release edition [038]

read time [6 minutes]

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

Today at a Glance:

• Farewell: So long, Summer
• Trends: My 5-Step Process
• Weekly Listen: Jon Gray

Farewell

Finally, Summer is over. For those of us in the Multifamily sector, it was a tough one.

As Housing Economist Jay Parsons shared in his September update newsletter, this was the softest summer in 15+ years.

Jay wrote: "Effective rents over the combined core summer months (June-July-August) fell for the first time since the Great Financial Crisis.It wasn’t an especially deep cut (-0.23%), but it’s a stark departure from the normal seasonal pattern of +1% or so. Part of that rent softening came via concessions – even in stabilized properties, with average discounts soaring to the highest level (around 6 weeks “free”) since the early 2010s."

Rent growth was negative for the first time post-GFC, shown below.

If you've been reading The Multifamily Download in 2025 then this slow Summer should not come as a surprise.

I noted weeks ago in TMD 033 that much of the strong leasing demand YTD has been what I'm calling "incentivized demand", and the hidden risk is that this false-positive demand will lead to leasing headwinds down the road.

If the market stay soft as current lessees go to renew their leases then owners will have no choice but to offer renewal concessions or reduced rent (or both) in order to retain those residents.

Said differently, if the future market rent of a Class-A property is $2,000 per month, but, today's effective rent is just $1,500 when considering 12 weeks of concessions.

Yes, residents should be qualified on the full lease rent of $2,000, but just because someone qualifies today doesn't mean they'll stay in the future.

It's highly likely that those residents, if not incentivized to stay, will eventually either (a) find a better deal at a similar property if one exists, or, (b) save money by moving to a Class-B or Class-C property.

This week I was on the road with one of our institutional equity partners.

We visited 15+ properties in 36 hours across two major markets, Las Vegas and Northern California.

A few themes emerged that I thought you may enjoy reading.

1. Concessions Are Sticky.

Almost every property that we toured is offering some type of concession or move-in special (gift cards, etc.)

Community managers noted this was a drastic departure from Summers in recent memory.

Even a market like Las Vegas, which did not have excessive new supply delivered over the past few years, is noticeably soft due to slower leasing demand.

2. Traffic Is Slow.

One manager jokingly said, "Where did everyone go?", and I think it underscores the greatest headwind for operators in the Multifamily sector today.

The community managers, my team, and my equity partner's portfolios have all seen slower leasing traffic this Summer.

Fewer leads and fewer calls equals fewer tours.

This unfortunate reality highlights the importance of maintaining strong retention to preserve occupancy.

3. Prospects Are Picky.

The prospects that are touring have been extremely picky, and willing to shop.

Gone are the days of touring 1-2 properties and choosing a home in one weekend.

Prospects have been far more selective as they've been shopping multiple assets across multiple submarkets and weekends.

Hopefully the slow Summer of 2025 will be followed by a friendly Fall, but I wouldn't bet on it. Leasing typically slows with school starting, the Holidays approaching, and the weather cooling.

My teams are laser focused on driving traffic today across our entire our portfolio in an effort to lease up to 95%+ before the mid-point of Fall. To do so, we have implemented enhanced incentive programs for the leasing teams to keep them engaged.

If you own in a higher supply or cold weather market then I would highly recommend considering doubling your marketing budget for 30 days to capture as many leases as possible.

Maintaining strong occupancy is more difficult today than it has been in quite some time. Position accordingly.

Trends

Last week's TMD 037 was a deep-dive into the current state of SFR and Multifamily.

I received positive feedback along with a few questions about how I make observations amid the overwhelming volume of market data, many opinions, and wide-reaching perspectives.

This week, I thought I'd share some insight into my process for spotting and analyzing trends.

First, my favorite disclaimer: I'm not an economist and I don't pretend to be one. I'm also not a seasoned veteran, and I still have plenty to learn. So my encouragement is to take what I share and filter it through your own lens of experience and knowledge. And lastly, please provide feedback and challenge my opinions if necessary, as this will sharpen both of us.

With that in mind, here's how I spot trends.

1. Read, A Lot.

I'm not talking about chapter books. I'm talking about headlines, articles, X and LinkedIn posts, and newsletters. I consume a vast amount of information every day across social media and various CRE publications.

To do this, I have setup a few simple systems:

(a) Subscribe to CRE publications.

I receive the following in my email inbox automatically: The Daily Spark, CRE Daily, BisNow, Howard Marks, The CRE Rundown by Trepp, and RealPage Analytics.

(b) Turn on X & LinkedIn Notifications.

I have a select number of post notifications turned on so that I get notified when someone posts something on either platform. This helps me skip the algorithm to ensure that I'm seeing and reading their content in real-time.

2. Write, Privately or Publicly.

The exercise of writing this weekly newsletter and frequently posting on LinkedIn have been an enormous benefit to helping me formulate and crystallize my thinking.

I would go so far as to say that it's a cheat code, because it keeps me sharp on a recurring basis.

I can pick up the phone at anytime on any day and provide a real-time, detailed update of what's happening in both the economy and Multifamily sector.

This is an advantage to anyone in this industry, but especially to those of us that are still relatively early in our careers.

3. Consider Motives.

This is an important step in the trend-spotting process, because it serves as a filter for assessing the validity of certain perspectives.

For example, Blackstone and CBRE both called the bottom of the CRE markets in 2024.

From where I sit, it would seem that both have incentives for calling the bottom regardless of if the market bottom had actually occurred.

My point is to think carefully about what a person or company has to gain by sharing what they're sharing. (i.e. bias).

4. The Logic Test.

Next, think about one simple question: "Does this make sense?".

This is a simple, yet profound question that necessitates critical thinking and careful consideration.

I also like to ask or consider: "If this was wrong, what would be correct?"

This line of thinking leads to healthy skepticism, which is a requirement for being a clear thinker and trend spotter.

Following the herd works, until it doesn't, so refining your thinking and questioning narratives will allow for new insights.

I'm not suggesting that we should be skeptical just for the heck of it, but rather to emphasize that curiously questioning narratives is important for cultivating steadfast conviction about a market perspective or investment thesis.

5. Historical Context.

Before formulating an opinion or perspective, the last variable that I consider is historical context.

This requires both an understanding of today's outside forces, as well as past outside forces and context when a similar event was unfolding in the past. (i.e. pattern recognition).

We all know the old saying, "History doesn't repeat, but it often rhymes", and I believe this is true largely because of the human condition: humans are emotional and we have a natural bias towards self-preservation and pain-avoidance.

Layering in historical context is helpful for seeing around corners and making a higher probability guess as to what might happen next.

This was a quick overview, and I know there are plenty of ways to formulate conviction, so I hope you find these five steps helpful.

Weekly Listen

This week's listen is a recent presentation by Jon Gray, the President and COO of Blackstone.

In the presentation, Jon explores five themes: Blackstone's performance, views on the economy, the 'main thing' today, outlook for alternative investments, and where to deploy capital. This 33 minute presentation flew by and covered a ton of exceptional information.

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.

If so, would you consider sharing it with a friend or colleague?

Simply send them this link.

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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