release edition [060]

read time [7 minutes]

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:

• Jobs: February Report Just Released
• Blue vs Red: My Contrarian Thesis Unfolding
• Leasing: What I'll Be Watching in Q2
• Weekly Listen: Jason Morgan

February Jobs

The Bureau of Labor Statistics released the February jobs report yesterday morning, and it was not pretty.

According to the initial report, the U.S. economy lost 92,000 jobs last month while economists were expecting a gain of 50,000 to 60,000.

The unemployment rate ticked up to 4.4%, from 4.3% in January.

And, the revisions of previous months made things worse.

January's headline jobs number was cut from 130,000 to 126,000. December was revised by 67,000 jobs, from a gain of 50,000 to a loss of 17,000.

With those changes, 2025 becomes the first year to record five months of labor market contractions since 2010.

Feel free to read that again.

That said, there are some distortions in the data worth considering.

First, a Kaiser Permanente nursing strike affected roughly 31,000 workers during the survey week.

Secondly, Winter storms weighed on construction and leisure/hospitality across much of the Eastern Seaboard.

Those are legitimate caveats that explain some of the weakness, but not all of it.

The honest read is that we are in what economists are calling a "low-hire, low-fire" equilibrium.

Layoffs remain low. The broad unemployment rate, which includes discouraged workers and those in part-time positions for economic reasons, actually fell slightly to 7.9%.

Wage growth came in at +0.4% month-over-month, lifting the annual rate to +3.8%, still above inflation.

The labor market is not falling apart, but it is not exactly healthy either.

And when the one-legged stool supporting this job market (healthcare employment) gets kicked over by a strike, the jobs numbers can collapse like we saw in February.

In my view, the bigger concern is the trend.

The U.S. economy has now shed jobs in five of the past nine months.

Long-term unemployment, those jobless for 27 weeks or more, stands at 1.9 million, up from 1.5 million a year ago. The average duration of unemployment hit 25.7 weeks in February, the longest since December 2021.

Today's job market is being held together by low turnover and above-trend wage growth in certain sectors, while hiring is essentially frozen in others.

Softening job creation among 20-to-28-year-olds, the core Multifamily renter cohort, was already a concern heading into the Spring leasing season, and February's jobs data potentially magnifies that concern.

Keep an eye on the March jobs report.

The Kaiser strike ended February 23rd, so there will be a one-time boost to healthcare numbers. That could temporarily flatter the March headline. Just don't let it skew your read on the underlying trends.

Summary

The February jobs report was weaker than expected on nearly every measure that matters. Distortions explain some of it, but the trend over five months is clear: Job creation may be stalling in the near-term.

Blue vs Red

In TMD 039, I made a somewhat contrarian call when I wrote that supply-constrained, regulation-heavy "Blue" markets would outperform the high-growth, business-friendly "Red" markets in today's market environment.

This has played out exactly as I expected, because it's extremely difficult for near-term demand to satisfy the overwhelming delivery of new supply over a short-term time horizon.

Boston, New York, Chicago, Philadelphia, and San Francisco are leading the country in rent growth.

The Northeast as a region is printing solid rent growth YoY thanks to limited new supply and durable renter demand.

San Francisco, which was practically written off three years ago, posted 7.4% rent growth in 2025 per RealPage data.

Chicago and Philadelphia are also outperforming their national peer set.

Meanwhile, Sun Belt markets where everyone was rushing to deploy capital in 2021 and 2022 (including Austin, Phoenix, Salt Lake City, Nashville, Atlanta) are still working through significant supply overhangs.

Austin's vacancy sits roughly 200 basis points above the national average. Effective rents have declined across many of these markets over the past 12 to 18 months.

The recovery timeline for Sun Belt Class A assets has been pushed to late 2026 at the earliest, according to CBRE.

There is nuance here. All Sun Belt markets are not created equal, and there are signs of life in specific submarkets and product types.

Cap rates in many Sun Belt markets appear to have stabilized. Investors are stepping back in, though notably at the lower end of the price spectrum.

But my contrarian thesis is still playing out the way I predicted.

