Waiting for Core: Why Multifamily Deal Flow Is Rising Without It Article originally posted on Globe St. on December 22, 2025 After several quarters of softening demand and slower rent growth, multifamily transaction activity is not only holding up—it is surprising even some of the most plugged‑in players. Rather than pausing, a cohort of sellers has accelerated plans to bring assets to market ahead of the new year and buyers with flexible capital are stepping in to fill the bid‑ask gap. That is the backdrop Kelli Carhart, President and head of multifamily capital markets at CBRE, is seeing across the platform. Despite well‑telegraphed headwinds on rent growth and net operating income, in a recent podcast, she described a market where liquidity remains intact, and volumes are set to finish the year “up significantly from last year.” Some owners, sensing that conditions could become more challenging as fundamentals normalize, “want to go now” and “get ahead of January activity and take advantage of the marketplace,” she said. Liquidity Holds as Headwinds Build The urgency on the sell side is meeting a deep bench of capital that has been waiting for the right entry point. While institutional money remains more selective, private buyers are increasingly dictating pricing dynamics in deals that are getting done. That shift is visible both in how investors underwrite and in where they are willing to set exit assumptions over a typical five‑year hold. On pricing, Carhart characterizes cap rates as remarkably steady given the macro volatility of the last two years. “Year‑to‑date, they’ve been fairly stable,” she said, adding that CBRE expects “more of the same going into 2026.” The market is still defined by a familiar tension: “Most buyers want to be north of a five. Most sellers want to be in the fours, and the best assets are still selling in the fours, in the four‑and‑a‑halfs in many markets across the country.” In other words, premium assets in growth markets continue to clear at sub‑5% yields, and that pattern has been “fairly consistent throughout the year” for newer‑vintage product. On paper, decelerating rent growth and pressure on NOI suggest some cap rate expansion as income growth slows. But Carhart points to the sheer amount of capital “on the sidelines that wants to participate” as a counterweight that is helping keep yields from backing up in a more meaningful way. Underwriting in a Stable‑Cap Environment How investors are getting comfortable with that pricing comes down to underwriting. Across CBRE’s multifamily deal flow, assumptions have moved, but not dramatically. Last year, Carhart said, buyers “didn’t really go north of a three percent annual rent growth assumption over a five‑year hold,” which she describes as the typical period for most multifamily investors. This year, those same assumptions have edged higher, to “between three and three‑and‑a‑half percent on the rent growth assumptions during the hold.” Exit cap rate underwriting has also normalized but remains relatively conservative by historical standards in many markets. “For most of the country, they’re either fairly flat to going‑in or elevated by 25 basis points,” Carhart said of exit cap assumptions on competitive bids. In her view, those are the terms “it takes to win” in today’s environment, even as some institutions would prefer “a little more cushion on those exit caps” and are finding themselves outbid. That dynamic has opened the door for private buyers to step into what had been a heavily institutionally dominated space. “They’re really leaning in and they’re buying on a discount to replacement cost,” Carhart said of these groups. “It’s not an IRR‑driven” play, she added, but a view‑of‑the‑real‑estate approach: investors who historically “would have been priced out” because their cost of capital did not match best‑in‑class assets now see an opportunity to own what they consider “great real estate.” Those buyers are helping bridge the gap between sellers anchored to peak‑cycle values and a more disciplined institutional cohort focused on index performance and fund‑level optics. In many processes, Carhart said, core and core‑plus capital is present and “participating in bids,” but the “lean in is just not as strong as some of the other sources,” given differences in cost of capital and internal portfolio considerations. The Slow Path Back for Core Capital The question hanging over the sector is when that core capital will truly return. Multifamily veterans have been talking about the “second half” inflection for several years, and Carhart does not shy away from that history. “We’ve been talking about the return of core capital for several years now,” she said. “We keep saying, oh, second half of this year, the next year. And so I’m going to say that again, the second half of 2026—but it feels a lot better.” There are reasons for that optimism. She points to “several quarters of positive returns for the ODCE [Open End Diversified Core Equity] funds” and easing redemption queues, both critical preconditions for getting large open‑end vehicles back into the market in a meaningful way. Core managers are “certainly interested” and “curious,” she added, probing underwriting standards and staying close to live processes, even if they are not yet setting the clearing price. One of the remaining obstacles is the gap between book values on existing core portfolios and where comparable assets are trading today. That disconnect makes it harder for some managers to justify new acquisitions without fully working through prior‑vintage valuations. Until that reconciliation is further along, the expectation is that private buyers and other flexible capital sources will continue to define the marginal trade in many markets. Who Sets the Clearing Price Now For now, CBRE’s models still point to “healthy” investment activity and a larger overall marketplace in the year ahead, even as rent growth downshifts from peak pandemic‑era levels. The investors leaning into this phase of the cycle are generally underwriting modestly higher rent growth than last year, flat‑to‑slightly higher exits, and a longer runway for capital appreciation tied to replacement‑cost discipline rather than aggressive IRR targets. In that environment, the bid may not be where it once was, but for willing sellers, it is increasingly good enough.