This analysis is based on data and insights published by Cushman & Wakefield in its recent review of performance trends across its national multifamily portfolio.
Recent portfolio-level operating data from a leading national property manager highlights an important inflection point in the multifamily cycle. While fourth quarter fundamentals reflected seasonal moderation, underlying performance metrics suggest improving leasing momentum, firmer occupancy, and easing concession pressure heading into 2026.
For owners, operators, and capital providers in the multifamily real estate sector, these signals reinforce a broader narrative of stabilization after an extended period of supply-driven adjustment. As new deliveries moderate and renter demand remains resilient, performance dispersion across asset classes is narrowing, with Class A properties showing renewed leadership.
Leasing Demand Improved into Year-End
The fourth quarter is historically the slowest leasing period of the year. Even so, leading demand indicators moved modestly higher at year-end.
According to the report, contacts, visits, and applications per available unit increased collectively in December compared to the prior year. As shown in the seasonal activity chart below, contacts per available unit led the rebound, often a precursor to increased tours and signed leases in subsequent months.
This early-stage leasing activity suggests that the spring leasing season may begin from a position of relative strength. For multifamily operators, that dynamic supports more disciplined revenue management strategies, particularly in submarkets where supply pressure is easing.
Occupancy Is Firming, With Class A Leading
Occupancy trends show steady year-over-year improvement, with Class A properties outperforming. The portfolio data indicates that Class A occupancy increased by 25 basis points compared to the prior year.
The line chart below illustrates this trajectory clearly, with Class A assets trending above Class B and Class C properties by year-end. This performance is notable given the elevated supply delivered into the Class A segment over the past two years.
The improvement likely reflects multiple factors:
- Renter income growth supporting “trade-up” decisions.
- Moderating rent growth narrowing the effective price gap between asset classes.
- Improved quality and amenity differentiation in institutional-grade properties.
For investors, Class A stabilization supports asset valuations that have been under pressure from cap rate expansion and higher financing costs.
Concession Pressure Is Easing
Concessions were a defining theme of 2024 and early 2025, particularly in markets experiencing peak deliveries. However, portfolio data indicates that overall concession rates remain modest and declined in December, with total concession amounts below 2.5 percent.
The bar chart below shows a clear retreat in concession levels after a late-year uptick. Class A assets accounted for much of the prior increase and subsequent decline, reflecting their role as the primary pressure valve for absorbing new supply.
As occupancy stabilizes and absorption improves, concession burn-off becomes a critical driver of effective rent growth. For lenders underwriting bridge loans, agency executions, or CMBS transactions, lower concession assumptions can materially impact debt service coverage ratios and valuation support.
Trade-Out Trends Signal Improving Resident Confidence
Lease trade-outs, which measure the rent change between expiring and new leases, slowed through much of the fourth quarter before improving in December.
While new lease trade-outs remained negative, Class A assets outperformed other classes, and overall trade-outs remained positive across the portfolio, led by Class A performance. The comparative line charts below demonstrate Class A’s relative strength across both new and renewal lease activity.
Renewals and overall trade-outs followed similar patterns, suggesting that existing residents are accepting modest increases as economic uncertainty recedes.
From a capital markets perspective, stabilizing trade-outs enhance income predictability. For borrowers pursuing refinancing, this trend supports improved underwriting visibility and greater lender confidence in forward cash flows.
Strategic Implications for Multifamily Owners and Borrowers
The combination of improving leasing demand, firmer occupancy, and easing concessions points toward a transitional phase in the multifamily market cycle.
Key implications include:
1. Revenue Management Discipline Is Returning
Operators may have greater flexibility to reduce aggressive concessioning strategies and focus on optimizing effective rents.
2. Class A Assets Regain Competitive Positioning
Improved occupancy and trade-out performance in Class A properties reinforce institutional demand and capital allocation toward stabilized core and core-plus strategies.
3. Underwriting Assumptions May Normalize
As concession pressure declines and occupancy stabilizes, lenders may recalibrate stress assumptions embedded during the peak supply cycle.
4. Portfolio Performance Dispersion Narrows
While market-level variation remains significant, asset class performance gaps appear to be tightening, reducing volatility across diversified portfolios.
Market Outlook
Multifamily fundamentals appear to be transitioning from supply-driven disruption toward normalized operating conditions. Although risks remain, including interest rate volatility and localized oversupply, portfolio-level data suggests that the sector is regaining balance.
For sponsors evaluating acquisition, recapitalization, or refinancing strategies in 2026, disciplined asset management and thoughtful capital structuring will remain critical. As income stability improves, capital stack optimization becomes increasingly important in preserving and enhancing equity returns.
Key Takeaways
- Leasing demand indicators strengthened into year-end despite seasonal softness.
- Class A occupancy improved year over year, leading the recovery across asset classes.
- Concession levels declined in December and remain relatively modest overall.
- Lease trade-outs and renewals are stabilizing, with Class A assets outperforming.
Collectively, these trends signal a multifamily market that is stabilizing and preparing for a more balanced growth environment.
The information provided in this article, including, without limitation, any opinions, predictions, forecasts, commentaries or suggestions, is for informational purposes only and should not be construed to be professional or personal investment, financial, legal, tax or other advice.