Parkview Insights: Navigating Multifamily Construction in 2025: Trends, Challenges and Lending Strategies
- Parkview Financial
- Oct 21
- 6 min read
Parkview Insights | Market Trends & Updates
Paul Rahimian, Founder, CEO | Dhaval Parikh, Managing Director, Head of Capital Raising & Investor Relations | Scott Denham, Managing Director, Head of Construction | October 2025
Multifamily construction starts have dropped dramatically—down approximately 30% year-over-year1. This steep decline reflects a convergence of elevated interest rates, rising construction costs, and tighter lending conditions.
Yet demand for rental housing remains resilient, fueled by demographic shifts, affordability barriers to homeownership, and evolving lifestyle preferences. However, we are seeing a reallocation of demand based on regional factors. While Sun Belt markets led the supply surge in recent years due to pandemic-era in-migration, they are now past peak delivery and are focused on absorbing the elevated supply. The Northeast, West Coast, and Midwest, which did not experience the same construction boom, are currently showing more balanced fundamentals characterized by steady demand and lower oversupply risk.
These shifting market dynamics are fundamentally reshaping how developers and lenders evaluate opportunities and manage risk. This latest Insights article will delve into these changes, including exploring the impact of tariffs and immigration on multifamily construction, and highlighting regions and commercial real estate credit strategies where Parkview sees strong relative value.
1 National Association of Home Builders, Sharp Drop in Multifamily Production Brings Overall Housing Starts Down, June 18, 2025. www.nahb.org
Tariffs and Material Costs
Construction costs have surged due to tariffs on key materials like steel, aluminum, and lumber. This is not just a recent development. Since 2020, tariffs—some reaching 25%—have contributed to material cost increases ranging from 30% to 50%2. Appliances, fixtures, and equipment sourced abroad add to the pressure, with supply constraints, extended lead-times for delivery, and significant upfront payment requirements. Together, these forces have made construction materially more expensive and less predictable. Developers are responding by rethinking project scopes, investing in operational efficiencies, and prioritizing value engineering. Despite these efforts, Parkview believes that elevated interest rates and material costs will continue to make new construction difficult to “pencil,” ultimately leading to muted future supply.
Immigration Policy and Labor Shortages
Labor availability remains a critical bottleneck. Immigrants comprise 34% of the U.S. construction workforce, and in states like California and Texas, that figure exceeds 50%3. However, the sustained impact of stricter immigration enforcement and the continued absence of a dedicated visa program for construction workers have exacerbated labor shortages. The major areas impacted in multifamily construction include labor-heavy trades such as wood framing, roofing, and drywall. These constraints have added to construction costs and delayed project timelines nationwide. Ultimately, the labor shortage is structural, not cyclical, meaning the lack of legal pathways for key workers represents a significant, latent risk that will likely intensify–adding acute cost pressure—once construction demand and development reaccelerate.
Divergence in Markets
Several markets have experienced significant multifamily supply growth over the past few years. For example, Dallas-Fort Worth delivered over 33,000 units in 2024, a 28% year-over-year increase; Denver saw a 50% increase in deliveries; and Austin delivered over 20,000 units, with a 36% increase in supply4. These markets, along with Phoenix, Atlanta, and Houston, have been at the forefront of the construction boom. The Sun Belt saw notable in-migration following the pandemic, as individuals and families sought locations with favorable weather, lower taxes, and reduced cost of living. Developers responded aggressively, resulting in oversupply that will take time to absorb.
Conversely, while many Sun Belt markets face oversupply, other regions are in a more balanced state driven by a combination of structural barriers and comparatively lower capital allocations from institutional investors and lenders. Supply in key markets across the Northeast and West Coast is primarily balanced due to barriers to new construction, such as regulatory constraints and land scarcity. These structural barriers limit the feasibility and pace of new construction despite strong, persistent demand, protecting existing asset values and keeping supply in check. For example, markets like Boston, Los Angeles, and San Diego are seeing more controlled growth and stability in supply due to regulatory constraints and limited developable land.
A separate set of markets, concentrated mostly in the Midwest, are balanced due to lower relative capital inflows; these areas are often overlooked by large institutional investors seeking scale. These underserved value markets, including Cleveland and Minneapolis, are characterized by stable fundamentals, creating compelling opportunities for selective, middle-market lending.
