{"id":32623,"date":"2025-10-05T09:37:22","date_gmt":"2025-10-05T16:37:22","guid":{"rendered":"https:\/\/essential.construction\/news\/amid-tariff-job-and-supply-concerns-multifamily-pros-prioritize-occupancy\/"},"modified":"2025-10-05T09:37:22","modified_gmt":"2025-10-05T16:37:22","slug":"amid-tariff-job-and-supply-concerns-multifamily-pros-prioritize-occupancy","status":"publish","type":"post","link":"https:\/\/essential.construction\/news\/amid-tariff-job-and-supply-concerns-multifamily-pros-prioritize-occupancy\/","title":{"rendered":"Amid tariff, job and supply concerns, multifamily pros prioritize occupancy"},"content":{"rendered":"

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For years, apartment operators have <\/span><\/span><\/span><\/span><\/span><\/span>circled late 2025 and 2026<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a> as a time when new apartment deliveries would begin to slow, allowing them to tamp down on concessions and even increase rents in high-delivery markets.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

As expected, <\/span><\/span><\/span><\/span><\/span><\/span>new deliveries are falling<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a>. At the end of August, 686,000 units were under construction, a 20.2% year-over-year drop, and multifamily developers finished an annualized 503,000 apartments in buildings with five or more units during the month, a 28.7% YOY drop.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

\u201cSpring of 2026 is when the bulk of that [supply] is finally in the rear view mirror,\u201d rental housing economist Jay Parsons told Multifamily Dive. \u201cThat’s what everyone’s been gunning for. That’s been the light at the end of the tunnel.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

However, even with relief on the delivery front, as the final months of the year approach, the \u201cSurvive for \u201925\u201d mantra seems to be a distant memory, as economic uncertainty around things like tariffs and jobs has permeated a market still dealing with heavy supply.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

For instance, tariffs are expected to <\/span><\/span><\/span><\/span><\/span><\/span>pose a heavy drag<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a> on the economy and will slow gross domestic product growth to 1.6% this year, the Conference Board said earlier this month, noting that its Leading Economic Index fell more in August than in any month since April.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

The jobless rate rose from 4.2% in July to 4.3% in August, as the number of unemployed people sat at 7.4 million according to the <\/span><\/span><\/span><\/span><\/span><\/span>U.S. Bureau of Labor Statistics<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a>. While the numbers aren\u2019t necessarily increasing, job growth isn\u2019t taking off either.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

\u201cWe’ve certainly already seen some disruption and the potential to slow further and get down to essentially no job generation,\u201d said Greg Willett, chief economist at Dallas-based lease insurance provider LeaseLock. \u201cSo [people are] hesitant to push rents.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

General uncertainty<\/span><\/span><\/strong><\/span><\/span><\/span><\/h3>\n

Apartment rents usually rise over the summer. But that wasn\u2019t the case this year, as concessions weighed on price growth. In 2025, rents fell<\/a> for the first time<\/span><\/span> since the global financial crisis in 2010, according to Parsons. While rents only fell 0.23%, according to RealPage Analytics and Waymaker research, the negative trend created uncertainty.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

Other sources showed similar weakening. Apartment List reported the <\/span><\/span><\/span><\/span><\/span><\/span>national median rent dropped 0.2%<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a> in August to $1,400, as the rental off-season arrived. Additionally, rent prices fell 0.9% through the first eight months of the year compared to the prior-year period.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

Willet said he thinks the economy is behind these declines. \u201cWhat’s driving the demand numbers now is what’s happening in the economy and how consumers are feeling,\u201d Willet said. \u201cAre they going to readjust their spending patterns at all?\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

For some apartment owners, issues began showing up earlier in the year. On AvalonBay Communities\u2019 <\/span><\/span><\/span><\/span><\/span><\/span>second-quarter earnings call<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a>, Chief Operating Officer Sean Breslin noted that conditions around asking rents had been softer than expected in 2025.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

\u201cPrimarily, our expectation is tied to slightly weaker job growth in the first half of the year than originally anticipated,\u201d he said. \u201cSo when you start to look across the footprint \u2026 across the first half of the year, we ended up with about 100,000 fewer jobs than originally projected.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

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Apartment rents fell in summer 2025.<\/p>\n

Permission granted by Waymaker research and RealPage Market Analytics<\/p>\n

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The jobs picture in certain markets could be especially challenging for the renter-by-choice cohort that occupies higher-end multifamily properties, though Breslin noted that he potentially sees things improving on that end later in 2025.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

\u201cThe composition does not favor higher-end multifamily right now, given the weaker environment for finance, professional services [and] technology [jobs],\u201d Breslin said on the earnings call.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

Other management teams are also seeing cracks. In Southern California, COVID-19-era eviction moratoriums and general economic softness related to the national economic picture muted growth for San Mateo-based REIT Essex Property Trust.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

\u201cWe\u2019ve all experienced a lot of the noise with public policy and the lack of clarity there. And so I do think companies have been more reticent in hiring and investing, which of course impacts our overall growth,\u201d CEO Angela Kleiman said on the <\/span><\/span><\/span><\/span><\/span><\/span>REIT\u2019s Q2 earnings call<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a> in late July.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n