February 24, 2026

Annual rent growth holds up in Richmond’s multifamily market despite rising supply

Q4 2025

Richmond multifamily market overview

Continued renter demand in the Richmond multifamily market supported property performance even as developers delivered the second-highest annual total of new units to the market during the past decade. More than 3,400 new units were added to inventory during the year, a 39% increase from 2024. Net absorption of approximately 2,750 units helped offset most of the impact of new construction, signaling that the market’s core demand drivers remain strong. Vacancies have generally remained within a tight range since late 2022, although the rate did rise 30 basis points in 2025. While most submarkets posted annual vacancy increases, the rate in Downtown Richmond remained steady in the mid-5% range. Absorption in Downtown Richmond trended higher, recording net move-ins of about 600 units in 2025, up from nearly 350 units in 2024.

Transaction activity slowed in Richmond in 2025, as the number of multifamily properties sold declined by about 15% from 2024 and nearly 60% from the 2021 cyclical peak. In the deals that did occur, the sales mix was dominated by newer-vintage assets. Sales activity for properties built in the 2020s more than doubled from 2024 to 2025, pushing overall pricing higher. The median sale price in 2025 was $222,400 per unit, up 27% from last year. Class A assets generally traded with cap rates between 5.0% and 5.5%, and core-plus or value-add opportunities typically priced in the 5.75% to 6.5% range.

Looking ahead

Richmond’s multifamily operating conditions are expected to remain stable but will continue to be shaped by elevated supply. About 3,500 new units are forecast to be delivered over the next year, similar to the 2025 total. Continued supply growth is projected to pressure overall vacancy slightly higher, from 7.2% to around 7.4%. Still, employment in the region is projected to increase by roughly 1.0% in 2026, supporting demand for housing. Gains will likely continue to be driven by education and health services and finance, with key assets like the VA Bio+ Tech Park serving as drivers to demand.

Investment activity could gain some momentum in 2026, particularly if interest rates tick lower and the market continues to generate rent increases. Investors may continue to show a preference for newer-vintage communities that justify higher per-unit pricing, but the market will truly show signs of stabilizing when older assets begin to trade in larger numbers. Cap rates on Class A assets are expected to continue trading in the low- to mid-5% range, while older vintages land in the mid-5% to mid-6% band.