Commercial real estate brokers are navigating a market defined by mixed signals. Juan Arias, National Director of U.S. Industrial Analytics at CoStar Group, recently led a segment of our 2026 Economic Outlook, delivering a detailed forecast for the multifamily sector. Leveraging his insights, we have outlined five defining trends for 2026 to help you navigate your multifamily clients through the year ahead.

1. Supply and Demand Are Finally Rebalancing

After a period of record-high deliveries, the market is beginning to absorb the surplus. While vacancy rates have climbed to historically high levels above 8%, the worst may be behind us. Arias notes that despite these high vacancies, “the supply demand picture is coming back into balance in 2025.” As deliveries moderate and demand creeps back up to absorb new properties, brokers can expect the vacancy rate to top out and begin a gradual contraction into the second half of 2026.

2. The Construction Pipeline Has Dramatically Slowed

The wave of new inventory that has flooded markets is set to taper off significantly. Developers pulled back sharply after interest rates rose, creating a future gap in supply. According to Arias, “construction starts peaked in 2022… and now we are 70% below those peak levels.” This sharp decline means that once the current wave of deliveries is absorbed, there will be significantly less competition from new inventory.

3. The “Luxury” Segment Is Taking the Hit

Not all assets are performing equally. The supply glut is overwhelmingly concentrated in high-end developments. Arias pointed out that “over 80% of new product is luxury build and that’s where we’ve seen most of the supply pain.” Consequently, vacancy rates for 4- and 5-star properties have shot up above 10%, while workforce housing (1- to 3-star properties) remains relatively stable. Brokers should note that affordable units are seeing much more limited vacancy expansion compared to their luxury counterparts.

4. Rent Growth Will Return by Late 2026

Don’t expect immediate spikes in rent growth early in the year, as the market is still working through the supply overhang. However, the outlook brightens as we move deeper into 2026. Arias forecasts that “by the second half of 2026 we should see rent growth come back across all star ratings… coming back to around that 2% annual rate.” It is important to temper expectations, though; this growth refers to asking rents, not necessarily effective rents, which may lag due to concessions.

5. Lease-Up Times Are Longer, and Concessions Are High

For brokers working with new developments, setting realistic expectations with clients is critical. The “if you build it, they will come” velocity of 2021 is gone. Arias highlighted that properties that have been built since 2023 and 2024 are taking well over 18 months to reach stabilization. To secure tenants, landlords are having to be aggressive. In highly supplied markets like Austin, Arias noted seeing six months of free rent, while in South Florida, two months of free rent has become the norm.

Next up: The 5 Trends to Watch in Industrial in 2026.

This article is provided for general informational purposes only and does not constitute investment, legal, tax, or financial advice, nor a solicitation to buy or sell any security or real estate interest. Readers should consult their own professional advisors before making any investment or business decisions. Market data provided by CoStar Group.The views expressed reflect individual market perspectives and do not represent investment recommendations or company forecasts. Certain statements may be forward-looking in nature and are based on current expectations, which are subject to change due to economic and market conditions.