Episode 26: Supply Relief (34% Decline in Deliveries, 70% Drop in Starts)

Welcome back to What's Hot & What's Not CRE — your daily pulse on commercial real estate in America. It's Monday, January 26th, 2026. Let's kick off the week with the latest residential and multifamily data. 🔥 What's Hot — Supply Relief Is Finally Here: Apartment Deliveries Down 34% — Nationally, apartment deliveries are projected to decline nearly 34% over the next year; the supply relief multifamily has been waiting for Texas Leading the Turnaround — Completions expected to average ~11,700 units/quarter in 2026; roughly half the quarterly volume from 2024-2025 New Construction Starts Down 70% — Developers broke ground on just 395,000 units expected in 2026, down from 410,000 in 2025; pipeline shrinking fast Developer Sentiment Shifting Positive — 70% of NMHC survey respondents believe conditions will improve in 2026; financing getting easier Select Markets Bucking Trend — Los Angeles deliveries nearly doubling to 15,500 units; Detroit seeing 77% increase with 3,100 units; San Diego and Anaheim up over 70% ❄️ What's Not — Vacancy Rates Still Elevated: National Vacancy at Record High — 7.3% in January 2026; record high for Apartment List index dating back to 2017 Denver Metro at 16-Year High — Arapahoe and Denver counties tied at 8.2% vacancy Sun Belt Still Absorbing — Tampa projected to see negative rent growth through year-end; San Antonio rent growth not expected to turn positive until Q4 Vacancy Expected to Stay Elevated — National vacancy around 8.4-8.5% through 2026; won't drop below 8% until 2027 or 2028 📊 Why It Matters: The multifamily market is at an inflection point. Supply is finally slowing — down 34% in deliveries, down 70% in new starts. But vacancy hasn't caught up yet. We're in the lag period where supply relief is real but absorption takes time. Rent growth expected to be modest — consensus around 2% for the year, CoStar projecting just 1% by year-end. Low-supply markets in the Northeast and Midwest will outperform. Sun Belt markets need more time. Bright spot: wage growth and cooling inflation strengthening real incomes. Reduced move-outs to single-family homes deepening the rental demand pool. Fundamentals setting up for recovery — but patience is required. 💡 Investor Takeaway: Supply relief is here but vacancy remains elevated. This is the setup for a 2027 recovery, not a 2026 sprint. Focus on low-supply markets — Northeast and Midwest. Avoid high-vacancy Sun Belt metros until absorption accelerates. Underwrite conservatively on rent growth — 2% is the realistic baseline. Thanks for tuning in. See you tomorrow! Don't forget to Like, Share and Subscribe! Visit hotnotcre.com to learn more and subscribe to our newsletter.