Tariffs, Treasuries, and the Quiet Bottom in Rents
April brought a new layer of policy uncertainty, range-bound Treasury yields, and the first credible signs that the post-pandemic rent rout has run its course. Here is what stood out to us—and where we are leaning in.
April was a month of crosscurrents. Tariff headlines disrupted construction-cost assumptions overnight, the 10-year Treasury whipsawed between 4% and 4.5% inside a single fortnight, and the U.S. apartment market quietly produced its strongest first-quarter leasing performance in three years. Underneath the noise, the path we have been walking for the last eighteen months—disciplined basis, durable Midwest and Southeast cash flow, light-to-moderate value-add—kept getting more attractive.
Pipeline: Two Live Deals, Disciplined Posture
We continued to make meaningful progress in two of our core markets. In Dallas-Fort Worth, we are closing in on award of a 496-unit asset in a high-growth submarket. Site visits are complete, lender and equity feedback has been incorporated, and we have refined the business plan with a seasoned local operating partner. DFW remains highly competitive, but we believe this opportunity offers a compelling basis and credible value-add upside in a market still backed by elite job growth and in-migration.
Separately, we sourced an off-market acquisition in Fayetteville, NC—three workforce housing communities totaling more than 300 units. The combination of scale, operational upside, and affordability in a stable market with minimal new supply makes this a strategic foothold in a Southeast geography that aligns with our broader platform thesis. Diligence and structuring are active.
Pipeline expansion continued across Dallas, Louisville, Indianapolis, Northern Indiana, and Orlando. We are also evaluating a deeply distressed, lender-controlled portfolio with assets in Charlotte, Raleigh, and Chapel Hill. Pricing reflects the recalibration underway in many submarkets—several of these properties are expected to trade at less than 70% of their 2021–2022 peak valuations, in some cases below outstanding debt. The signal we take from this is that disciplined, well-capitalized sponsors are positioned to generate long-term value here, and we intend to be one of them.
Oakdale $10M GP Fund: Closing in May
We are nearing our $10 million target and expect to hold our initial Fund closing in May. We anticipate allocating capital into one or more transactions over the coming quarter and continue diligence on several near-term candidates. For those still interested in participating, please reach out directly.
Tariffs Add a New Layer of Uncertainty—and an Unexpected Tailwind
The most consequential macro shift in April came not from the Fed but from trade policy. After the April 2 “Liberation Day” announcement, a universal 10% tariff hit nearly all imports, with additional duties layered on top for several countries. Apartment developers responded by accelerating bulk material orders[1]—flooring, appliances, fixtures—six to ten months ahead of typical schedules to lock in pre-tariff pricing. Pro forma yields on new construction, already squeezed by elevated financing costs, took another hit.
For existing owners, the second-order effect is more interesting. Industry observers noted that the post-2022 supply glut now looks like a strategic asset[2] rather than a liability: existing inventory has been built at a basis the next vintage of construction may struggle to match. For our acquisitions strategy this means the value of in-place assets in already-financed markets is structurally higher than it was 90 days ago, and the runway before the next wave of new supply arrives just got longer.
Tariffs convert today’s standing inventory into tomorrow’s scarcity. The next development cycle will start from a higher cost curve—and existing owners are on the right side of it.
Vintage Bias Creates Opportunity in 1980s Product
We continue to see investor capital concentrate in 1990s-and-newer product, particularly early-2000s suburban garden assets. The thesis is straightforward—less capex risk, fewer functional obsolescence concerns, easier financing—but the result has been pricing distortion. Many 1980s-built properties with good bones and proven demand sit at materially wider cap rates with fewer bidders.
For experienced operators with a credible renovation plan and a disciplined asset management team, this dislocation is one of the most attractive risk-adjusted setups in the market. The work is more operationally intense, but the entry basis frequently sits below replacement cost by 30% or more, and the rent comp set inside the same submarket is often nearly identical. This matters for our underwriting because the alpha is increasingly in vintages and product types other sponsors are unwilling to operate—not in chasing the same set of trophy assets at compressed yields.
Rates: Range-Bound, but Volatile Underneath
The 10-year Treasury remained range-bound between roughly 4.2% and 4.4% on a monthly basis, but inside the month the volatility was striking. The 10-year dropped to 3.99% immediately after the tariff announcement, then climbed 50 bps to 4.49% by April 11[3], before settling at 4.17% at month-end. Sticky services inflation has kept the Fed cautious, while softer labor and manufacturing data have kept rate cuts in the conversation. Futures markets are now pricing one to two cuts in 2025, down from three earlier in the year.
For real estate underwriting, this push-pull translates into persistent caution on both sides of the table. With risk-free rates stabilizing rather than rising, however, we are seeing early signs of recalibrated seller expectations and meaningfully higher engagement on bid-ask gaps that were unbridgeable six months ago. Cap rate expansion remains a live discussion, but the direction of travel is now toward closure rather than further separation.
Signs of Rent Stabilization Are Real
The most important data point of the month came from CoStar and RealPage. RealPage reported Q1 2025 absorbed over 138,000 market-rate apartment units—the strongest first quarter in its 30-plus-year dataset[4]. CoStar/Apartments.com data showed asking rents held at 1.1% year-over-year national growth with vacancy stable near 8.1%[5]. New-lease trade-outs averaged 1.4% month-over-month from January through March, the strongest Q1 in three years, and by March, trade-outs had reached 0%—meaning new lease rents had caught up to expiring ones. That is a notable improvement from November 2024, when new leases were rolling 4% below prior rents.
For markets that absorbed the sharpest rent declines—Austin, Phoenix, other high-supply Sun Belt metros—this flattening points to a bottom. Rent growth remains well below historical norms, but the inflection matters: pricing power returns gradually as demand absorbs elevated supply and new deliveries taper. The signal we take from this is that the rent-growth assumptions we have been using in our underwriting since mid-2024 have been too conservative for stabilized Midwest and Southeast assets, and we are revisiting our acquisition models accordingly.
The first-quarter print did not say rents are surging. It said rents stopped falling. In a cycle like this one, that is the more important number.
Closing Thought
April reinforced the path we have been walking. The cost of capital is sticky. New supply is constrained by both financing and now construction-input policy. Operating fundamentals are stabilizing in the markets we underwrite to. And dislocation continues to widen the gap between sponsors who can operate older vintages and execute on basis-driven business plans and everyone else.
We continue to favor stabilized and light-to-moderate value-add product in the Midwest and Southeast, with disciplined entry basis and capital structures that do not require macro tailwinds to clear. The next twelve months should produce attractive opportunities for the patient. Please reach out with questions or to discuss the markets we are active in.
Will Thompson
Founder & CEO, Oakdale Capital
Sources
Multifamily Dive, “Apartment developers gear up for tariffs,” April 2025. multifamilydive.com
Walker & Dunlop, “Apartment Developers Who Overbuilt Luck Out With Tariffs,” April 2025. walkerdunlop.com
Tradeweb, “Government Bond Update — April 2025,” May 2025. tradeweb.com
RealPage, “1st Quarter 2025 Multifamily Update,” April 2025. realpage.com
Apartments.com, “Rent Growth Report: No Change in Rent Growth or Vacancy in First Quarter of 2025,” March 2025. apartments.com