The implication of this "Blue market" outperformance matters because capital is increasingly gravitating toward markets with regulatory or geographic construction limits, stable employment bases, and balanced pipelines.

The Northeast and supply-constrained coastal markets are attracting renewed institutional attention.

If you have been avoiding those markets because of their political environment, they may be worth revisiting on a case-by-case basis.

In my 2026 predictions (TMD 052), I also predicted that markets delivering more than 3% of existing stock in new supply would see flat or negative rent growth again.

The CBRE and RealPage show this trend playing out in market after market across the Sun Belt.

And my 2025 prediction of bifurcated rent growth, a double-digit spread between the top and worst performing markets, was confirmed: San Francisco at plus 7.4%, Austin at minus 8.1% per RealPage. The largest spread in at least a decade.

The market is no longer clean-cut between "Coastal versus Sun Belt", as local demand drivers, active supply pipelines, and resident demographics all merit careful consideration.

But my underlying thesis, that supply discipline matters more than business-friendliness in an oversupply era, is holding strong.

Summary

The Blue vs. Red market thesis I first outlined in TMD 039 is being confirmed by 2025 and early 2026 data. Supply-constrained coastal markets are leading the rent growth recovery, while the Sun Belt recovers.

The implication for 2026 and beyond: Submarket selection and supply discipline matter more than ever.

I've put the 2021 playbook on the shelf, and I plan to keep it there.

Spring Leasing

The Spring leasing season officially begins in late March.

In TMD 052, one of my predictions was that leasing in 2026 would mirror 2025, but in reverse: a weak first half followed by a recovery in the second half.

Everything I see so far supports the weak first half. The question is whether the 2H recovery actually materializes.

There are three things I'm watching closely heading into Q2:

1/ Occupancy versus rent growth

Multifamily owners are choosing occupancy over rent growth on new leases. This is the right trade in a soft demand environment, but it creates a gap between asking rents and effective rents that can lead to inverted rent rolls with significant gain-to-lease.

The good news is that renewal rates remain exceptionally strong, running at 57% of all leasing activity per CBRE, up from 48% in 2005 and 51% in 2015. Existing resident retention are the guardrails keeping the proverbial Multifamily train on the tracks.

2/ Concession burn-off

Concessions remain elevated in high-supply markets. The apartment REIT earnings calls from Q4 2025, per Jay Parsons' analysis, showed early signs of reduced concessions heading into spring, but I'm not so sure if this trend will hold.

As I mentioned in TMD 033, when concessions burn off, we get a moment of clarity on true market rent. Some operators are going to be surprised, in both directions.

3/ The renter demand question

February's jobs report is a yellow flag. Demand from the 20-to-28-year-old cohort, the core renter demographic, has been soft. Their unemployment rate was running at 7.4% as recently as last September, well above the 4.4% national rate. Yesterday's report did not improve that picture. If hiring among this cohort does not pick up in the next two to three months, the demand assumptions built into Q3 and Q4 projections will need revisiting.

If I had to guess, spring leasing will come in softer than typical seasonality would suggest, but not catastrophically so.

The renewal floor is real, and supply is finally receding in most markets. And the macro picture, while cloudy, is not recessionary in the traditional sense.

Strong resident retention and NOI preservation will be keys to operating Multifamily successfully in 2026.

Summary

The Spring 2026 leasing season is starting soft. The renewal floor is holding, but demand from core renter cohorts is under pressure from a weak jobs market. Hopefully my 2H 2026 recovery prediction plays out, but it's still too early to tell.

Weekly Listen

This week's listen is Episode 74 of The Rent Roll with Jay Parsons, featuring Jason Morgan, co-CEO of Morgan Properties.

Morgan Properties started in the mid-1980s when Mitchell Morgan acquired three communities in suburban Philadelphia with a dollar down. It has since grown to 110,000+ units, making it the second-largest apartment owner in the country.

Mitchell recently elevated his two sons, Jonathan and Jason, to co-CEO. Jason joined Jay to talk company origins, the Midwest buy box, and what leadership looks like under the next generation. Jay also breaks down fresh apartment sales data on where capital is returning, and where it still isn't.

You can listen to the full episode here.

Wrap Up

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

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