Q1 2025 Recap, Career Advice, & More

release edition [013]

read time [10 minutes]

Welcome to The Multifamily Download, a weekly newsletter where I provide institutional insights to help you build an exceptional Multifamily career.

Today at a Glance:

• 1Q25: Recap & Observations
• Career: The Future of CRE
• Weekly Listen: Jon Gray, Blackstone

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1Q25

Can you believe we're only three months into 2025?

As I have begun to reflect on Q1, I'm realizing how fast-paced and non-stop the quarter has been.

From a new Presidential administration to interest rates to the Fed, there has been no shortage of news to watch or trends to follow.

Below are my early takeaways from Q1, and I'll continue to share my observations based on future Q1 data as it is released.

Note that these are my personal anecdotes based on what I've seen and heard in the market on a daily basis.

Your observations will likely differ to certain degree, so my hope is that you can compare mine with yours and formulate an even stronger opinion on the current market dynamics.

The Fed

The Fed met twice in Q1, and in both cases they elected to hold the Fed Funds Rate steady at their target of 4.25% - 4.50%. These two decisions came as a surprise to few, as inflation data has not been cooling at the pace the Fed hoped, while employment appears to still be holding steady. In simple terms: "If it ain't broke, don't fix it".

Fed Press Releases: January 2025 / March 2025

Inflation

The most recent CPI release was +2.8% and PCE release was +2.5% (and 2.8% excl. food and energy). Although these are not yet near the Fed's 2.0% target, they are far more stable than the past few years, especially as current-dollar personal income was +0.8% MoM versus Real PCE +0.1%, which means real wages continue to grow. The consensus on inflation is still out, though, as a recent flurry of tariffs have short-term inflation fears running rampant across the economy.

Interest Rates

The 5yr US Treasury has steadily rallied as rates have moved down from an intra-quarter high of 4.59% to 3.98% today. There are a number of factors that drive bond yields down and prices up, and while I'm certainly not a bond expert like my father, it appears that nervous investors seeking safe haven are pushing yields down as they move into U.S. Treasuries (and Gold!)

Debt & Equity

Liquidity remains widely available in the Commercial Real Estate world, but unfortunately, availability and accessibility are not the same. As was the case in 2023 and 2024, the bid/ask spread between buyers and sellers continues to be problematic. While sellers are beginning to move off their price target on a more regular basis, deal volume does not appear to be accelerating yet. (Disclaimer: The Q1 data may prove otherwise, but my sentiment is that deal volume has not increase meaningfully QoQ). Unlocking risk-adjusted returns that provide alpha to investors has been, and still is, of the utmost importance to investors.

Distress

As I wrote about yesterday on LinkedIn, the trend of Multifamily distress continues to move rapidly in a negative direction. While distress is not currently a systemic issue, cracks are forming and many borrowers are realizing the gravity of the Capital Markets shift that has taken place since their existing debt was originated in 2021 or 2022.

Supply & Demand

Many high supply markets (including Austin, Phoenix, Salt Lake City, Nashville, etc.) continue to experience softness in leasing velocity, rent growth, and concessions. For example, there are new construction, Class-A properties in downtown Salt Lake City where 1-BR units are available to rent for $1,500 per month + two months free. I'm curious to see how record absorption from 2024 translates in 2025 as those leases roll and concessions may or may not be available. I predict that 2025 will be a year of aggressive renewal concessions as operators fight to maintain occupancy as developers also fight for leasing velocity and lease-up occupancy.

Pipeline

While I can only speak from my team's experience, I can say with confidence that actionable opportunities are coming to us more frequently than they did at any time in 2023 or 2024, as evidenced by our negotiating $100M+ in transaction volume to varying milestones during the first quarter (more to come in the future). A lot of work remains to get these opportunities closed, but it feels good to be filling our pipeline with actionable acquisition opportunities.

Policy & DOGE

While I've written about DOGE and other policy-related items in the weeks past, I'm keeping this Q1 recap focused on the broader economy and Multifamily industry. Opinions on the current administration differ, and while I'm sure that I'll provide commentary or observations in the future, there's plenty of items to focus on within the economy and CRE industry. If you're curious to follow DOGE, you can visit the official government website here.

Based on what I've shared above, I expect Q2 to be a moderate improvement over Q1 for buy-side activity. It feels like the 'Higher for Longer' stance that the Fed has taken YTD will force lenders to make difficult decisions sooner than they otherwise would have liked. This should result in the acceleration of liquidity events, leading to more Capital Markets and Investment Sales activity.

