Key Takeaways
Multifamily fundamentals are normalizing as annual demand approaches trend while supply pressures fade. New construction is decelerating meaningfully, occupancy is stabilizing across many markets, and visibility into forward supply conditions is improving.

Rentership is increasingly structural, not cyclical. The rent-versus-own calculus remains unfavorable for many households, reinforcing rental tenure as a durable component of the U.S. housing system.

In our view, an attractive window for disciplined capital deployment is emerging. Multifamily pricing has adjusted, cap rates appear more stable, and market-level differentiation is emerging.

The U.S. Housing Market Has Entered Another Era of Rentership

At the beginning of 2026, multifamily fundamentals are poised for a gradual normalization toward recovery. With new construction decelerating and occupancy stabilizing in many markets, we can see reemerging signs of structural undersupply. Investors returning to the sector with disciplined capital will likely find cap rates stabilized and select regional markets that offer attractive rent growth prospects. In our view, multifamily stands out as a core asset class for the potential for income stability and capital appreciation ahead of the next upcycle.

Signs of a recovery are unfolding against a broader, protracted shift in the U.S. housing system. We believe the market has entered another era of rentership—one defined by an altered rent-versus-own calculus that is fundamentally different than the post-GFC business cycle. The financial commitment required to own a home remains elevated, reflecting higher asset prices, financing costs, and rising ongoing expenses. As a result, the current environment makes a compelling case that renting is, for many households, a more efficient and flexible choice.

The economics are straightforward. Even as home price appreciation has moderated, the all-in cost of ownership remains historically high relative to renting. Mortgage payments, insurance, taxes, and maintenance continue to grow, while rental pricing—particularly within institutionally managed multifamily housing—has normalized as new supply has come online. This has helped restore balance to rent-to-income dynamics and improved rental affordability at the margin.

At the same time, the quality and availability of rental housing have materially improved. For households navigating an uncertain labor market, delayed family formation, or geographic mobility, renting increasingly aligns with lifestyle and financial priorities rather than serving as a transitional stopgap.

These themes are playing out as the housing market digests a late-cycle wave of multifamily deliveries. In the near term, elevated supply in select markets has weighed on rent growth and driven concessions. However, this period of adjustment is also serving an important role—allowing households to access higher-quality rental options and enabling markets to absorb inventory without compromising long-term fundamentals. In our view, the availability of institutional rental housing is helping many markets work through this phase efficiently.

Looking ahead, the construction pipeline is thinning meaningfully as higher construction costs and tighter capital conditions reduced the feasibility of many new developments. As supply growth decelerates and rental demand remains supported by both economic and lifestyle considerations, market conditions should gradually rebalance—particularly in markets that absorbed the bulk of recent deliveries.

The bottom line: in our view, the opportunity is clear. Pricing has adjusted, the outlook for new supply is improving, and long-term demand drivers are well established. We believe this is an attractive window to allocate capital to multifamily—capturing durable income today while positioning portfolios for
operating leverage and value creation as the next upcycle takes hold.

The U.S. Is Entering a New Era of Rentership¹

1 U.S. Census Bureau via FRED, Housing Vacancies and Homeownership, Q3 2025.

Disclosures

This material is for educational purposes only and should not be treated as research. This material may not be distributed, transmitted or otherwise communicated to others, in whole or in part, without the express written consent of Bridge Investment Group Holdings LLC (together with its affiliates, “Bridge”).

The views and opinions expressed in this material are the views and opinions of the author(s) of the material. They do not necessarily reflect the views and opinions of Bridge and are subject to change at any time without notice. Further, Bridge and its affiliates may have positions (long or short) or engage in securities transactions that are not consistent with the information and views expressed in this material. There can be no assurance that an investment strategy will be successful. Historic market trends are not reliable indicators of actual future market behavior or future performance of any particular investment which may differ materially and should not be relied upon as such. Target allocations contained herein are subject to change. There is no assurance that the target allocations will be achieved, and actual allocations may be significantly different than that shown here.

