Archives for 2025

A Shift In Rent Dynamics

After years of rapid rent growth, construction is finally catching up to demand, reports Zillow. The US rental market is showing signs of cooling. Affordability is improving in most major metros. A key driver is the surge in new apartment completions in 2024 — the highest in any year since 1974.

The result? Renters are seeing relief not just in prices but in perks. In September, 37.3% of listings on Zillow included concessions like free rent or parking — the highest share ever recorded for the month.

Rent Growth Slows, Especially In The South And West

Multifamily rent growth has slowed to just 1.7% annually, with asking rents in cities like Austin (-4.7%), Denver (-3.4%), and Phoenix (-2.2%) declining year-over-year. These drops are most pronounced in regions with looser construction regulations. Areas like the South and Mountain West saw faster responses from developers, who were quicker to meet demand.

In contrast, cities with tighter building constraints, such as Chicago (6%), San Francisco (5.6%), and New York (5.3%), saw the largest rent increases.

Concessions Now Commonplace

With elevated vacancy rates and cooling demand, property owners are turning to incentives instead of cutting rents. Nearly 4 in 10 rentals on Zillow offered some type of concession in September. That’s up from 14.4% in 2019 and 35.8% in September 2024.

Cities seeing the biggest year-over-year jump in concessions include Memphis (+10.9 percentage points), Denver (+10.6 pts), and Houston (+9.4 pts). However, as competition for tenants continues to slow into winter, experts suggest price cuts could soon follow.

Single-Family Rentals Feel The Slowdown Too

Even single-family homes — a segment that had been more insulated from market shifts — are showing signs of deceleration. Annual rent growth for single-family homes slowed to 3.2% in September, the weakest since 2016. Monthly rent declines were recorded in 22 of the largest 50 metros, led by Providence (-1.2%) and Seattle (-0.7%).

Affordability At A Four-Year High

Nationally, a new lease now requires 28.4% of the median household income, down from 28.8% a year ago. That’s the most affordable reading since 2021 and below the 30% threshold often used to define a housing cost burden.

Rent affordability improved year-over-year in 38 of the 50 largest US metros. The biggest gains were seen in Denver, Austin, Miami, San Antonio, and Phoenix — all cities that have added substantial rental supply.

The most affordable large metros in September included Austin (18.2% of income), Salt Lake City (19.5%), and Raleigh (19.7%). On the flip side, New York (40.6%), Miami (38.6%), and Los Angeles (35.5%) remained the least affordable.

What’s Next

More inventory is still set to hit the market, and the labor market remains soft. As a result, rent growth is expected to stay subdued through the rest of 2025. Concessions will likely remain high through the winter. If demand doesn’t pick up by spring, landlords may start offering broader rent reductions.

Despite a 2.6% annual increase in the income needed to afford the typical rent, the surge in supply is beginning to chip away at the rental affordability crisis — at least for now.

Source: “Rental Affordability Rises As Rent Growth Slows“

Investor Demand Remains Strong—For Now

Multifamily investment activity is rising again, according to industry leaders at a recent Mortgage Bankers Association (MBA) roundtable, reports GlobeSt. Chad Musgrove of M&T Realty Capital Corp. said spreads on multifamily loans have tightened. Current pricing falls in the 200–250 basis point range for moderate-leverage deals (65–70%). Higher leverage loans are seeing spreads in the 275–325 basis point range.

The capital influx is largely being directed at newer, stabilized properties, especially those transitioning out of construction loans and into lease-up financing. Value-add opportunities remain viable but only when backed by experienced operators and strong equity positions. Musgrove expects this investor enthusiasm to carry into 2026, particularly if interest rates trend downward.

But Credit Stress Is Mounting

Despite strong capital inflows, cracks are showing in the multifamily market. Delinquencies and distress are rising rapidly, especially among non-agency multifamily CMBS loans. Robert Grenda of KBRA noted that the delinquency rate in this segment jumped from 3.33% in September 2024 to 6.59% recently. Including specially serviced loans, the multifamily distress rate now sits at 9.87%—behind only office and mixed-use assets.

The root causes? A surge in new supply, declining net absorption, and a spike in operating costs. Between 2011 and 2024, new multifamily deliveries increased from 45K to over 300K units annually. Yet demand has cooled. First-quarter 2025 absorption was less than half of the same period a year earlier, signaling a potential oversupply in some markets.

Shift In Loan Composition Reflects Sector Sentiment

The rising share of multifamily loans in CMBS conduit deals suggests shifting investor priorities. According to 3650 Capital’s Malay Bansal, multifamily loans accounted for 27% of conduit issuance in the first nine months of 2025—up from just 9% in 2023. Occupancy has stabilized at 92%, boosting confidence, though fundamentals remain uneven.

Notably, older, rent-regulated properties are experiencing the most distress. As expenses rise faster than regulated rent growth, these assets are increasingly under financial pressure—a trend lenders are watching closely.

