I still remember the moment Ken McElroy brought it up in January 2024.
I was sitting in a small meeting room in Dallas, watching Ken pace back and forth on stage, gesturing emphatically at the graphs displayed behind him. He was discussing something that few people were paying attention to at the time, but that would soon become impossible to ignore.
His thesis was simple:
New apartment construction has basically stopped
Demand for apartments is strong as ever (with no sign of slowing)
This meant we could reasonably assume two things:
There will be a shortage of apartment units for rent starting in 2026
Shortage of units = higher rents = higher property values
I remember looking around the room, trying to gauge if others were as intrigued as I was. Some were furiously taking notes. Others looked skeptical. But something about the straightforward logic of this thesis stuck with me.
From Insider Knowledge to Mainstream News
For the past year, we've been operating under this thesis, looking for solid apartment deals where we can take advantage of this trend. (We got close on a couple in Las Vegas, but were ultimately beat out by family offices with deeper pockets.)
And until recently, there hasn't been much discussion about this outside of folks deep in the real estate weeds – experts like Ken and the always-insightful Jay Parsons, along with industry research from the likes of Marcus & Millichap and Yardi.
But now? The big players are talking.
Several of the large multifamily-focused REITs discussed this trend during their Q4 earnings calls.
Here's what Keith Oden, president of Camden Property Trust had to say:
I think things on the horizon, back half of 2025, looks to be pretty constructive for us... When you look out to 2026 and…what's been happening on starts and what's likely to happen on completions in '26 and '27, I think we're set up for one of those 2 or 3-year runs that they're going to be pretty impressive for the entire multifamily sector.
That's not some random real estate guru on YouTube. That's the president of a company that owns 60,000 apartment units.
But what's really caught my attention is how this insider knowledge has now jumped to the mainstream media:
Is It Too Late to Take Advantage?
There's a popular saying among investors that once you read about it in the WSJ, it's too late – the opportunity is gone.
But I don't think that's the case here.
Until rents actually start taking off (likely late this year or early next), there's still time to get in. That's why we're still actively looking at deals, trying to find these opportunities before the rest of the market fully catches on.
And further, this trend will benefit some of our other current investment opportunities like our Private Commercial Credit Fund, as higher property values further strengthen our assets in the fund (and let us capture more upside in some of our preferred equity positions).
What This Means For You
If you've been on the fence about multifamily investing, that’s understandable.
The last few years have been challenging – average property values are down as much as 20% from their 2021-2022 peaks.
But now might be the time to take a closer look.
When the rental shortage becomes obvious to everyone, prices will already have adjusted upward. And as with most investment opportunities, the best returns go to those who position themselves ahead of the curve, not those who jump in after reading about it in the financial press.
So don't be surprised to see more of these stories from mainstream sources in the coming months – they're finally catching on to what we've known for over a year.
The question is: will you position yourself ahead of the curve, or wait until everyone else jumps in?