also think it's worth noting that there are many topics or quotes in this section of the report that I would caution you against immediately accepting as fact.

Most notably, it feels premature to conclude that tighter immigration policies will inevitably lead to labor shortages and lower economic growth (see page 23).

For example, I've heard anecdotally that some homebuilders and general contractors have reported the opposite; that labor is pricing more competitively due to the supply-side scarcity of new projects resulting from diminished demand for new housing.

Also, as a thought exercise, what if, perhaps, native born workers are able to re-enter the workforce amid a productivity boom and the output per worker actually increases on a GDP basis due to the combination of lower remittances, more domestic spending, and increasingly higher tax revenues?

Yes, lower immigration or net-emigration impacts both supply and demand, but these impacts are not, cannot, and should not be distilled into "if this, then that" conclusions, as I allude to above.

Economists and market watchers have been wrong about many of the current administration's economic policies thus far. (This is not a political statement, but rather an observation of the facts as they play out in real time).

The reality is this:

Economics is multi-variate, and anyone that concludes something on an "if this, then that" basis should be questioned or studied further, in my opinion.

Spotlight: Demographics

As I wrote about yesterday on LinkedIn, demographics will define the next decade plus for Real Estate in the U.S.

I thought the below points were interesting, because they touch on the reality ahead of us in housing, but they fail to convey the full picture.

My thoughts on Topic 1:

Yes, in theory, delayed household formation creates pent-up housing demand, but the argument could also be made that these young adults living at home will leapfrog from their parents/grandparents, to their own place, and then to new household formation far more quickly than they would have if they'd moved out in their early 20s and remained single living on their own for longer. So, this trend could actually be deflationary for housing demand.

My thoughts on Topic 2:

Also, it's true that baby boomers will drive a major housing shift, but not in the way the below describes. It's no mystery that the wealthiest cohort in America are in the third phase of their lives (i.e. aged 65-90). This age cohort benefited greatly from the fruitful combination of a downtrend in interest rates since the late 1970s, accelerating technological innovation, and currency debasement that all drove their asset values higher.

As a result, I'd be willing to bet that many with 2nd, 3rd, 4th homes are owned by this age cohort. So, what happens when they pass away and these homes are left to middle-aged heirs with a stepped-up basis? I'll tell you what happens: They get listed and sold as fast as possible tax-free. This phenomenon will put deflationary pressure on housing prices over the next 10-15 years.

Property Type Outlook

Alright, let's get into the meat & potatoes of today's newsletter: Multifamily in 2026.

Below are the recent annual rankings of various asset classes in Commercial Real Estate.

Multifamily is highlighted on page 57, and opens with the headline, "Affordability Shapes Multifamily Trends", and I completely agree.

Prospects are searching for value, and operators are searching for prospects. This is leading to downward pressure on effective rents in many higher supplied markets, and these headwinds are going to persist into 2026.

There is real uncertainty permeating the market today in Q4 2025. On the heels of a sluggish Summer leasing season and amid an uncertain labor environment, many would-be 2025 buyers are pausing and rethinking their investment thesis heading into 2026.

As I shared here in my preview of this report on LinkedIn on Thursday, one quote stood out among the rest:

Also noteworthy is the inverse relationship between supply and rent growth.

If you are investing in a higher supply market (which I define loosely as 3% or more of existing stock under construction), then I would advise you do the following:

• Generate 40-50% of your total return through cash flow
• Trend income growth in a defensible, data-driven manner (Costar, Axiometrics, Yardi, etc.)
• Stabilize on an untrended basis at least 100 basis points above today's market cap rate

The above requires a unique combination of competitive cost basis (to produce cash yield), hyper-local supply balance (to trend income growth defensibly in a non-zero manner), and embedded loss-to-lease (to generate NOI growth outside of relying on organic growth).

Conversely, investing in supply constrained markets requires much of the same, but allows for a less stringent approach to each of the three variables above, since they have a combined synergistic impact on overall returns.

Tighter supply markets typically have strong income growth, and investors are willing to pay for access to that future growth, which translates to tighter cap rates and therefore a larger proportion of overall returns from profits (versus cash flows).

Below are the aggregated recommendations from the respondents to buy vs hold vs sell the various niches in Multifamily based on their outlook for 2026 (top) and their opinions of current apartment pricing (bottom).

