release edition [072] read time [8 minutes] Welcome to The Multifamily Download, a weekly newsletter where I provide institutional insights to help you build an exceptional Multifamily career. Forwarded this email? Subscribe here. Today at a Glance:
Last Saturday's TMD 071 covered what changed in the broader sector and across the architecture of how a Multifamily deal gets done. This week is about what has quietly shifted at the market, submarket, and property levels. Items like insurance, bad debt, concessions, renewals, payroll, development costs, and even resident expectations all look much different than they did just 5 or 10 years ago. Nearly every asset-level variable has to be evaluated through an operational lens. Today, we'll examine 11 more comparisons to conclude this short two-part comparison series. Let's dive into what has changed, and why, from the ZIRP era of 2010-2021 to the current era. Hit reply and let me know what you think of today's newsletter! The Supply Side1. Development Pipeline: Ramp vs Cliff The 2010s built into a strengthening demand backdrop. Starts climbed from a 2010 trough, deliveries grew steadily, and absorption mostly kept pace. The current era has proven to be the opposite. Construction starts collapsed in 2023-2024, and the 2027-2028 delivery window is going to be relatively thin. I covered the supply backdrop in TMD 003 (508K units), TMD 029 (RealPage demand and starts chart), TMD 050 (supply theme), and TMD 058 (Census supply data). The operator implication: Vintage 2025-2026 deliveries face a wall of competing supply on lease-up, but the operator who buys or builds today and stabilizes in 2027-2028 may be the best-positioned cohort of this decade. 2. Cost to Build: Reasonable vs Prohibitive Land, labor, materials, insurance, impact fees, and municipality tensions have all caused development costs and timelines to inflate. The per-unit math is in a different universe than it was even five years ago, primarily due to the cost of debt capital. Hard costs are up roughly 35-40% from 2019 per RSMeans and Turner Building Cost Index. Soft costs (insurance, impact fees, lender requirements) have moved even more in some Sunbelt markets. This combination is the structural reason that merchant builders are on pause, and why the 2027 delivery cliff could be a tailwind to leasing demand and the reemergence of market rent growth on a broader scale. 3. Sun Belt: Obvious Bet vs Contrarian Risk Houston, Dallas, Phoenix, and Atlanta were among the consensus winners of the last cycle. Today, however, they're navigating a tumultuous supply hangover, and the Blue > Red thesis I made in TMD 039 flips the script on how rent growth may unfold in the back half of the 2020s decade. Markets with more than 3% of stock under construction have seen flat-to-negative rent growth, and most of those markets are in the Sunbelt (TMD 050). The Sunbelt thesis isn't dead, but it has been re-priced. Submarket selection inside Sunbelt MSAs now matters more than the MSA call itself. As I like to say, Multifamily investing is both local and hyper local. The Operations4. Renewals: One Lever vs Only Lever In the post-GFC era, both renewal increases and lease trade outs drove meaningful rent growth as the rising tide of renter demand and limited supply lifted NOI nationally. Today, new-lease rents are flat or negative in most Sunbelt markets, and renewal growth is left to do all the work. I covered this in TMD 052 prediction #3 (renewal outpaces new lease) and TMD 053 (improving leasing ops). Any new business plan should be wary of assuming positive lease trade out growth of 4-5% per year. Multifamily in the near term still has to perform on renewals alone, and that means resident retention, service quality, and renewal communication are now alpha-generating activities that truly matter. 5. Concessions: Tool vs Crutch I coined the phrase "Incentivized Demand" in TMD 033 before it was mainstream when I saw that concessions were obfuscating demand. Concession-driven demand creates false positives (higher occupancy and strong rent rolls), but when concessions burn off the renewal shock can lead to elevated turnover and economic vacancy. The summer of 2025 was the softest in 15 years per Jay Parsons (TMD 038), which is exactly what the concession data was telegraphing. When underwriting to a stabilized property, it's important to back out the concessions to understand the net effective rent. 6. Bad Debt: Noise vs Line Item For most of the post-GFC era, bad debt was a 1% placeholder in the underwriting model. Eviction moratoriums, rental assistance burn-off, and the challenged bottom 50% demographic in the K-economy have changed that. Bad debt is now a 3-5% reality in many markets, or higher. I covered the operational side in TMD 037 (bad debt collection tactics) and the macro side in TMD 004 (K-economy origin) and TMD 049 (credit loss as a 2026 risk). Bad debt is no longer a plug number in an underwriting model. It should be treated as a business plan variable, and it deserves the same attention as rent growth and OpEx inflation. 