Elevated New Multifamily Inventory Met with Robust Demand, Supporting Continued Rent Growth in Richmond

Operating conditions in the Richmond multifamily market posted a strong second quarter, as vacancies have been stable and rents continued to advance. After a peak in completions in 2023, development briefly returned to long-term norms last year, but the pace has picked up again in 2025. Through the second quarter, projects totaling approximately 2,600 units have come online, slightly exceeding the total for all of 2024. Despite the increase in supply, vacancy has remained at roughly 7% through the first half of the year, reflecting strong renter demand. During the past 18 months, apartments have recorded net absorption of roughly 5,000 units, closely tracking the pace of new inventory additions during the same period. Nearly 65% of the absorbed units were in Class A properties, underscoring a clear preference among renters for top-tier units.

Following a strong close to 2024, multifamily properties continued to change hands in Richmond in the first half. Total sales during the second quarter matched levels from the previous quarter, and year-to-date activity has doubled compared to the same period of 2024. Despite this momentum, sales volume for the first half of the year is trailing the region’s 10-year average by 33%. Most of the assets that traded in recent months were older properties, primarily from the 1960s and 1980s, some of which were acquired with a value-add strategy. While older vintages have made up the majority of sales since the first quarter, properties built in the 2020s have accounted for one-third of the transactions so far this year. Pricing has declined modestly, with the median sale price year to date at $167,000 per unit, down 4% from last year.

Looking ahead

The Richmond multifamily market is expected to continue working through existing supply as the construction pipeline tapers. Even so, projects totaling approximately 4,000 units are expected to come online this year, elevated compared to traditional levels, but below the 2023 peak. Renter demand should remain healthy, supporting stable vacancy conditions. The vacancy rate is projected to end the year at 7.0%, up just 10 basis points from the rate at the close of 2024. Strong absorption is likely to support modest rent growth in the second half of the year. While rents in Richmond have trended lower during the second halves of the past three years, this pattern is expected to reverse in the coming months. Submarkets with limited new construction, such as Chesterfield, are poised to outperform with healthy rent growth and below-average vacancy.

An early look into the third quarter suggests that sales velocity should accelerate through the end of 2025, following historical trends. Total sales in the Richmond multifamily investment market are likely to surpass levels recorded in each of the past two years and may match long-term averages with a strong finish to the year. While the sales mix to this point in the year has been concentrated at the extremes of the vintage spectrum, properties across all vintages are expected to change hands more frequently, consistent with patterns observed over the past five years. Buyer and seller expectations appear to have aligned during the past nine months, which bodes well for the future of the local investment market.

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Contact our Richmond office for more information.