Capital Comes Back, but Not Everywhere
Multifamily investment volume rebounded sharply in Q1, institutional confidence is returning, and capital is concentrating in the Southeast and Midwest. We are closing our GP Fund into exactly that setup.
May was the month the bid side showed up. After two years of frozen transaction markets, Q1 2025 multifamily volume printed at $28.8 billion—up 33% year over year and the strongest first quarter since 2022. The return of capital is uneven, however. It is concentrating in the Southeast and Midwest, in core-plus and value-add deals, and in the hands of sponsors who have built operating credibility through the cycle. That is the lane we have been positioning Oakdale to run in, and we are closing our $10M GP Fund into it.
Q1 Investment Volume: A Real Inflection
The headline number tells most of the story. CBRE reported Q1 2025 multifamily investment volume at $28.8 billion, a 33% year-over-year increase[1], with multifamily representing the largest single share of total commercial real estate investment in the quarter. Net absorption totaled 100,600 units—the strongest first quarter since 2000—and the overall vacancy rate fell 20 bps to 4.8%, below its long-term average of 5.0%.
The signal we take from this is that the institutional patience of 2023–2024 is breaking. Investors are no longer waiting for a clearer macro picture; they are underwriting to today’s rates and acting. Notably, deal flow improved in secondary markets as well as primaries, particularly where construction has slowed and rent growth has held. That is the kind of broad-based return of capital that historically precedes price recovery.
Transaction volume returns before pricing does. We are now in the part of the cycle where the bid side shows up first—and where conviction gets rewarded.
The Southeast Keeps Pulling Capital
According to Berkadia’s 2025 Multifamily Investor Sentiment Survey[2], more than 25% of multifamily investors ranked the Southeast as their top regional target for the year. Atlanta, Charlotte, Tampa, and Nashville continue to benefit from durable in-migration, strong job growth, and business-friendly governance. Capital is pursuing both core-plus and value-add opportunities, drawn by healthy absorption, stable operating margins, and favorable replacement-cost dynamics.
Institutional groups have also begun chasing “cost-to-own” gaps and leveraging tax-abatement programs in cities like Jacksonville and Birmingham to push yields. For our acquisitions strategy this means selectivity matters more, not less. The popular Southeast metros are seeing the most capital and the most supply at the same time; the work is identifying the specific submarkets and product types where the supply-demand math is genuinely favorable, not just the regional narrative.
The Midwest Is Having a Quiet Moment
Indianapolis, Kansas City, Cleveland, and Columbus continue to outperform on rent growth and occupancy, despite minimal attention in the national investment press. Northmarq research showed all major Midwest markets posted positive 12-month rent growth[3], with Chicago and Kansas City around 2.6–2.7% year-over-year. Limited new construction, strong affordability relative to coastal markets, and durable demand from healthcare, logistics, and education sectors are driving the upside.
Cap rates in these markets remain roughly 100–150 basis points wider than Sun Belt equivalents, which translates directly into yield-to-cost for yield-focused buyers. The signal we take from this is that the Midwest is no longer just “boring but stable.” It is one of the few places in U.S. multifamily today where you can underwrite both a credible going-in yield and a defensible rent-growth assumption without relying on macro tailwinds. That is exactly the combination we look for.
Core-Plus and Value-Add Dominate Investor Intent
The same Berkadia survey found that 83% of multifamily investors plan to expand their portfolios in 2025, with the majority favoring core-plus and value-add strategies over either core or opportunistic plays. Core-plus is the top choice for 43% of respondents; value-add follows at 30%.
That tells you where institutional underwriting expects the next cycle of returns to come from: well-located but under-managed assets where operational execution—not market beta—is the dominant return driver. It is also where the dislocation from the last 24 months has created the cleanest entry points, particularly in high-growth metros where new deliveries are now moderating. For our underwriting purposes, this is a useful corroboration: the deals that work in this environment are the ones where the sponsor’s operating capability is the load-bearing assumption, and the macro is treated as a known risk rather than a thesis.
The Big Picture
Despite ongoing concerns in office, retail and other commercial segments, multifamily continues to outperform. The Southeast and Midwest in particular are benefiting from affordability, demographic tailwinds, and localized supply-demand imbalances. We expect both portfolio expansion and capital deployment to accelerate in these regions through the second half of 2025.
Oakdale GP Fund: Closing This Week
We are pleased to share that we are beginning the process of closing our $10 million GP Fund. This milestone underscores our commitment to expanding Oakdale’s footprint in the high-growth and stable multifamily markets we have been writing about for months. The Fund enables us to co-invest alongside institutional partners on value-add opportunities that align with our data-driven thesis. We are preparing a final call to interested investors this week, with only a small window remaining before the Fund is fully committed.
Our first deployment from the GP Fund is slated for an off-market multifamily acquisition in Fayetteville, North Carolina. Fayetteville ranks at the top of North Carolina markets for rental demand[4], anchored by Fort Liberty (formerly Fort Bragg) and a growing medical sector, with steady population inflows and limited new modern rental supply. The asset profile, basis, and submarket dynamics all reflect the playbook we have been refining over the past year: stabilized to light-value-add product, durable workforce demand, and a basis that does not require macro relief to clear.
The right deal in the right market at the right basis still produces excellent risk-adjusted returns. The next twelve months will reward sponsors with the discipline to wait for that combination.
Closing Thought
May made the recovery thesis harder to dismiss. Volume is back. Vacancy is falling. Institutional capital is engaging again—selectively. The opportunity is no longer in calling the bottom; it is in deploying capital intelligently in the regions, vintages, and asset profiles where the recovery is most credible. That is what we are doing.
As always, please reach out with questions about our investment strategy, the Fund, or the Fayetteville deal. We appreciate your continued partnership and engagement.
Will Thompson
Founder & CEO, Oakdale Capital
Sources
CBRE, “U.S. Multifamily Recovery Continues as Vacancy Rate Falls, New Construction Slows,” April 2025. cbre.com
Bisnow / Berkadia 2025 Multifamily Investor Sentiment Survey, “83% of Multifamily Investors Are Looking To Buy In 2025,” February 2025. bisnow.com
Northmarq, “Multifamily fundamentals continue to improve across the Midwest,” 2025. northmarq.com
Rentastic, “Fayetteville, NC Real Estate Investment Guide 2025,” 2025. rentastic.io