This material does not constitute an offer of any service or product of Bridge. It is not an invitation by or on behalf of Bridge to any person to buy or sell any security or to adopt any investment strategy, and shall not form the basis of, nor may it accompany nor form part of, any right or contract to buy or sell any security or to adopt any investment strategy. Nothing herein should be taken as investment advice or a recommendation to enter into any transaction.

Hyperlinks to third-party websites in this material are provided for reader convenience only. Unless otherwise noted, information included herein is presented as of the dates indicated. This material is not complete, and the information contained herein may change at any time without notice. Bridge does not have any responsibility to update the material to account for such changes. Bridge has not made any representation or warranty, expressed or implied, with respect to fairness, correctness, accuracy, reasonableness, or completeness of any of the information contained herein, and expressly disclaims any responsibility or liability, therefore. The information contained herein is not intended to provide, and should not be relied upon for, accounting, legal or tax advice or investment recommendations. Investors should make an independent investigation of the information contained herein, including consulting their tax, legal, accounting or other advisors about such information. Bridge does not act for you and is not responsible for providing you with the protections afforded to its clients.

Certain information contained herein may be “forward-looking” in nature. Due to various risks and uncertainties, actual events or results may differ materially from those reflected or contemplated in such forward-looking information. As such, undue reliance should not be placed on such information. Forward-looking statements may be identified by the use of terminology including, but not limited to, “may”, “will”, “should”, “expect”, “anticipate”, “target”, “project”, “estimate”, “intend”, “continue” or “believe” or the negatives thereof or other variations thereon or comparable terminology. Any reference to indices, benchmarks, or other measure of relative market performance over a specified period of time are provided for context and for your information only.

All rights to the trademarks and/or logos presented herein belong to their respective owners and Bridge’s use hereof does not imply an affiliation with, or endorsement by, the owners of these logos. This material may contain select images that are provided for illustrative purposes only and may not be representative of assets owned or managed by Bridge. Such images may include digital renderings or stock photos rather than actual photos of assets, residents or communities.

Past performance is not necessarily indicative of future results.

Additional information may be available upon request.

© 2026 Bridge Investment Group Holdings LLC. All Rights Reserved.

BGRT-20260126-5153959-16247236

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Executive Summary
Freight activity offers a clear, fundamentals-driven lens on industrial real estate demand, making freight trends a useful early indicator of tenant demand. As local consumption represents an increasing share of freight, these dynamics suggest the next phase of the industrial cycle will be supported by steady goods movement and favoring well-located, modern warehouse assets positioned at the heart of domestic distribution.

Industrial demand ultimately follows the movement of goods, making warehouse-relevant freight volumes one of the most reliable leading indicators of where tenant demand and leasing momentum will emerge.

As freight growth in major U.S. metros becomes increasingly driven by local consumption, infill and near-consumer logistics assets are structurally advantaged, benefiting from durable demand and reduced exposure to global supply-chain volatility.

Even the largest U.S. freight hubs—including New York, Los Angeles, Chicago, Dallas, and Houston—derive an outsized share of volume from locally generated freight, underscoring the depth of consumer-driven demand and reinforcing the central role of last-mile logistics in top industrial markets

From Tonnage to Tenants: Freight Signals for Industrial Real Estate

We believe the geography of the next logistics cycle is embedded in freight activity. At its core, warehouse demand is freight-driven: goods must move, be stored, sorted, and delivered, and industrial real estate sits at the center of that system. While tenant preferences and capital markets conditions matter, freight volumes remain a foundational driver of long-run warehouse utilization.

In short, warehouses follow freight, both locally and nationally. Within metro areas, warehouses cluster near freight infrastructure—ports, interstates, railyards, and airports—which maximizes logistics efficiency. Similarly, regions that move more warehouse-relevant freight tend to support larger industrial footprints, even after controlling for population size.

Importantly, not all freight are equal for industrial real estate demand. It is important to differentiate between goods that typically flow through warehouses—consumer products, foodstuffs, and intermediate manufactured goods—rather than bulk commodities like coal, grain, or petroleum that bypass traditional warehouse networks. These warehouse-intensive goods are most closely aligned with logistics tenant demand.

