by Worth Woodyard
Memphis Multifamily Market Summary 2024-2025
The Memphis multifamily market is at a turning point. After a few years of rising cap rates due to higher interest rates and economic uncertainty, 2025 is shaping up to be the year when things start stabilizing.
Per Lawrence Yun, National Association of Realtors Chief Economist, Memphis will see a spike in rents and values in the next 12 months.
Per CoStar, Crexi, and public data, Memphis multifamily cap rates hit ~6.8% in 2023, well above the national average, offering investors good investment opportunities.
Higher borrowing costs forced sellers to adjust pricing, leading to slower transaction volume and more cautious investors and motivated sellers.
But with interest rates expected to hold or slightly decrease in 2025, we may see slight cap rate compression by year-end and prices increasing.
🏗️ Supply & Demand Shifts
A wave of new Class A developments caused higher vacancy in luxury apartments, forcing owners to offer concessions.
Meanwhile, Class B & C properties have remained more stable, with strong occupancy and rent growth.
The Elon Musk new AI facility, Blue Oval City Ford Truck project, St. Jude’s $13 Billion expansion, Regional One Health’s new $1 Billion hospital campus, FedEx hub expansion are expected to bring tens of thousands of new jobs, increasing housing demand.
The Greater Memphis Regional Commerce has been hinting at several new huge projects coming soon but have yet to be announced. Most are speculating that more ancillary uses related to Musk’s AI like Dell Computer Company as well as more distribution related opportunities.
💰 Opportunities for Investors
Memphis is still an affordable, high-yield market compared to national averages but prices may not stay this low for long.
Investors willing to buy at today’s higher cap rates could see strong returns if rates decline and values rebound.
Distressed asset sales may increase as some owners struggle to refinance at today’s rates creating some shortterm opportunites for cash buyers that move fast without requiring bank financing.
🔮 2025 Outlook
Experts predict cap rates could dip slightly as rates stabilize.
Investors are positioning for a rebound, anticipating strong rental demand and long-term market growth.
Memphis remains one of the best markets for high-yield multifamily investment.
If you’re in the multifamily space, how are you adjusting your strategy for 2025?
Let’s talk about the opportunities ahead!
- Worth Woodyard
Woodyard Realty Corp.
901-767-1998
worth@woodyardrealty.com
