Multifamily real estate has long been considered a safe haven within commercial real estate, buoyed by strong demand fundamentals and a persistent national housing shortage. While the past few years have introduced challenges through rising interest rates and recalibrated valuations, 2025 marks not a downturn, but a reset. One that’s creating opportunities for disciplined, well-capitalized investors. As others retreat or recalibrate, Ackermann is leaning into the market with confidence, focusing on cash flow, prudent debt structuring, and sustainable long-term growth.
This new reality has exposed cracks in some portfolios, particularly among sponsors who took on excessive risk in recent years. At the same time, it’s also provided a proving ground for groups with discipline, depth, and a long-term strategy. Ackermann Group, through deliberate positioning and conservative stewardship, has successfully shielded itself from much of the distress currently roiling the multifamily space. Here’s a closer look at the market dynamics today, and why we built our strategy for moments exactly like this.
Understanding the Nature of Today’s Distress
Multifamily distress in 2025 does not look like the overleveraged collapse of 2008. What some describe as “distress” is, in our opinion, a normalization of pricing and expectations after years of compressed cap rates and aggressive underwriting. The adjustment underway is allowing fundamentals to reassert themselves. What began with an aggressive rise in interest rates from 2022 onward has morphed into a broader recalibration of valuations, investment assumptions, and capital structure strategy.
Interest rate volatility has cooled the transaction frenzy of 2021, but it has also clarified the playing field. With fewer competitors and more rational pricing, buyers with experience and operational sophistication can finally transact on terms that align with long-term value creation. The capital that once waited on the sidelines for rates to normalize is now beginning to capitulate, transacting under current conditions rather than continuing to hope for a return to the “old normal.”
As noted by Kurt Shoemaker of CBRE in our recent roundtable, this is not a widespread liquidation event. True distress is showing up selectively only among sponsors who grew too fast, relied too heavily on short-term floating rate debt, or lacked the operational infrastructure to handle complex portfolios.
Capital Market Shifts and the Psychology of a New Cycle
The rapid rate hikes of 2022–2023 have given way to a period of relative stability. While interest rates remain higher than the previous decade’s historic lows, volatility has eased, and spreads are tightening. This stability allows sponsors to plan with confidence, locking in fixed-rate structures that prioritize cash flow over speculation.
Ackermann’s conservative approach to leverage, coupled with long-term fixed-rate financing, and built-in interest rate protections, positions our portfolio to thrive in precisely this kind of environment. We’ve never viewed debt as a tool to maximize short-term returns, but as a strategic lever to protect and enhance long-term value.
On the equity side, investor capital is actively seeking stability and yield, both of which multifamily offers in abundance. For many, multifamily represents the ideal combination of income and long-term growth potential. As public market volatility persists and bond yields normalize, real estate is regaining favor as a cornerstone of balanced portfolios.
Economic fundamentals remain solid, and with development pipelines slowing, existing assets will continue to capture strong tenant demand. In short, the path to value creation in the Midwest is durable, dependable, and exciting.
Why Ackermann is Built for This Cycle
One important macro trend working in favor of long-term owners like Ackermann is the steep decline in new supply. Demand for rental housing continues to outstrip supply, particularly in markets like Lexington, Columbus, and Indianapolis, where Ackermann operates. With new construction starts down nearly 50% nationally since 2022, rent growth is poised to accelerate over the next three years, driven by simple economics: too few units, too much demand.
For long-term investors, this creates a favorable setup for both current yield and appreciation. As concessions fade and occupancy strengthens, well-managed communities are positioned to deliver consistent cash flow even amid higher-rate environments.
In a time when leverage, speculation, and operational inconsistency are being punished, Ackermann’s investment strategy has never looked more promising. For decades, we have operated with a simple yet powerful set of principles: underwrite conservatively, manage properties ourselves, focus on real fundamentals, and never confuse short term gains for long term value. These principles have created a cushion during volatile periods, not only protecting our capital but positioning us to seize opportunity as others face pressure.
Our vertically integrated model provides us with direct control over leasing, operations, and capital improvements. This means we don’t rely on outside property managers to generate NOI growth. We do it ourselves, with our own teams. In periods of distress, this control translates into faster decision making and tighter cost management. It also means our underwriting is reflective of the reality of managing apartments, not just theoretical spreadsheets.
Our focus on Midwest secondary markets also gives us a built-in buffer against the oversupply and volatility hitting major coastal and Sunbelt metros. Cincinnati, Indianapolis, Columbus, Lexington — these are markets where the fundamentals are compelling and the path to long term value creation is rooted in durable economic growth. In many ways, the Midwest is having its moment in the national spotlight and Ackermann has been here all along.
Looking Forward: Cautious Optimism and Strategic Patience
Ackermann is positioned to act selectively and confidently. We are not under pressure to deploy capital into marginal deals. We evaluate and execute only where we see a clear alignment between risk, return, and operational upside. Our lens remains the same: focus on the long term, stay operationally tight, and preserve investor trust above all else.
As we look ahead, the multifamily arena is not merely holding its ground; it’s gaining momentum. First-quarter 2025 absorption of roughly 100,600 units marked the strongest start to a year in the sector since 2000, and the national vacancy rate slipped 20 basis points to 4.8%.
Meanwhile, new construction starts have decelerated markedly and delivery pipelines are tightening, a dynamic that institutes the classic scenario for rent and occupancy upside.
The result? A window of exceptional value is opening for investors who prioritize cash flow, operational strength, and long-term growth. With demand anchored by demographics, home-ownership affordability challenges and urbanization trends, the conditions are aligning for multifamily assets to deliver both yield and appreciation. This isn’t a cautious waiting game. It’s a proactive opportunity to deploy capital into real assets that are built to generate income today and compound value tomorrow. For investors who act now with confidence and discipline, the next several years could become one of the most compelling chapters for multifamily investing in recent memory.
Ackermann Group.
INVESTING IN COMMUNITY TOGETHER for 88 years.