This linkage has only been reinforced over recent years. Markets experiencing faster growth in freight volumes have generally seen stronger demand, suggesting freight activity can serve as an early signal for leasing momentum and likely demand pressure.

Another notable feature of today’s freight landscape is the growing importance of local activity, particularly in large urban freight zones. In the largest markets, a disproportionate share of freight is generated within the metro itself rather than passing through as long-haul transit.¹ This locally generated demand tends to favor dense consumer bases, with e-commerce penetration reinforcing the increasing importance of last-mile and same-day delivery. In our view, this dynamic may provide a degree of insulation from global supply-chain disruptions while reinforcing the strategic value of infill and near-consumer logistics locations.

Looking ahead, freight fundamentals appear positioned to improve. After several years of headwinds tied to geopolitical tensions and uneven consumer demand, forecasts from the U.S. Bureau of Transportation Statistics point to broad-based growth in warehouse-related freight volumes across U.S. major metros (see accompanying visual). Growth is expected to be particularly strong in higher value-per-ton goods,² which may favor modern, tech-enabled warehouses capable of supporting high-throughput operations.

Taken together, freight data suggest that the next phase of the industrial cycle is likely to be grounded less in speculative supply and more in the steady pull of
goods movement. For industrial real estate investors, we believe that following tonnage remains one of the most reliable ways to anticipate where tenants will ultimately land.

Consumer-based Freight Volumes Expected to Increase in Dense Urban Metros through 2030³

1 Bureau of Transportation Statistics, Freight Analysis Framework, 2024.
2 Bureau of Transportation Statistics, Freight Analysis Framework, 2024.
3 Bureau of Transportation Statistics, Freight Analysis Framework, 2024.

Disclosures

This material is for educational purposes only and should not be treated as research. This material may not be distributed, transmitted or otherwise communicated to others, in whole or in part, without the express written consent of Bridge Investment Group Holdings LLC (together with its affiliates, “Bridge”).

The views and opinions expressed in this material are the views and opinions of the author(s) of the material. They do not necessarily reflect the views and opinions of Bridge and are subject to change at any time without notice. Further, Bridge and its affiliates may have positions (long or short) or engage in securities transactions that are not consistent with the information and views expressed in this material. There can be no assurance that an investment strategy will be successful. Historic market trends are not reliable indicators of actual future market behavior or future performance of any particular investment which may differ materially and should not be relied upon as such. Target allocations contained herein are subject to change. There is no assurance that the target allocations will be achieved, and actual allocations may be significantly different than that shown here.

This material does not constitute an offer of any service or product of Bridge. It is not an invitation by or on behalf of Bridge to any person to buy or sell any security or to adopt any investment strategy, and shall not form the basis of, nor may it accompany nor form part of, any right or contract to buy or sell any security or to adopt any investment strategy. Nothing herein should be taken as investment advice or a recommendation to enter into any transaction.

Hyperlinks to third-party websites in this material are provided for reader convenience only. Unless otherwise noted, information included herein is presented as of the dates indicated. This material is not complete, and the information contained herein may change at any time without notice. Bridge does not have any responsibility to update the material to account for such changes. Bridge has not made any representation or warranty, expressed or implied, with respect to fairness, correctness, accuracy, reasonableness, or completeness of any of the information contained herein, and expressly disclaims any responsibility or liability, therefore. The information contained herein is not intended to provide, and should not be relied upon for, accounting, legal or tax advice or investment recommendations. Investors should make an independent investigation of the information contained herein, including consulting their tax, legal, accounting or other advisors about such information. Bridge does not act for you and is not responsible for providing you with the protections afforded to its clients.

Certain information contained herein may be “forward-looking” in nature. Due to various risks and uncertainties, actual events or results may differ materially from those reflected or contemplated in such forward-looking information. As such, undue reliance should not be placed on such information. Forward-looking statements may be identified by the use of terminology including, but not limited to, “may”, “will”, “should”, “expect”, “anticipate”, “target”, “project”, “estimate”, “intend”, “continue” or “believe” or the negatives thereof or other variations thereon or comparable terminology. Any reference to indices, benchmarks, or other measure of relative market performance over a specified period of time are provided for context and for your information only.

