Multifamily housing leads in October

A version of this article first appeared in the CNBC Property Play newsletter with Diana Olek. Property Play covers new and evolving opportunities for the real estate investor, from individuals to venture capitalists, private equity funds, family offices, institutional investors and large public companies. subscription To receive future issues, directly to your inbox.

July marked a turning point in the competition for commercial properties, with bids rising for the first time in more than a year. This trend continued until October.

Bidder dynamics during the month saw the second-highest monthly gain over the past year, according to JLL’s Global Bidding Density Index. Competitiveness continues to improve, partly due to interest rate cuts by the US Federal Reserve in September and October.

The index measures bidding activity in order to give a real-time view of liquidity and competitiveness in private real estate capital markets. This, in turn, is an indicator of future capital flows via investment sales transactions.

“With capital deployment accelerating during the third quarter, institutional investors are signaling increased confidence in the market, even as uncertainty persists,” said Richard Bloxham, chief executive of capital markets at JLL. “We expect business confidence to continue to improve and pave the way for continued capital flow growth through 2026.”

Of all commercial real estate sectors, multifamily housing leads the competition with the strongest bidding activity. This is due to the housing shortage in most major markets. Rental vacancy rates remain high, but more tenants are expected to rent back next year because the for-sale housing market is so expensive.

JLL estimates there is a shortage of 3.5 million housing units in the U.S., and that, combined with near-record high housing prices, is keeping renters in place longer, and will likely push multifamily vacancy rates lower once all the new supply comes through the pipeline. All of this leads to strong and continued conviction among multifamily investors.

There was also a significant recovery in bidding competitiveness for the industrial and logistics sector, with trade policy uncertainty stabilizing slightly.

There was some decline in competition for retail properties simply because there was more of it for sale, so buyers had more options. However, there were more deals on the market. Investor demand is being influenced by higher consumer and retail spending, at least for now.

The office sector is also seeing a good recovery, with bidding dynamics rising from all-time lows in late 2023. Investor sentiment is improving as bidder pools expand and lender participation increases.

Near-term interest rate cuts remain in question, especially in light of stronger-than-expected employment numbers for September, released late due to the government shutdown. However, investors appear to be less sensitive to timing, as they still expect interest rates to fall further next year.

“While market uncertainty will continue to influence decision-making, the growth picture looks more positive for 2026. After working through various periods of uncertainty over the past year, more investors have demonstrated greater risk tolerance,” Bloxham said. “Combined with exceptionally strong debt markets, we expect this to spur a continued improvement in liquidity.”