This divergence across markets underscores the importance of a targeted, selective lending strategy that prioritizes regions with structural supply constraints or underserved value, where fundamentals are stable and lending opportunities can be pursued with lower execution risk.
2 National Association of Home Builders, “How Tariffs Impact the Home Building Industry,” NAHB, accessed October 2025. www.nahb.org
3 Construction Reporter, “Immigrant Construction Workforce at All‑Time High, With Signs Pointing to More Growth, According to New Harvard Report,” Construction Reporter (2025).
4 Based on market‐level multifamily delivery data compiled by Colliers, RealPage, and Multifamily Dive (e.g. “Top 20 US metros for apartment deliveries in 2024,” Multifamily Dive)
Parkview’s Lending Approach
In response to the current market challenges and structural constraints, Parkview has adopted a flexible and opportunistic lending strategy. The firm is actively providing rescue financing—short-term bridge loans designed to help borrowers complete projects stalled by valuation resets, constrained by takeout financing or delayed projects. These loans offer attractive yields and are “de-risked” as they finance projects that have already overcome the most complex construction hurdles such as zoning approval and initial foundation work, allowing Parkview to minimize entitlement risk and execution risk, and capitalize on market dislocation.
Parkview is also strategically allocating capital to ground-up construction in markets with balanced supply-demand dynamics, targeting major coastal markets such as New York City, Boston and Los Angeles, where structural impediments ensure limited new supply, and focusing on select Midwest markets that remain underserved by large institutional lenders. These regions offer more predictable absorption rates and less competition, making them attractive targets for new development. This focus allows Parkview, through a middle-market lending approach, to capture an attractive yield premium for funding quality multifamily projects.
Conclusion
Multifamily construction today is shaped not only by its inherent complexity, but by the critical need for strategic capital deployment. Developers and lenders must navigate the confluence of rising material costs, acute labor shortages, and fundamentally divergent regional demand patterns. As traditional financing sources remain constrained, Parkview demonstrates that selective capital deployment and granular, market-specific insights are key to driving value and protecting principal. By focusing rigorously on strong sponsors, a secure basis, and clear paths to stabilization through senior secured lending, Parkview is strategically positioned to deliver risk-adjusted, equity-like returns for investors and certainty of execution for borrowers.
By Paul Rahimian, Founder, CEO | Dhaval Parikh, Managing Director, Head of Capital Raising & Investor Relations | Scott Denham, Managing Director, Head of Construction
Learn more about our lending programs and market insights, www.parkviewfinancial.com
This article is intended for general information purposes only and is not intended to offer investment advice or recommend investments. This article is not an offer to sell or a solicitation of an offer to buy securities. Parkview Financial 2015 Fund, LP (“Parkview Financial”) offers investments to qualified investors only under the terms of a Confidential Private Offering Memorandum (the “Memorandum”) that may be made available to prospective investors in accordance with applicable federal and state securities laws. The Memorandum contains information regarding the business of Parkview Financial and the risks of making an investment in Parkview Financial. Prospective investors are required to read the Memorandum and acknowledge the risks of investment before making any investment in Parkview Financial.
About Parkview Financial
Parkview Financial is an alternative investment manager specializing in commercial real estate credit in the U.S. Over its 15-year history, Parkview has successfully executed more than $4 billion in short-term bridge and construction first-lien financing across 200 loans. The firm is active in major U.S. markets and is primarily focused on middle-market loans for the development, acquisition, renovation or refinancing of multifamily, single family residential, industrial, retail and mixed-use projects.
Headquartered in Los Angeles with offices in New York and Las Vegas, Parkview has grown exponentially since it was founded in 2009 by CEO Paul Rahimian. The firm has earned a reputation within the commercial real estate industry as a respected private lender known for its ability to provide swift, creative financing solutions to borrowers requiring certainty of execution.
Parkview's success is driven by its team of seasoned in-house experts across originations, credit underwriting and construction, who bring creativity and agility to even the most complex projects. This combination of expertise and flexibility has solidified Parkview's standing as a trusted partner to experienced and well-capitalized borrowers.
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