All rights to the trademarks and/or logos presented herein belong to their respective owners and Bridge’s use hereof does not imply an affiliation with, or endorsement by, the owners of these logos. This material may contain select images that are provided for illustrative purposes only and may not be representative of assets owned or managed by Bridge. Such images may include digital renderings or stock photos rather than actual photos of assets, residents or communities.

Past performance is not necessarily indicative of future results.

Additional information may be available upon request.

© 2026 Bridge Investment Group Holdings LLC. All Rights Reserved.

BGRT-20260113-5117930-16130362

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Executive Summary
Based on Q3 2025 cross‑asset comparisons, we believe U.S. CRE appears inexpensive relative to major U.S. equity indices, creating a potential attractive entry point as fundamentals firm and financial conditions ease.

CRE appears to offer strong relative value vs. equities. Converting cap rates to implied “earnings multiples,” core sectors like industrial (~16x) and multifamily (~18x) sit below the S&P 500 (~28x) and Nasdaq 100 (~37x) as of Q3 2025.

Why the gap widened. In 2025, equities priced in tech/AI optimism, while CRE values were anchored by lower sales volumes and higher financing/refinancing costs.

U.S. Commercial Real Estate Is Inexpensive Relative to Equities

We believe U.S. commercial real estate (CRE) appears inexpensive relative to major U.S. equity indices.

By inverting real estate capitalization rates (cap rates) to “earnings multiples,” we can compare commercial real estate with public equities P/E (price-to-earnings) ratio for approximate comparisons¹. Using average cap rates from the third quarter of 2025, we see potential signs of differentiation: sectors such as multifamily and industrial have meaningfully lower implied multiples than the S&P 500 or Nasdaq 100 as of Q3 2025.

U.S. industrial properties average around a 6.1% cap rate²—an implied multiple of ~16x. Multifamily averages near a 5.6% cap rate, or ~18x. Public equity indices’ P/E values are higher: for Q3 2025, the S&P 500 was ~28x trailing P/E, the Nasdaq 100 near 37x, and even the Dow Jones Industrial Average—arguably the most value‑oriented major index—near 23x (see accompanying visual).³

The divergence between CRE and public equity indices widened in 2025. We believe public equities have benefited from optimism around technology‑led productivity gains—and particularly notable is the extreme concentration of AI in the S&P 500⁴. On the other hand, U.S. CRE valuations remained anchored by lower sales volumes and elevated refinancing activities in a higher interest rate environment.

We believe CRE offers attractive value, especially as fundamentals across many property types are resilient and are improving. For example, multifamily occupancy appears poised to improve after late cycle downward pressure, and we see similar signs of improvement in certain segments of the logistics and industrial sector. As financial conditions ease and liquidity returns to commercial real estate markets, we believe that relative value—particularly in multifamily and industrial—presents a compelling opportunity to engage capital into real assets.

Sectors of U.S. CRE Potentially Offer Strong Relative Value to U.S. Equities⁵

1 Comparisons convert commercial real estate cap rates into implied earnings multiples (1/cap rate) to align with equity P/E. Note, metrics are not perfectly comparable due to differences in NOI, leverage, liquidity, growth, and risk. Results are illustrative and limited to the period stated above.
2 MSCI Real Capital Analytics’ cap rates include refinance transactions and exclude portfolio transactions.
3 Bloomberg, as of November 4, 2025. The equity indices P/E ratios represent average values for Q3 2025 and are calculated for indices as Last Price divided by Trailing 12M Diluted EPS from Cont Ops (Bloomberg RR900).
4 See in particular: Sløk, T. (2025, September 16). Equity investors are dramatically overexposed to AI. Apollo Academy. https://www.apolloacademy.com/equity-investors-are-dramatically-over-exposed-to-ai/; and Sløk, T. (2025, September 8). Extreme Concentration in the S&P 500. Apollo Academy. https://www.apolloacademy.com/extreme-concentration-in-the-sp-500-3/
5 MSCI Real Capital Analytics, as of Q3 2025. Bloomberg, as of November 4, 2025.

