Key Highlights:
- Demand remains strong: The net absorption to completions ratio strengthened to 1.42, more than double the rate in the fourth quarter of 2024.
- Investment momentum builds: Nearly 400 properties sold for at least $25 million in the first half of 2025, up nearly 16% from the same period of 2024 and nearly 5% from the first half of 2023. Institutional demand for large assets remained robust, driving price-per-unit gains.
- Gateway markets rebound: High barriers to development, elevated homeownership costs, and a return-to-office trend fueled stronger operating conditions in gateway markets like New York, San Francisco, and Chicago.
- Vacancy stable, rent growth slows: National vacancy held steady at 5.3% in Q2 2025, but rent growth decelerated slightly to 0.2% year-over-year as new supply temporarily weighs on fundamentals.
- Macro backdrop shifts: Slowing job growth and moderating inflation prompted the Fed to cut rates in September 2025, with further reductions expected by year-end, adding some clarity to the near-term investment outlook.