7. Insurance: Line Item vs Deal Breaker It's hard to think of a bigger underwriting shift in the past five years than insurance repricing. Insurance premiums in coastal Texas and Florida have tripled or quadrupled since 2020, and in some submarkets, insurance now exceeds property tax as the single largest OpEx line. Crazy, right? I flagged this in TMD 049 as risk #7 for 2026, and it's still an issue worthy of careful scrutiny during due diligence. When underwriting an acquisition in a high-exposure market it's critical to get a real insurance quote during diligence. The gap between legacy insurance assumptions and today's reality has been a silent deal killer for several years now. 8. Payroll: Build vs Right-Size The post-GFC playbook was to add human capital to fix operational issues by hiring more leasing agents, more maintenance techs, and more regional support. Today's playbook is different, and often looks like centralized leasing, AI tenant screening, fewer onsite staff, and right-sizing payrolls to be as efficient as possible. I covered the leasing side in TMD 017 (10 leasing velocity strategies) and TMD 053 (improving leasing ops). The property manager who beats their OpEx budget in 2026 is doing it through technology, process, and efficiency, not headcount. Adding human capital to solve operational problems may win the short term battle, but it loses the long term war. The Markets & Tech9. Tech Stack: Yardi vs AI-Native Ops The 2010s tech stack was a property management system plus revenue management plus an applicant screening tool. Today's tech stack adds self-guided tours, AI fraud detection, centralized leasing platforms, AI-assisted underwriting, and increasingly AI-assisted customer service. I covered this in TMD 057 (AI in defensive strategies) and TMD 052 prediction #7 (AI mainstreams in CRE). The operators investing in technology infrastructure today will have a compounding structural advantage in 3-5 years. The operators waiting to see how it shakes out will be acquired by the operators who didn't wait. 10. SFR Competition: Fringe vs Structural Single-family rental was a fringe asset class for most of the 2010s. Today it's a structural competitor that's competing for the same renter household. Build-to-rent communities are now being delivered alongside garden-style multifamily, institutional SFR portfolios have scaled to $50B+ AUM, and the mortgage lock-in effect has kept owners from selling and forcing them to rent if they need to relocate without giving up their existing mortgage. I covered this in TMD 005 (SFR Gridlock, 80% of mortgagees under 5%), TMD 037 (SFR affordability deep dive), and TMD 052 prediction #10 (soft SFR for-sale hurts lease-ups). When underwriting a Sunbelt acquisition, the competitive set is no longer just garden-style multifamily within a one-mile radius, but now must include BTR and SFR, too. 11. Geography: Sunbelt Wins vs Coastal Resurges The 2010s narrative was simple: Sunbelt wins, gateway loses. 2026 transaction data is flipping that narrative on its head, at least for now. Per Newmark's 1Q26 report, NYC apartment transaction volume is +40% YoY, San Francisco +27%, Seattle +44%, while Dallas is -9%, LA -9%, Miami -10%, and Denver -44%. I covered the contrarian angle in TMD 039 (Blue vs Red) and TMD 044 (ULI market rankings). It's unlikely that this becomes a permanent reversal, but it's one worth watching closely in 2026. Operators that have dismissed coastal markets since 2020 may want to rethink their strategy as low supply and resulting rent growth emerges in these forgotten, relatively "low growth" coastal markets. Closing ThoughtsWe've now covered 22 comparisons across the previous vs current Multifamily eras. None of these comparisons is shocking on it's own, but together they detail an industry that's been quietly rebuilt from both the capital stack down and from the resident interaction up. The capital stack reset has received most of the headlines, but the operational reset is what will separate Multifamily operators over the next five years. The post-GFC era proves that cheap capital can mask a lot of operating sins. This era is teaching the opposite: When capital is expensive, operating excellence is what creates returns. The good news is that operating excellence is a learnable, repeatable, and durable advantage. The bad news is that experience is often the best teacher. Better days are coming to the operators that are willing to do the work to navigate this new era of Multifamily investing. Which of these 11 comparisons resonated with you? Hit reply to let me know! I read every response Weekly ListenThis week's listen is a Forum 2025 panel highlight from the Multifamily Unpacked podcast, featuring operating leaders from Greystar, Pacific Urban Investors, Redstone Residential, and 20for20. The 24-minute panel covers what it actually takes to scale a centralized operating model, including which functions move off-site first (property admin before leasing), how Greystar built AI-powered workflows at scale, and how third-party fee structures are evolving. If you're rethinking your operating model heading into 2026 budget season, this one is worth your time. You can listen to the full episode here. Wrap UpThat's it for today. I hope you found this edition of The Multifamily Download insightful. Consider sharing this link to The Multifamily Download with a friend or colleague. Your feedback is appreciated, so feel free to reply anytime. Thanks for reading. See you next week! Forwarded this email? Sign up here. Join me on LinkedIn | Twitter | Website |
The Multifamily Download · May 30, 2026
The Quiet Operational Reset
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