Disclosures

This material is for educational purposes only and should not be treated as research. This material may not be distributed, transmitted or otherwise communicated to others, in whole or in part, without the express written consent of Bridge Investment Group Holdings LLC (together with its affiliates, “Bridge”).

The views and opinions expressed in this material are the views and opinions of the author(s) of the material. They do not necessarily reflect the views and opinions of Bridge and are subject to change at any time without notice. Further, Bridge and its affiliates may have positions (long or short) or engage in securities transactions that are not consistent with the information and views expressed in this material. There can be no assurance that an investment strategy will be successful. Historic market trends are not reliable indicators of actual future market behavior or future performance of any particular investment which may differ materially and should not be relied upon as such. Target allocations contained herein are subject to change. There is no assurance that the target allocations will be achieved, and actual allocations may be significantly different than that shown here.

This material does not constitute an offer of any service or product of Bridge. It is not an invitation by or on behalf of Bridge to any person to buy or sell any security or to adopt any investment strategy, and shall not form the basis of, nor may it accompany nor form part of, any right or contract to buy or sell any security or to adopt any investment strategy. Nothing herein should be taken as investment advice or a recommendation to enter into any transaction.

Hyperlinks to third-party websites in this material are provided for reader convenience only. Unless otherwise noted, information included herein is presented as of the dates indicated. This material is not complete, and the information contained herein may change at any time without notice. Bridge does not have any responsibility to update the material to account for such changes. Bridge has not made any representation or warranty, expressed or implied, with respect to fairness, correctness, accuracy, reasonableness, or completeness of any of the information contained herein, and expressly disclaims any responsibility or liability, therefore. The information contained herein is not intended to provide, and should not be relied upon for, accounting, legal or tax advice or investment recommendations. Investors should make an independent investigation of the information contained herein, including consulting their tax, legal, accounting or other advisors about such information. Bridge does not act for you and is not responsible for providing you with the protections afforded to its clients.

Certain information contained herein may be “forward-looking” in nature. Due to various risks and uncertainties, actual events or results may differ materially from those reflected or contemplated in such forward-looking information. As such, undue reliance should not be placed on such information. Forward-looking statements may be identified by the use of terminology including, but not limited to, “may”, “will”, “should”, “expect”, “anticipate”, “target”, “project”, “estimate”, “intend”, “continue” or “believe” or the negatives thereof or other variations thereon or comparable terminology. Any reference to indices, benchmarks, or other measure of relative market performance over a specified period of time are provided for context and for your information only.

All rights to the trademarks and/or logos presented herein belong to their respective owners and Bridge’s use hereof does not imply an affiliation with, or endorsement by, the owners of these logos. This material may contain select images that are provided for illustrative purposes only and may not be representative of assets owned or managed by Bridge. Such images may include digital renderings or stock photos rather than actual photos of assets, residents or communities.

Past performance is not necessarily indicative of future results.

Additional information may be available upon request.

© 2025 Bridge Investment Group Holdings LLC. All Rights Reserved.

BGRT-20251110-4978855-15689522

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Read the 2025 WFAH Report here

The post 2025 Workforce and Affordable Housing Impact Report appeared first on Bridge Investment Group.

Executive Summary
Pull factors continue to steer people and employers toward the Sunbelt, and we believe momentum will persist for many markets that have experienced consistent growth trends over the past decade.

The Sunbelt still leads. From 2020–2024, Texas and Florida metros led 25–44 population gains, with annualized growth broadly consistent with the prior five years.¹

What is powering it? Corporate relocations and expansions, local job creation, relative housing affordability, and lifestyle preferences—all amplified by remote and hybrid work trends.

