Q2 2025 – Mid-Atlantic Multifamily Market Report

Audience: Accredited investors, family offices, institutional LPs

Coverage: Washington, D.C.; Northern Virginia; Maryland; Richmond; Tidewater / Hampton Roads

Update window: April — July 2025 (sources checked July 2025)

Executive Summary

The Mid-Atlantic multifamily market entered Q2 2025 with stabilizing fundamentals: national absorption strengthened, rent growth turned modestly positive, and construction deliveries are decelerating from 2023–24 peaks. Elevated interest rates continue to influence transaction timing and capital structures; however, buyer interest is re-emerging for stabilized, cash-flowing assets in rent-resilient submarkets.

Macro & Capital Markets — What changed (latest)

Demand & Absorption: CBRE reports record Q2 net absorption (188,200 units) and a national vacancy rate that fell to 4.1% in Q2 as demand outpaced deliveries across tracked markets.
Rent Trends: Yardi Matrix shows rent growth is positive but tepid — average asking rents rose to ~$1,749 in June (about +0.9% YoY). Gateway and tech-adjacent markets are leading returns.
Supply: Newmark and other data show deliveries moderating: Q1 2025 deliveries were sizable but down from the 2024 peak; industry projections for 2025 deliveries have shifted lower.

Implication: The supply/demand balance is moving from oversupply in 2023–24 toward a more balanced market in 2025 — good for NOI stabilization, but growth remains modest.

Fed outlook & direct impact on multifamily (latest signal)

Policy: The FOMC held the federal funds target at 4.25%–4.50% at the July meeting; market pricing for cuts has been fluid but cuts are not broadly assumed until later in 2025.
Market mechanics: CME FedWatch remains the market standard to gauge investors’ timing expectations for cuts; current probabilities reflect uneven expectations and heightened event risk.

Implication: Elevated short-term rates keep borrowing costs high, making floating-rate or bridge financings more expensive — driving capital to prefer fixed-rate, stabilized investments.

Mid-Atlantic Submarket Highlights (Q2 2025 — latest)

Washington, D.C. | Northern Virginia | Maryland

Core D.C. submarkets continue to show rent resiliency (1.0–2.3% in stronger nodes) and high occupancy (≈95–96%). Navy Yard/Capitol South saw a concentration of completions but still posted strong leasing. Marcus & Millichap notes 3,200 units anticipated to open in D.C. in 2025, down from 5,800 in 2024.

Richmond, VA

Richmond shows steady, modest rent growth (~1.2–1.5% YoY) with occupancy mid-90s; demand is supported by government, healthcare, and logistics jobs. Development activity has moderated.

Tidewater / Hampton Roads

Stability driven by military and port logistics; occupancy ~94–95% with flat to slight positive rent movement. Supply is moderate and absorption steady.

Capital Markets & Transactions (latest signals)

Trading volumes are increasing vs. H1 2025 lows as buyers return, but transactions favor stabilized properties with conservative leverage and predictable cash flows. Newmark reports demand outpacing supply for consecutive quarters.

Key Risks (current/future)

Rate volatility & Fed leadership changes — monitor CME FedWatch and Fed communications.
Localized oversupply — certain D.C. neighborhoods still face elevated near-term deliveries.
Macroeconomic shocks / trade policy — could pressure rent growth in cyclical submarkets.

Opportunities & Recommended Positions

Buy/Hold: stabilized Class A/B properties in core submarkets (fixed-rate capital preferred).
Value-Add: Richmond and Hampton Roads workforce housing with manageable lease-up risk.
Finance: conservative LTVs, long-term fixed-rate financing, interest-rate stress tests.

Final Summary

Q2 2025 shows stabilization: absorption is strong, rent growth is modest and positive, and construction deliveries are falling from 2024 peaks — yet elevated rates and Fed policy uncertainty require conservative financing and tight underwriting. Target stabilized assets in rent-resilient Mid-Atlantic submarkets and use fixed-rate structures to mitigate rate risk.