With commercial real estate repricing, debt markets gradually stabilizing, and refinancing timelines looming, investors with dry powder are watching a new phase of opportunity take shape. Yet the path forward—marked by rate cuts, shifting cap rates, and supply-driven regional differences—remains uneven and volatile.  

Multifamily remains a focal point, but not all markets are positioned the same. To unpack these dynamics, Ricardo Gennari, Managing Director of Real Estate Credit at Leste Group shares his views about the evolving opportunity set, the role of private credit, and the regional forces shaping valuations in 2025. 

CM: Many investors have been waiting on the sidelines with significant dry powder. How are lower valuations beginning to shape the opportunity set for those ready to deploy capital now? 

RG: Investors are finally moving off the sidelines as multifamily prices are down and borrowing costs have eased. Smart buyers with dry powder can now acquire quality assets with strong upside, but the key is being highly selective – picking the right submarket and vintage that will make the difference between the good and the bad. 

CM: Are you seeing investors more willing to step into transactions they passed on a year ago due to pricing? 

RG: Sellers are starting to accept 15-25% lower pricing. Many of those same assets are now trading all-cash or to low-leverage buyers with the bid-ask gap having narrowed dramatically in the last six months. 

CM: Multifamily has historically served as a defensive sector. How is oversupply in certain markets—particularly in the Sun Belt—affecting valuations and projected rent growth? 

RG: Heavy deliveries in markets like Austin, Phoenix, Dallas, and Charlotte have pushed vacancies up and rents flat-to-negative. Valuations in these markets remain under pressure, and there is still some reckoning ahead in 2026 before rent growth turns meaningfully positive again. 

CM: Which multifamily markets do you believe are positioned to stabilize first, and what indicators are you watching most closely? 

RG: Markets with almost no new supply coming online—Detroit, Columbus, Cleveland, Indianapolis, and parts of the DC/Baltimore corridor—are stabilizing fastest. We’re closely tracking rent growth, lease trade-outs improving, and new construction starts. These markets should lead the recovery in 2025-2026. 

CM: You’ve noted that the path back to renewed fundamentals will be slow and volatile. What are the biggest forces keeping cap rates elevated today? 

RG: Persistent uncertainty around the direction of long-term interest rates, sticky inflation, and geopolitical risks are the main drivers keeping cap rates high. While spreads have compressed, Lenders are still requiring more spread than in 2021, and buyers are demanding extra yield for perceived risk. Until the 10-year Treasury finds a clear range and inflation expectations settle, cap rates will stay elevated compared to where they were five years ago. 

CM: At what point do you expect risk aversion, tight underwriting, and distress to ease enough for values to rise more meaningfully? 

RG: We expect a meaningful turn in late 2026 to early 2027 once the 2024-2025 floating-rate debt maturities are largely behind us and new supply drops. Risk aversion will ease when occupancy stabilizes nationally and banks/agencies increase lending quotas again. That’s when we should see the first consistent quarter-over-quarter price appreciation. 

CM: With many developers facing upcoming refinancing deadlines, where do you see the most compelling opportunities for capital providers willing to move quickly 

RG: The most compelling opportunities, as a lender, will be with sponsors that are willing to cash-in into those opportunities to support the transaction. Markets and vintages will continue to play an important role, but quality of sponsor will be the main driver to be able to mobilize capital. 

CM: For investors trying to time their capital deployment, what signals will indicate that valuations have finally reached bottom—or that they’re beginning to rebound? 

RG: Trying to time the bottom to mobilize for an investment is always risky, since markets can move quicker than your ability to deploy. Each opportunity should be analyzed for their merits alone, and the key will be having a steady flow of those compelling opportunities with capital that is ready as they come along.