MLG Capital Releases Latest Private Real Estate Market Outlook – Cites Rare Moment of Opportunity

Brookfield, WI – May 22nd, 2025 – Qwoted Newswire – MLG Capital – a national leader in private real estate investments for accredited individuals, RIAs, family offices and institutional allocators­ released its “2025 Spring Market View,” a robust report featuring the firm’s insights on the multifamily and industrial sectors, along with current trends in capital markets. The market view provides an inside look for investors on the state of the private real estate market, including where opportunities may exist and identifying important trends.

In the latest Market View, MLG explains why today’s market, shaped by oversupply from record development starts in 2021-2022, tightening capital and a sharp decline in new construction, may present as an attractive buying opportunity.

The following is a summary of key findings in select sectors. The full report can be viewed and downloaded here, and a discussion with MLG’s CEO Tim Wallen, President Billy Fox and Chief Investment Officer Dan Price can be viewed here.

Multifamily fundamentals remain intact amid temporary imbalances

According to MLG, long-term demand drivers reinforce the multifamily asset class despite near-term operational softness. The ongoing appeal of multifamily investments is supported through the following:

– Steady Demand: Household formation is outpacing population growth, averaging approximately 1.33% annually over the past decade. This divergence is driven by delayed marriage, an aging population living alone longer, and a growing cohort of renters-by-necessity. These structural shifts are not cyclical—they reflect durable changes in U.S. housing behavior driving the demand for all housing.

– Affordability Constraints: As of early 2025, the cost of homeownership exceeds the cost of renting, on average, by approximately 64%—the widest margin recorded in over two decades. This growing delta is extending rental lifespans and expanding the renter base, particularly among middle-income households.

– Reduced New Construction Permits & Starts: Multifamily new construction starts have declined to approximately 80,000 units per quarter, or 320,000 units annually—well below the estimated 430,000 units needed annually to meet household formation trends. This projected undersupply is expected to see further supply reductions resulting in stronger operating performance in the coming years. Additionally, since 2000, construction costs have risen at a compound annual rate of 3.7%, outpacing rent growth at 3.2%. This growing gap makes the investment of ground-up multifamily increasingly more challenged, particularly without government incentives like tax subsidies.

With these factors in mind, MLG continues to prioritize acquisitions of high-quality, well-located assets, particularly in the Midwest and other potentially less volatile markets. These assets are typically acquired below current replacement costs to provide a compelling entrance basis.

Flex industrial niche is well-positioned for investment

MLG notes that while much of the industrial sector is navigating supply-driven volatility, the flex industrial niche remains undersupplied, structurally sound and positioned for stable rent growth. Notable insights include:

– New Supply Surge: Over the last three years, institutional capital heavily favored large-format logistics assets, leading to a wave of new development in the 250,000+ square foot distribution segment. This has resulted in some softening in occupancy and rent growth within the bulk industrial space.  MLG is not focusing on large, single tenant assets.

– Flex Undersupply: Despite representing a significant share of tenant demand, flex product (defined by multi-tenant, small-bay spaces with many containing small office components) accounts for just a fraction of recent development. As of early 2025, only 1-2% of new industrial construction has targeted flex product, creating a supply/demand imbalance that may support continued rent growth.

– Outsized Rent Growth: Smaller units allow for greater pricing flexibility. For example, a $1-2/sq. ft. rent increase may represent 10-20% growth while remaining a manageable cost for tenants. This dynamic enhances cash flow growth without significant tenant churn.

While overall industrial vacancies have modestly increased, occupancy in MLG’s flex industrial portfolio remains above 90%, driven by demand from local businesses, service providers and light manufacturing users. According to MLG Chief Investment Officer Dan Price, “flex industrial is the multifamily of industrial–fragmented, resilient and typically provides the same discount to replacement cost story we seek in our multifamily investments.” 

Capital markets are constrained but not broken

According to MLG, for managers with stable investor bases and conservative leverage, today’s scarcity in equity and debt is creating opportunity, not obstruction. Highlights from the report include:

– Shifting Capital: With risk-free rates above 4-5% , many allocators have shifted short-term capital into high-yield savings, corporate credit and private lending strategies. While understandable, MLG believes this trend is cyclical—not permanent. As public yields normalize and real estate fundamentals stabilize, capital flows are likely to return in scale. In the meantime, the funds flowing away from real estate equity investments result in less competitive buying processes that MLG can take advantage of.

– Stricter Underwriting and Lower Leverage: Banks, life companies and agencies remain active at low-to-moderate leverage levels. Higher-leverage strategies, often used by syndicators and merchant developers, have become difficult to execute, removing a significant portion of the buyer pool from active competition.

– Enhanced Sourcing Environment: With many syndicated buyers sidelined and institutions cautious, MLG is seeing increased access to off-market recapitalizations, developer exits and assets with loans maturing.

“While periods of market dislocation can feel uncertain, they can be among the most attractive windows to deploy capital,” said Price. “Today’s private real estate market reflects exactly that dynamic—a convergence of softer near-term fundamentals, reduced capital competition and mounting barriers to future supply.”

Disclaimer: Private investments are highly speculative, illiquid, may involve a complete loss of capital, and are not suitable for all investors. Past performance is not indicative of future results. Prospective investors should conduct their own due diligence and are encouraged to consult with a financial advisor, attorney, accountant and any other professional that can help them to understand and assess the risks associated with any investment opportunity.

About

MLG Capital is a sponsor of private real estate funds targeting investment from investment advisors, family offices, and accredited individuals. For more information about MLG Capital and its investments, visit the firm’s newsroom.

This release does not constitute an offer to sell an investment in a security. Offers to sell an investment in a security can only be made to a qualified purchaser by delivery of a Confidential Private Placement Memorandum (the “Memorandum”), any supplements to the Memorandum and accompanied by a Subscription Document Booklet. The information contained in this release may be preliminary in nature and may have not been independently verified by MLG Capital or its affiliates. The recipient of this release should consult with its own investment, tax and/or legal professionals about the merits of the investment. MLG Capital does not make any representation or warranty as to the accuracy or completeness of any information presented in this release.

Securities offered through North Capital Private Securities, Member FINRA/SIPC. Its Form CRS may be found here and its BrokerCheck profile may be found here. NCPS does not make investment recommendations and no communication, through this release or in any other medium, should be construed as a recommendation for any security offered on or off this investment platform. This release is intended solely for qualified investors. Investments in private offerings are speculative, illiquid, and may result in a complete loss of capital. Past performance is not indicative of future results. Prospective investors should conduct their own due diligence and are encouraged to consult with a financial advisor, attorney, accountant, and any other professional that can help them to understand and assess the risks associated with any investment opportunity.

Any offering includes risks and uncertainty many of which are not outlined herein including, without limitation, risks involved in the real estate industry such as market, operational, interest rate, occupancy, inflationary, natural disasters, capitalization rate, regulatory, tax and other risks which may or may not be able to be identified at this time and may result in actual results differing from expected.

Any financial information or projections may be initial estimates and may be subject to change without notice to recipient. An investment into a private offering is subject to various risks, none of which are described herein. All figures as of 3/31/2025. Value consists of disposed of assets as well as the current internal valuation of currently held assets as of 3/31/2025. Values may not have been reviewed by an independent 3rd party and may be internal projections.

Advisory services offered through MLG Fund Manager LLC, an investment adviser registered with U.S. Securities & Exchange Commission.

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