Looking ahead: Markets with above average increases in living and housing costs are likely to moderate the pace of in‑migration. We expect growth trends to continue toward markets that balance attractive pull factors with housing choice and affordability.

The Great Reshuffling to the Sunbelt: Not Just a Flash in the Pan

Recent population growth and migration have powered meaningful changes in commercial real estate values, and the past decade has made the destination of choice clear: the Sunbelt. Net domestic migration, layered on top of natural growth, helped to shift population and pricing power toward metros across the Southeast, Texas, and the Mountain West.

Over the last five years, four factors have done much of the heavy lifting: business relocation, local job creation, housing affordability, and lifestyle preferences, each shaped by the normalization of remote and hybrid work. Together, we believe these factors accelerated trends that already were underway pre-pandemic.

Our internal analysis indicates that from 2020–2024 the Sunbelt sustained robust growth among adults aged 25–44—the prime working and household formation cohort.¹ Among the 50 largest U.S. markets, metros in Texas and Florida led this expansion, and their annualized growth rates remained broadly consistent with the prior five-year period. In simple terms, “the Great Reshuffling” looks durable, not episodic.

Why has this persisted? Over the past decade, a rising share of companies—especially in technology, finance, and manufacturing—have relocated or expanded into lower cost, business friendly Sunbelt markets. Favorable tax and regulatory regimes, expanding talent pools, and infrastructure modernization have reinforced that momentum, creating virtuous cycles of investment and employment growth.

We see signs that housing has been another decisive variable. Survey data from Development Counsellors International underscores that housing costs and supply rank among the most important lifestyle factors influencing where people move.²

Looking ahead, markets with above average increases in living and housing costs are likely to moderate the pace of in-migration. We expect growth to continue the trend toward more affordable, well-connected markets where pro housing policy, available land, and improving infrastructure can accommodate demand.

Annualized Growth in Population Aged 25-44 Between 2020-2024³

1 U.S. Census Bureau, County Population by Characteristic: 2010, 2014, 2015, 2019, 2020, and 2024.
2 Development Counsellors International, Talent Wars, May 2025.
3 U.S. Census Bureau, County Population by Characteristic: 2010, 2014, 2015, 2019, 2020, and 2024.

Disclosures

This material is for educational purposes only and should not be treated as research. This material may not be distributed, transmitted or otherwise communicated to others, in whole or in part, without the express written consent of Bridge Investment Group Holdings LLC (together with its affiliates, “Bridge”).

The views and opinions expressed in this material are the views and opinions of the author(s) of the material. They do not necessarily reflect the views and opinions of Bridge and are subject to change at any time without notice. Further, Bridge and its affiliates may have positions (long or short) or engage in securities transactions that are not consistent with the information and views expressed in this material. There can be no assurance that an investment strategy will be successful. Historic market trends are not reliable indicators of actual future market behavior or future performance of any particular investment which may differ materially and should not be relied upon as such. Target allocations contained herein are subject to change. There is no assurance that the target allocations will be achieved, and actual allocations may be significantly different than that shown here.

This material does not constitute an offer of any service or product of Bridge. It is not an invitation by or on behalf of Bridge to any person to buy or sell any security or to adopt any investment strategy, and shall not form the basis of, nor may it accompany nor form part of, any right or contract to buy or sell any security or to adopt any investment strategy. Nothing herein should be taken as investment advice or a recommendation to enter into any transaction.

Hyperlinks to third-party websites in this material are provided for reader convenience only. Unless otherwise noted, information included herein is presented as of the dates indicated. This material is not complete, and the information contained herein may change at any time without notice. Bridge does not have any responsibility to update the material to account for such changes. Bridge has not made any representation or warranty, expressed or implied, with respect to fairness, correctness, accuracy, reasonableness, or completeness of any of the information contained herein, and expressly disclaims any responsibility or liability, therefore. The information contained herein is not intended to provide, and should not be relied upon for, accounting, legal or tax advice or investment recommendations. Investors should make an independent investigation of the information contained herein, including consulting their tax, legal, accounting or other advisors about such information. Bridge does not act for you and is not responsible for providing you with the protections afforded to its clients.