A few noteworthy observations:

1. Student housing has the strongest "Buy" rating at 56.2%. I find this surprising given the early-innings A.I. boom, exorbitant prices for U.S. colleges and universities, and accelerating online education.
2. Lower-income apartments are the lowest "Buy" rating at 41.6% but the second highest "Strongly Buy" rating at 15.7%. This highlights the love/hate view of this niche in the Multifamily sector.
3. High-income apartments are the most efficiently priced today with 70.6% of respondents offering a "Fairly priced" rating.
4. Senior housing has both the highest "Strongly Buy" rating of 23.6% and the most "Underpriced" rating of 17.4%. Does this sound like selection bias?
5. Moderate-income apartments have the strongest "Hold" rating at 38.9%. This is interesting as this segment serves the "missing middle" of the population; that is, those that are not quite paycheck-to-paycheck, but also may not have great prospects of future homeownership. I interpret this as the "safe middle", benefiting from struggling Class-A renters that recede to Class-B, and ambitious Class-C renters that filter up to Class-B. Of course, this "Hold" rating could be biased due to other factors like investment vintage, underwater basis vs market value, and existing non-matured debt.

While Supply has been the story of 2025, as I predicted in both TMD 002 and TMD 003 in January (excerpts shown below, respectively), I think Demand will be a central theme in 2026.

Developers will become desperate to complete lease-up efforts, B- and C-Class operators will focus on retention and NOI preservation, and assets in supply constrained markets with steady employment will outperform.

(But I'll save my complete 2026 predictions for a future newsletter).

The wildcard in Multifamily in 2026 could be the Capital Markets.

Currently, debt is extremely plentiful and competitive, and Equity is readily available for the right risk-adjusted investment opportunities.

It logically follows that, because of the vast amounts of available capital across the capital stack, that the price floor for Multifamily will remain relatively elevated.

The variable, then, will be if the debt or equity markets pull back amid any domestic or macroeconomic shocks (labor, trade, geopolitics, capital rotation, war, etc.).

While these potential shocks are unknown and unknowable, I would expect the Capital Markets to remain healthy in 2026.

The 2026 Multifamily outlook conclusion is fitting, titled "Weak Growth but Stable", with Paul writing the following:

Markets to Watch

The table below shows the top-30 markets for "Overall Real Estate Prospects."

A few markets worth double-clicking into:

1. Dallas: Unchanged from 2024, Dallas still ranks as the top market in the report "due to accessibility, low cost of living, and ease of doing business."
2. Jersey City: Up from 19 to 2 on this list, Jersey City offers "access to top talent, investors, and global markets while maintaining a more affordable and scalable business environment." Also noteworthy that multifamily vacancy is just 2.8% with 2.4% YoY rent growth (double the National average) despite adding 20% of stock over the past 5-years.
3. Salt Lake City: Down from 9 to 23, Sale Lake City has been pummeled with new Multifamily supply over the past 24 months, which has improved affordability but hurt the outlook as an investible Multifamily market in the short-term.
4. Orange County: Up from 29 to 18, Orange County is home to a supply constrained Multifamily market, a quazi-monopoly by the Irvine Company, and wildly unaffordable home, putting upward pressure on Multifamily rents and single family affordability.
5. Austin: Recently rated a "Super Nova" market in this annual report, Austin has fallen from a perennial top-5 market to 30 on this list. The lesson: Please take these market rankings with a few grains of salt.

This newsletter has already exceeded 2,000 words, so I'm going to stop here.

If you've read this far then chances are that you're going to enjoy reading the full report.

You can access the 2026 Emerging Trends in Real Estate Digital report here or the PDF here.

Enjoy!

Weekly Listen

This week's listen is a monologue reading by Howard Marks of his latest Memo, titled "Cockroaches in the Coal Mine".

In it, Howard considers how recently publicized credit problems serve as a reminder that the yield premium offered by sub-investment grade credit isn’t a freebie, but rather compensation for bearing credit risk. While good times lead to complacency and elevated risk tolerance, bad times expose the results of that carelessness. Howard emphasizes that it’s essential to always balance the desire to put money to work with the need for prudence.

Howard's Memos are full of quality reminders about psychology, behavior, and emerging patterns. Enjoy!

You can listen to the full episode here.

Wrap Up

That's it for this week. I hope you found this edition of The Multifamily Download insightful and enjoyable.

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I always welcome your feedback. Reply and let me know what you'd like to see in the future.

Thanks for reading. See you next week!

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