What’s Next

Multifamily remains a favored asset class for many investors, especially as fundamentals recover in newer, high-quality properties. However, rising delinquencies and a glut of new supply are reshaping risk profiles—forcing lenders and borrowers alike to be more selective.

The sector’s future hinges on the delicate balance between capital availability and operational performance, with 2026 poised to be a pivotal year.

Source: “Multifamily Distress Escalates Amid Rising Capital Inflows“

In today’s market, tenant improvement allowances (TIAs) can be the difference between winning and losing a long-term, creditworthy tenant. They streamline the move-in process, provide tenants with space that fits their needs, and give landlords a competitive edge over comparable properties.

The challenge: high costs and long timelines have made TIAs less attractive for owners, while tenants continue to face buildout budgets that strain balance sheets.

A new approach addresses these issues head-on, offering a smarter way to fund improvements that works for both landlords and tenants.

The Hidden Cost of Tenant Improvements

Inflation, tariffs, and supply chain disruptions have pushed the cost of tenant improvements, as well as furniture, fixtures, and equipment (FF&E), to new highs. Add high interest rates to the mix, and the cost of getting a property move-in ready can be intimidating.

To attract tenants, landlords have typically had limited choices: dip into reserves, raise equity, delay occupancy, or tap credit lines that tie up capital better spent on operations and growth.

A new approach changes this equation, allowing landlords to remain competitive without capital calls while providing tenants the flexibility to spread payments across longer terms.

The Challenge for Landlords

With valuations softening and occupancy under pressure, landlords need flexible ways to attract and retain creditworthy tenants. Concessions like free rent and TIAs can help, but often come at a steep cost.

Traditional funding methods—equity, bank loans, and credit lines—are not only expensive but also slow to arrange. The restrictions on how funds can be used add another layer of difficulty, often prolonging vacancies and limiting options for repositioning space.

The Challenge for Tenants

Tenants face many of the same obstacles. Buildout and equipment costs frequently exceed budgets, creating financial strain. Traditional financing options are inflexible, weigh heavily on balance sheets, and slow down the move-in process, delaying revenue generation and disrupting business plans.

These high upfront costs often force tenants to compromise, settling for cheaper space in less ideal locations. While pandemic-era vacancies drove TI allowances higher beginning in 2020, those offerings have since declined, leaving tenants with fewer options at a time when construction and financing costs remain elevated.

A Faster, Flexible Funding Model

The Dolfin TI Lease offers unsecured, non-recourse financing for tenant improvements, equipment, and FF&E. Key features include:

• Funds 100% of TI and equipment costs.
• Fixed rates amortized over the entire term of the tenant’s lease (5 to 20+ years).
• Available across all industries (industrial, healthcare, professional services, retail, etc.)
• Offers much faster execution than traditional financing options with its simple 5-page lease.

Dolfin even offers a unique sale-leaseback option that lets landlords and tenants recoup funds already invested in tenant improvements, freeing up trapped cash for other priorities.

Competitive Advantage for Landlords

With the Dolfin TI Lease, landlords can deliver turnkey space without tapping equity or reserves. Capital can instead be directed toward higher-yielding opportunities.

The Dolfin TI Lease streamlines negotiations and accelerates closings, helping landlords bring tenants into turnkey space more quickly. The ability to quickly repurpose a space also expands the range of tenants a property can attract, strengthening competitiveness in markets where occupancy is under pressure.

Competitive Advantage for Tenants

Traditional TI financing often ties up working capital and limits growth. The Dolfin TI Lease provides 100% financing for past, present, and future buildouts, allowing tenants to preserve cash and credit lines for priorities like hiring, expansion, or R&D.

With long-term unsecured capital and funding available in as little as 30 to 60 days, tenants can move in faster, stabilize operations, and focus on growth rather than balance sheet strain.

Who Benefits Most?

The Dolfin TI Lease is designed for landlords and tenants with specific needs:

• Landlords competing in markets where occupancy is slipping and incentives make the difference
• Growth-focused tenants with $100 million+ in revenue and $20 million+ in EBITDA facing buildout constraints
• Finance leaders—CFOs, corporate real estate heads, and treasurers—seeking efficient balance sheet solutions

The Dolfin Advantage

The Dolfin TI Lease makes tenant improvement funding faster, simpler, and more flexible.

Key Terms:

• Funding: $2 million to $300+ million
• Rates: Currently 6.5% to 9%, according to credit
• Term: 5 to 20 years or more, aligned with the property lease term
• Structure: Unsecured
• Time to close: 30 to 60 days investment grade, 60-90 days non-investment grade

For landlords, that means filling space faster and attracting tenants without draining equity or reserves.

For tenants, that means building out the right space while keeping capital free for growth, expansion, and higher-return opportunities.

Source: “A Smarter Way to Fund Tenant Improvements“