Commercial Real Estate: Why the Cycle Looks Like 2013—and Why Multifamily Is the Opportunity of the Decade

Introduction: The Shape of the Cycle

The commercial real estate (CRE) market is entering a pivotal phase that closely resembles the recovery dynamics seen in 2013. After an extended period of compressed valuations, volatile transaction volumes, and macroeconomic headwinds, the foundation for the next sustained cycle is forming. Once again, multifamily housing is emerging as the sector with the clearest asymmetric opportunity.

In 2013, following the aftermath of the Global Financial Crisis (GFC), the multifamily sector led a durable real estate recovery. The hallmarks of that period were clear: disciplined capital deployment, cap rate normalization, stabilization of rental demand, and a cautious but persistent return of institutional capital. The parallels to today's environment are striking.

As we move through 2025, multiple data points and market signals suggest that the CRE cycle is tracking a similar pattern. Property values appear to have bottomed, private equity is re-entering the market selectively, and constrained new supply combined with robust demand in residential segments is setting the stage for multifamily to lead again.

This report explores the evolving CRE landscape, why multifamily in particular represents a standout opportunity, and how investors can apply the 2013 blueprint to generate superior risk-adjusted returns in the years ahead.

The Current CRE Backdrop: A Nascent Recovery

After two years of valuation compression and a sharp pullback in transaction volumes, the commercial real estate market is finally showing signs of stabilization. MSCI data shows that global property valuation declines continued through Q2 2024, down 6.3% year over year, but the pace of decline is clearly decelerating.

At the same time, transaction activity remains muted—down 31% year over year—but bid-ask spreads are narrowing as buyers and sellers converge on more realistic pricing expectations.

Deloitte’s latest CRE outlook underscores this inflection point. 88% of global real estate executives now expect revenues to increase over the next 12–18 months, a dramatic reversal from the prior two years of bearish sentiment. Importantly, over 68% of executives also expect CRE fundamentals to improve across key metrics—cost of capital, property prices, leasing activity, and rental growth.

This positive shift is not uniform across property types. The office sector remains structurally challenged due to remote work trends and oversupply. Retail is bifurcated, with well-located prime assets outperforming legacy centers. Industrial assets are fundamentally sound, but valuations are no longer distressed.

The standout sector—again—is multifamily housing.

How the Current Cycle Mirrors 2013

The similarities between today’s market and the setup in 2013 are profound—and not coincidental.

In 2013, U.S. multifamily building permits had surged to 155,000 units, up nearly 70% from the post-GFC lows. This was a response to genuine demand, not speculative froth. Vacancy rates had declined from 10.5% in 2008 to 7.6% by 2013, and cap rates compressed from 7.5% to 6.2% as confidence returned.

Equally important, 2013 was a period of rebound in capital growth for property assets, despite the constrained financing environment. Deals required sound fundamentals and hyper-local knowledge. Investors were rewarded for underwriting quality and for value-add execution—not financial engineering. 

Fast forward to 2025, and the same pattern is emerging. Cap rates are normalizing after years of artificial compression, rents are stabilizing in line with wage growth, and institutional capital is selectively re-engaging. Importantly, the speculative “growth at any cost” mindset that defined the 2019–2021 period has ended.

In many respects, 2025 represents a new 2013: a disciplined, fundamentals-driven entry point, with a much-needed margin of safety.

Why Multifamily Is the Asymmetric Opportunity

Of all CRE sectors, multifamily housing offers the clearest path to upside. Several factors are driving this dynamic.

First, the supply pipeline is structurally constrained. According to JP Morgan, new multifamily construction starts are 13% below their 2022 peaks, and the sharp rise in construction costs means that it is often cheaper to buy than to build.

Second, rental demand remains resilient. U.S. unemployment is hovering near 4%, and household formation trends—especially among Millennials and Gen Z—are driving sustained demand for rental housing. Vacancy rates across U.S. multifamily are near 25-year lows, even amid broader macro uncertainty.

Third, cap rate spreads relative to Treasuries are now starting to look attractive again. While spreads compressed sharply in 2021, they have begun to normalize as interest rate volatility declines. This sets up multifamily for both yield and capital appreciation.

Finally, multifamily offers a hedge against inflation and a reliable source of cash flow. KKR notes that fundamentals across residential real estate are strong, and that long-term demographic trends support stable demand for housing of all types.

The Role of Revitalization: Where Alpha Will Be Found

Another clear parallel to 2013 is the importance of revitalization markets. In the post-GFC recovery, cities like Denver, San Francisco, and Boston led the way as public infrastructure spending and private investment catalyzed neighborhood transformation.

Today, the same forces are at work in emerging second-tier markets such as St. Louis, Indianapolis, Miami, Austin, and New Orleans.

Public sector investments in transit, green infrastructure, and housing affordability are dovetailing with private capital flows. Savvy investors who engage with local partners and focus on value-add strategies in early-stage revitalization corridors are positioned to generate superior returns.

The investor playbook from 2013 remains highly relevant: thesis-driven acquisitions, conservative leverage, operational excellence, and community engagement.

