Q&A with Berkadia’s Hilary Provinse: Navigating the Multifamily Investment Landscape in 2025

With multifamily investment continuing to evolve against a backdrop of higher-for-longer interest rates and overall volatility, industry experts are keeping a close watch on emerging trends. Following Berkadia’s recent reports, Multifamily Investor Sentiment Survey and Multifamily Powerhouse Poll Outlook, Hilary Provinse, Berkadia’s EVP – Production and Capital Markets, shares additional insights on investor sentiment, current trends, and what to anticipate for multifamily in 2025.

Q: It sounds like investors, mortgage bankers, and investment sales advisors seem optimistic about the multifamily sector. What’s driving this positive outlook?

A: Investors favor multifamily investments for their long-term growth potential buoyed by population growth and demographic trends. In fact, 65% of investors plan to increase their multifamily allocations this year, reflecting enduring confidence in the sector.

A major driver of this confidence is the continued supply-demand imbalance, with 63% of investors believing renter demand will outpace new apartment supply in 2025. The U.S. structural national housing shortage, combined with steady population growth is keeping multifamily a top asset class for both institutional and private capital investors.

Despite the volatility in the capital markets, we are seeing a flight to quality with investors favoring durable cash-flowing investments with Core, Core-Plus, and Value-Add profiles. We have also seen some of the most iconic investors hunting for portfolios. Over the past few years, private investors have dominated, but that’s starting to shift as institutional capital moves off the sidelines. Investors with a greater risk appetite are pursuing distressed and recapitalization opportunities, while others are increasingly allocating capital into an array of different types of debt strategies, capturing strong yields without taking on “equity” like risk.

Q: How are investors responding to the current rate environment?

A: Investors are closely monitoring treasury yields and interest rates, especially amidst current market conditions. The Federal Reserve has signaled their bias to keep interest rates higher for longer, especially as tariff uncertainty elevates inflation concerns. Volatility driving uncertainty has impacted both investment transaction and financing activity. When we see relative “stability” in treasury yields, we see an uptick in both transaction and financing activity.

There is a lot of price discovery underway as clients strive to better understand their cost of capital, and the market is expected to remain volatile through 2025, with elevated interest rates likely to persist. Some analysts are predicting the 10-Year Treasury could stay around 4% for the foreseeable future, but rather than rely on predictions, we provide our clients with real-time insights they need to navigate today’s challenging market with confidence.

Q: Do investors generally see eye to eye with Berkadia’s producers on the multifamily landscape?

A: Both investors and Berkadia’s producers recognize how resilient and attractive the multifamily sector is. We are seeing players shift their allocation out of other commercial real estate asset classes into multifamily for various reasons, including offering more liquidity, asset class performance, and fundamentals. However, there can be differences in risk tolerance and strategy. As a result, investors are playing up and down the capital stack

Our producers act as advisors first and foremost, always prioritizing our clients’ interests. We don’t just have a single perspective on the market, we work closely with our clients to understand their investment strategies in great detail, then identify opportunities that align with their strategies. It’s about tailoring capital solutions in a bespoke manner rather than pushing a one-size-fits-all approach.

Q: How are investors tackling financing in 2025?

A: Debt financing is abundant, but the real challenge lies in selecting the optimal lender, structure, and terms that are accretive to leveraging returns. CLO executions are on the rise, debt funds remain popular, banks have resumed lending, life companies are actively lending, and Freddie Mac and Fannie Mae (the multifamily GSEs) continue to provide significant liquidity to the multifamily sector. Given the competitive landscape, borrowers don’t have a shortage of options and are strategically aligning financing solutions to best suit their strategy and investors.

Q: Any final thoughts on what’s ahead for multifamily investment in 2025?

A: Investors like clarity, therefore, we see investors taking a more disciplined approach to investing today. They are being selective, but capital is still moving, albeit at a slower pace. Multifamily remains one of the more desired asset classes, presenting abundant opportunities for those approaching the markets opportunistically. Key dynamics driving this outlook include the ongoing supply constraints due to declining new construction starts, strong absorption rates, and single-family headwinds.

We believe multifamily is set to outperform expectations, especially around rent growth, in the next few years. Additionally, the role multifamily plays in investors’ portfolios as an inflation hedge enhances its appeal in this shifting economic landscape. Expect more portfolio and M&A activity to come as the year unfolds with investors positioning and preparing for the next real estate cycle.