Certain information contained herein may be “forward-looking” in nature. Due to various risks and uncertainties, actual events or results may differ materially from those reflected or contemplated in such forward-looking information. As such, undue reliance should not be placed on such information. Forward-looking statements may be identified by the use of terminology including, but not limited to, “may”, “will”, “should”, “expect”, “anticipate”, “target”, “project”, “estimate”, “intend”, “continue” or “believe” or the negatives thereof or other variations thereon or comparable terminology. Any reference to indices, benchmarks, or other measure of relative market performance over a specified period of time are provided for context and for your information only.

All rights to the trademarks and/or logos presented herein belong to their respective owners and Bridge’s use hereof does not imply an affiliation with, or endorsement by, the owners of these logos. This material may contain select images that are provided for illustrative purposes only and may not be representative of assets owned or managed by Bridge. Such images may include digital renderings or stock photos rather than actual photos of assets, residents or communities.

Past performance is not necessarily indicative of future results.

Additional information may be available upon request.

© 2025 Bridge Investment Group Holdings LLC. All Rights Reserved.

GWMS,20251104-4947464-15602636

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Executive Summary
Higher buying costs and fewer affordable options are keeping would‑be buyers in rentals. We believe multifamily occupancy rates could achieve high levels in many markets across the U.S.

Owning a home has gotten pricier. Home prices, mortgage rates, insurance, and taxes have all risen materially. At the same time, affordability protections on roughly 900,000 income‑restricted apartments are set to expire by 2033, pushing more households into residential rental.

More renters, longer tenures. From 2021–2023, the U.S. added about 1.5 million renter households. Since early 2020, average rents are up ~22%, while typical mortgage payments have more than doubled, widening the monthly cost gap.

The Result? Fewer first‑time buyers. Only 24% of recent home purchases were by first‑timers, and the median first‑time buyer is 38 years old, both historic records—a sign that many households are delaying ownership.

Residential Rental Demand Sustained by the Persistent Unaffordability of Homeownership

Homeownership has become increasingly” less attainable over the past several years. As a result, millions of U.S. renter households cannot afford the median‑priced home in their local market, and the pipeline of would‑be buyers continues to thin. We believe this affordability shock is not transitory; it is embedded in both sides of the attainability equation—restricted supply of affordable options and elevated all‑in costs of owning relative to renting.

On the supply side, affordability protections for subsidized rental housing are rolling off. Roughly 900,000 affordability restrictions are scheduled to expire by year‑end 2033,¹ shrinking the stock of regulated units and pushing more households into the market‑rate rental pool. Newly constructed affordable housing may, in our view, offset the sunsetting of protections, but only to a degree—and not enough to make forward progress.

On the demand side, the cost of accessing homeownership remains increasingly high versus renting, with higher home prices, elevated mortgage rates, insurance inflation, and rising taxes observed in many metros. We view this as contributing to a widening and persistent “rent‑versus‑own” gap that keeps households in rental tenure longer.

Household formation appears to support this trend. Approximately 1.5 million renter households were formed between 2021 and 2023, according to the latest U.S. Census data—about three times the growth observed between 2015 and 2019.² While many of these new renter households faced rents that have increased 22% since the beginning of 2020, during the same period mortgage payments more than doubled.³

Market activity hints at how the story is evolving. First‑time homebuyers represent just 24% of transactions, the lowest share since tracking began in 1981, while the median age of first‑time buyers has climbed to 38 in 2024, the highest on record.⁴ Both indicators point to delayed entry into ownership and extended rental duration.

Bottom line: With more renter households unable to bridge the affordability gap to ownership, we believe multifamily occupancy rates could achieve levels above historical averages in many markets across the U.S. This supports our high thematic conviction for residential rental broadly while also reinforcing the attractive investment characteristics of well‑located, institutionally managed rental housing.

