Feedback from the Pipeline

By Hunter Graul

The multifamily real estate markets in Texas, Colorado, and Utah are exhibiting varying dynamics in Q1 2025, shaped by supply trends, transaction activity, and investor sentiment. While some markets are showing resilience with steady deal flow, others face liquidity constraints, distress opportunities, and valuation uncertainties. Below, we provide a data-driven breakdown of the current state of these markets, highlighting transaction volumes, new supply pipelines, and evolving investor appetite.

Austin, TX: Market Saturation & Transaction Slowdown

• Transaction Pipeline: Down 40% YoY, with liquidity challenges across all asset classes.
• New Supply: Over 18,500 units delivered in 2024, with another 15,000+ units expected in 2025—surpassing demand growth.
• Rent Trends: Negative rent growth of -2.8% YoY as landlords increase concessions to attract tenants.
• Investor Sentiment: Hesitant, particularly for Class B and C assets, which are struggling to attract buyers.

Austin’s multifamily market remains oversupplied, particularly in the class A segment, leading to rising vacancy rates (currently hovering around 14% in some submarkets). Transaction volume has declined significantly as buyers and sellers struggle to align on pricing. The few deals closing are mostly newer Class A properties, with older assets seeing minimal interest due to rent stagnation and increased capital expenditure requirements. The short-term outlook suggests continued distress, with potential value-add opportunities emerging in mid-to-late 2025 as pricing adjusts and we work through the oversupply.

Dallas-Fort Worth, TX: Steady Activity Amidst Balanced Growth

• Transaction Pipeline: Moderate but stable—one of the most active U.S. multifamily markets.
• New Supply: 22,000 units delivered in 2024, with 19,000 units planned for 2025, but absorption rates remain above 80% due to strong in-migration.
• Rent Trends: Positive rent growth of 1.9% YoY, supported by job expansion and population growth.
• Investor Sentiment: Remains strong, particularly for stabilized Class A and value-add Class B assets.

Dallas-Fort Worth continues to attract investors due to its diverse economy, population influx, and relative affordability. While the metro is supply-heavy, its pace of deliveries is more manageable compared to Austin and San Antonio. Cap rates range from 5% to 5.5% for institutional-quality properties, with suburban submarkets such as Frisco, McKinney, and North Fort Worth drawing increased investor attention and stiff competition.

San Antonio, TX: High Distress Levels, Especially in Class B & C Segments

Transaction Pipeline: Up nearly 30% YoY, driven by distressed sales.
New Supply: 6,845 units under construction (down 29% from the 10-year average), signaling a cooling in development.
Rent Trends: Flat YoY growth due to absorption struggles.
Investor Sentiment: Active interest in distressed Class B and C properties, as well as opportunities to acquire Class A assets below replacement cost.

San Antonio has emerged as a leading market for distressed multifamily opportunities. Investors have shown interest in acquiring Class A properties at 15-25% discounts from peak valuations, while Class B and C assets face the most pressure. Occupancy rates in some submarkets have dipped below 90%, leading to lender pressure and forced sales. Given the pricing dislocation, we see an opportunity to capitalize on distressed deals in Q2 2025, particularly in areas where absorption is expected to stabilize.

Salt Lake City, UT: Controlled Growth & Limited Distress

• Transaction Pipeline: Minimal activity, reflecting a more balanced market.
• New Supply: 4,100 units expected in 2025, in line with the 10-year average.
• Rent Trends: 2.5% projected rent growth for 2025, driven by economic stability.
• Investor Sentiment: Neutral—few distressed opportunities but steady long-term fundamentals.

Unlike other high-growth metros, Salt Lake City did not experience an extreme construction boom during 2021-2022, leading to a more balanced supply-demand environment today. The market remains relatively stable, with rent growth expected to reach 2.5% in 2025 and occupancy rates holding at 92-93%. Submarkets like Holladay and Sugar House are seeing the strongest rent growth (4-5% YoY). While distressed opportunities are rare, well-located assets with steady cash flow remain attractive for long-term investors.

Denver, CO: Institutional-Quality Focus & Older Asset Liquidity Challenges

• Transaction Pipeline: Limited activity, mostly concentrated in newer institutional-quality properties.
• New Supply: 10,500 units delivered in 2024, with 2025 construction starts down 20% YoY—easing future supply pressure.
• Rent Trends: -2.59% rent decline YoY, with stabilization expected in H2 2025.
• Investor Sentiment: Flight to quality, with investors favoring post-1990s properties over aging assets.

Denver’s multifamily market remains bifurcated: newer institutional-quality properties continue to attract investor interest, while pre-1990s assets face liquidity challenges. Older properties are struggling to trade, as capital expenditures and insurance costs erode investor returns. Despite short-term challenges, long-term fundamentals remain strong, with suburban areas like Lakewood and Aurora showing resilience due to affordability.

Key Investment Takeaways & Opportunities

Austin & San Antonio: Prime Targets for Distressed Acquisitions (Q2 2025 & Beyond)

• High supply levels and rent stagnation will force further price corrections.
• Class B and C assets offer the best value-add opportunities at attractive discounts well below replacement cost.

Dallas-Fort Worth: Stability & Consistency

• One of the most active multifamily markets, supported by population and job growth.
• Best opportunities in suburban submarkets with steady demand

Denver: Institutional Buyers Favor Newer Assets

• Older properties are becoming illiquid, but post-1990s assets continue to trade.
• Suburban markets with lower vacancy rates present better risk-adjusted opportunities.

Salt Lake City: Limited Distress but Solid Long-Term Play

• Few distressed sales, but strong fundamentals make it a reliable market for long-term investors.

Distressed Market Considerations:

• Cap rates are generally in the low-to-mid 5% range, but liquidity is limited for older properties.
• The bid-ask spread remains wide due to lender reluctance to accept deep discounts. However creative workout and restructuring are on the table.
• Opportunistic investors should closely watch distress-driven price adjustments in late 2025.

Final Outlook

The Q1 2025 multifamily market landscape varies significantly across these metros. Distress is rising but remains selective, with Austin and San Antonio showing the most forced sales, while Dallas and Salt Lake City remain relatively stable. Liquidity constraints for older properties are notable in Austin, Denver, and San Antonio, suggesting a continued flight to quality. Investors who can navigate valuation dislocations and lender workouts may find attractive long-term opportunities as price corrections materialize later in 2025.