While I continue to stand by my prediction that sales volume in 2025 will be the same or less than 2024, I hope I'm wrong.

Career

If you're a relatively newer reader of The Multifamily Download then you may not know my story, so here's a quick overview.

I graduated from the University of San Diego in 2015, and after studying Finance, I got into Corporate Finance. Within 90 days I realized that I wanted to be in Real Estate, so after 9 months, I politely declined a promotion (yes, it was awkward), put in my 2 weeks notice, and became a licensed Real Estate agent to sell single family homes. I had 7 corporate jobs over the first 8 years of my career until I found 'the one'.

In short, I refused to settle for a career that didn't combine my passions (what I enjoy), my skills (what I'm good at), and my desired earning potential (what I can get paid for).

Fast forward to today: I'm currently the Vice President of Investments at an emerging Multifamily sponsor with 1,5000 units and $500M in AUM, and I couldn't be more excited for what the future holds.

As 2025 unfolds, I think it's important that we all reflect on where we've been, what we're doing today, and where we may end up in the future.

If you're earlier in your career (0-7 years), here are a few things to consider:

1. Network

Meet as many people as you can, and do your best to stay top of mind with anyone that you believe you may cross paths with again in the future. Try your best to genuinely help the other person, even if it's simply a word of encouragement or an offer to connect them with anyone in your network. Genuine kindness matters, a lot.

2. Learn

Avoid, at all costs, being entertained to death. I chose education over entertainment in my 20s, and I believe that decision is paying dividends today. I didn't 'go out with the boys' or go to sporting events. I read books, listened to podcasts, and did everything that I could to wrap my mind around things I found interesting. Stay curious, and keep learning.

3. Take Risk

I know this is cliche, but it's cliche for a reason. Your advantage today is likely that you currently have the fewest responsibilities (mortgage, family, etc.) that you'll ever have. I tried as many roles, industries, and jobs as I needed to try until I found my thing. I would encourage you to consider doing the same.

If you're in the middle of your career (7-15 years), here are a few things to consider:

1. Goal Orient

By this point, hopefully your career path is unfolding with clarity. Now is the time to make sure that you are oriented in the direction of your long term goals, and that your current career vehicle will take you where you want to go as long as you keep fueling it. As Warren Buffett says, "It doesn't matter how hard you row, it matters which boat you get in".

2. Focus

With focus, time becomes an ally. With distraction, time becomes an enemy. If you want to achieve your career goals, now is the time to focus on being both efficient and effective with your time and contributions. In a world with ever-increasing distractions, your ability to 'win' in your career should get easier, not harder, if you can tune out the world and focus.

3. Grow

While learning is key in the first phase of your career, now is the time to grow, or improve. Learning is no longer enough, and being educated is no longer a distinct competitive advantage. Increasing both soft skills (written, communication, etc.) and hard skills (analytical, technological, etc.) are how growth will occur and progress will be sustained. Strive for greatness.

If you're later in your career (15+ years), here are a few things to consider:

1. Asymmetry

Enough time and experience has gone under the bridge by now, and now it's time to jump into the right boat if you're not already there. Ideally, this boat will come with asymmetrical upside. Trading time for dollars will never lead to leverage. Consider a role that has a performance incentive (cash, stock, etc.) that will turbocharge your earnings per hour if you succeed.

2. Ownership

As a continuation of the asymmetry mentioned above, ownership is how wealth (both money and freedom) is generated in a capitalistic economy. Love it or hate it, it's just the truth. Find a way to gain ownership in your current company, a separate venture, or by starting your own business. Or don't. But just realize this can be a delicate tipping point that ends up being career defining.

3. Legacy

How do I want to be remembered? It's never too early to begin thinking about the answer to this question. Whether you know the answer yet or not, keep it top of mind and decide what it is that you truly want to leave behind one day. If you're looking for somewhere to begin, consider getting into service, education, mentorship, and/or leadership. Contribution to others always creates a positive ripple effect.

Weekly Listen

This week's listen is a recent episode, once again, of the Walker Webcast hosted by Willy Walker with guest Jon Gray, the President and COO of Blackstone.

Blackstone is the world’s largest alternative asset manager with more than $1 trillion in AUM. In this episode, Willy and Jon discuss various topics including getting into the SFR rental business post-GFC, Jon's journey of 33+ years with the firm, things that Blackstone looks for in potential hires, and much more.

One of my all-time favorite business books is "What it Takes", written by Blackstone Chairman & CEO Steve Schwarzman.

You can listen to the full episode here.

Wrap Up

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