The Private Equity Edge

Private equity investors are particularly well-positioned to capitalize on this cycle. Despite recent market turbulence, private equity now represents over 51% of U.S. real estate investment activity.

PE firms bring critical advantages: flexible capital, a long-term investment horizon, and operational capabilities. These strengths are ideally suited to a multifamily market that increasingly rewards active asset management and tenant-focused execution.

Moreover, the current environment of selective distress is tailor-made for PE strategies. As the “wall of maturities” hits in 2025 and 2026, many undercapitalized owners will be forced to transact. PE firms with dry powder and conviction-driven theses will be able to acquire assets at favorable basis levels.

Capital Market Dynamics and Debt Availability

One critical difference between today and 2013 is the evolution of capital markets. The emergence of private credit as a CRE lender is filling gaps left by traditional banks.

While bank lending remains subdued, private credit is providing acquisition and bridge financing to enable transactions. Additionally, NAV-based financing and continuation funds are becoming more prevalent, giving PE firms additional liquidity tools.

This evolving capital stack supports deal flow, particularly in multifamily, where stabilized cash flow provides a strong underwriting base for lenders.

Climate and ESG Considerations

One emerging risk factor compared to 2013 is climate exposure. As Deloitte and MSCI note, investors are increasingly focused on climate resilience. Multifamily assets with energy efficiency, smart building features, and location advantages will command premium pricing.

Simultaneously, public policy incentives—such as green building tax credits and transit-oriented development grants—are supporting ESG-aligned investment in multifamily.

Investors who proactively integrate ESG considerations into their underwriting and asset management will have a competitive edge in both tenant attraction and capital markets.

Conclusion: The Blueprint for 2025

As the CRE market transitions from post-peak volatility into a more fundamentals-driven phase, multifamily housing stands out as the sector with the most asymmetric opportunity.

The playbook is clear:

• Revisit the 2013 model: disciplined capital deployment, block-by-block underwriting, and value-add execution.

• Focus on revitalization corridors and emerging growth markets.

• Leverage private credit and flexible capital structures to transact amid selective distress.

• Embrace ESG integration as both a risk mitigant and value driver.

Ultimately, the next generation of winners in CRE will look much like the leaders of 2013: thesis-driven, community-embedded, operationally excellent, and aligned with long-term secular trends.

2025 is not the end of a cycle—it is the beginning of a new one. And for multifamily investors, the window is wide open.

Sources & References

Deloitte. (2024). 2025 commercial real estate outlook. https://www2.deloitte.com/us/en/insights/industry/financial-services/commercial-real-estate-outlook.html 

CBRE. (2024). Capital Markets Activity Expected to Stabilize. https://www.cbre.com/insights/books/us-real-estate-market-outlook-2024/capital-markets 

Fastmarkets. (2024). US housing market analysis: Recent trends shaping the market. https://www.fastmarkets.com/insights/us-housing-market-analysis-recent-trends/?gad_source=1&gad_campaignid=22545353907&gbraid=0AAAAABUTniyjapZ9Cmul1HxmnrIxIOY-6&gclid=CjwKCAjwr5_CBhBlEiwAzfwYuGnUxP0TkxjuNdu4KFZIh7BTKHv1rmeYiWSVVgHIo3C2wzDUBhUFLhoCdFoQAvD_BwE 

Federal Reserve Bank. (2025). Commercial Real Estate Prices for United States. https://alfred.stlouisfed.org/series?seid=COMREPUSQ159N&utm_source=series_page&utm_medium=related_content&utm_term=related_resources&utm_campaign=alfred 

Federal Reserve Bank. (2025). Value of Construction Put in Place. https://fred.stlouisfed.org/release/tables?rid=229&eid=22348#snid=22545 

JP Morgan. (2024). Three reasons we see a potential comeback in commercial real estate. https://privatebank.jpmorgan.com/nam/en/insights/markets-and-investing/ideas-and-insights/three-reasons-we-see-a-potential-comeback-in-commercial-real-estate 

KKR. (2024). Investing in the Real Estate Recovery. https://www.kkr.com/insights/real-estate-recovery#2 

MSCI. (2025). Real Estate in Focus: 2025 Trends to Watch. https://www.msci.com/research-and-insights/blog-post/real-estate-in-focus-2025-trends-to-watch 

RedFin. (2025). Data Center. https://www.redfin.com/news/data-center/ 

Riskwire. (2025). The Impact of Interest Rates on Real Estate Valuations. https://www.riskwire.com/the-impact-of-interest-rates-on-real-estate-valuations/ 

Statista. (2024). CoStar Commercial Repeat-Sales Index (CCRSI) for office real estate in the United States from March 1996 to March 2024. https://www.statista.com/statistics/1379467/ccrsi-office-real-estate-usa/ 

Statista. (2025). Quarterly office vacancy rates in the United States from 4th quarter 2017 to 1st quarter 2025. https://www.statista.com/statistics/194054/us-office-vacancy-rate-forecasts-from-2010/ 

U.S. Census Bureau, Total Construction Spending: Nonresidential in the United States [TLNRESCONS], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/TLNRESCONS, June 11, 2025.