Baltimore’s 2024 Multifamily Outlook

Baltimore’s 2024 Multifamily Outlook

Multifamily investment in Baltimore is expected to increase in 2024, as a stable interest rate environment should push more deals to the finish line. The Federal Reserve has indicated multiple rate cuts are on the docket for this year and even more in 2025, thanks to easing inflation. Multifamily properties also saw a noticeable uptick in leasing in 2023, a trend expected to continue due to a myriad of struggles in the single-family for-sale market.

Loan maturities will remain the focus as many short-term loans acquired during the pandemic featured ultra-low interest rates. These owners are now faced with a higher cost of capital, making refinancing more difficult and resulting in more sales. The bid-ask spread will likely narrow, and more buyers can return to the market as the interest rate volatility in previous years lessens.

While performance among metro markets is bifurcated, those with less supply-side pressure will likely continue to see rent increases. Baltimore has far less construction underway than the national average, and rents are growing faster than in many fast-growing markets like Miami, Nashville, Phoenix, and Raleigh. Multifamily construction is mainly concentrated in southern areas, and landlords in the Mid-Atlantic and Northeast markets have reaped the benefit of pushing rents with the uptick in rental demand.

“...more buyers can return to the market as the interest rate volatility in previous years lessens. ”

Baltimore will likely continue to see more adaptive reuse of older, low-performing properties, especially within the downtown. Over 40% of the current inventory under construction includes conversions from a previous use of an office, hotel, or warehouse. Continued woes in the office market could result in more conversion opportunities for developers and investors in the next several years.

Despite many recessionary concerns, the economy continued to grow in 2023. Baltimore’s overall job growth grew by 1.8%, and the unemployment rate is near an all-time low of 1.8%. Economic leaders will continue to eye consumer spending and real gross domestic product (GDP) in 2024, as these figures exceeded expectations last year.