Share of First-Time Home Buyers at a Record Low⁵

Accessing the Homeownership Market Is Prohibitively Expensive⁶

1 National Housing Preservation Database. Public and Affordable Housing and Research Corporation and the National Low Income Housing Coalition, 2024 Picture of Preservation, December 2024.
2 U.S. Census Bureau, American Community Survey, 1-Year Estimates, 2023.
3 RealPage, as of Q3 2025. Moody’s Analytics and Bloomberg, as of October 2025. Mortgage calculations are based upon median existing home prices between 2020 and 2025.
4 National Association of Realtors, Profile of Home Buyers and Sellers, 2024.
5 National Association of Realtors, Profile of Home Buyers and Sellers, 2024.
6 RealPage, as of Q3 2025. Bloomberg, Moody’s Analytics, and National Association of Realtors, as of October 2025. Mortgage payments are calculated using median existing home prices and Freddie Mac 30 Year Fixed Mortgage Rate.

Disclosures

This material is for educational purposes only and should not be treated as research. This material may not be distributed, transmitted or otherwise communicated to others, in whole or in part, without the express written consent of Bridge Investment Group Holdings LLC (together with its affiliates, “Bridge”).

The views and opinions expressed in this material are the views and opinions of the author(s) of the material. They do not necessarily reflect the views and opinions of Bridge and are subject to change at any time without notice. Further, Bridge and its affiliates may have positions (long or short) or engage in securities transactions that are not consistent with the information and views expressed in this material. There can be no assurance that an investment strategy will be successful. Historic market trends are not reliable indicators of actual future market behavior or future performance of any particular investment which may differ materially and should not be relied upon as such. Target allocations contained herein are subject to change. There is no assurance that the target allocations will be achieved, and actual allocations may be significantly different than that shown here.

This material does not constitute an offer of any service or product of Bridge. It is not an invitation by or on behalf of Bridge to any person to buy or sell any security or to adopt any investment strategy, and shall not form the basis of, nor may it accompany nor form part of, any right or contract to buy or sell any security or to adopt any investment strategy. Nothing herein should be taken as investment advice or a recommendation to enter into any transaction.
Hyperlinks to third-party websites in this material are provided for reader convenience only. Unless otherwise noted, information included herein is presented as of the dates indicated. This material is not complete, and the information contained herein may change at any time without notice. Bridge does not have any responsibility to update the material to account for such changes. Bridge has not made any representation or warranty, expressed or implied, with respect to fairness, correctness, accuracy, reasonableness, or completeness of any of the information contained herein, and expressly disclaims any responsibility or liability, therefore. The information contained herein is not intended to provide, and should not be relied upon for, accounting, legal or tax advice or investment recommendations. Investors should make an independent investigation of the information contained herein, including consulting their tax, legal, accounting or other advisors about such information. Bridge does not act for you and is not responsible for providing you with the protections afforded to its clients.

Certain information contained herein may be “forward-looking” in nature. Due to various risks and uncertainties, actual events or results may differ materially from those reflected or contemplated in such forward-looking information. As such, undue reliance should not be placed on such information. Forward-looking statements may be identified by the use of terminology including, but not limited to, “may”, “will”, “should”, “expect”, “anticipate”, “target”, “project”, “estimate”, “intend”, “continue” or “believe” or the negatives thereof or other variations thereon or comparable terminology. Any reference to indices, benchmarks, or other measure of relative market performance over a specified period of time are provided for context and for your information only.
All rights to the trademarks and/or logos presented herein belong to their respective owners and Bridge’s use hereof does not imply an affiliation with, or endorsement by, the owners of these logos. This material may contain select images that are provided for illustrative purposes only and may not be representative of assets owned or managed by Bridge. Such images may include digital renderings or stock photos rather than actual photos of assets, residents or communities.

Past performance is not necessarily indicative of future results.

Additional information may be available upon request.

© 2025 Bridge Investment Group Holdings LLC. All Rights Reserved.

GWMS,20251022-4913355-15520935

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Executive Summary
Online sales are outpacing stores, and we believe demographics and sticky consumer behavioral shifts are durable tailwinds that will continue to shape U.S. commercial real estate in favor of modern logistics asset infrastructure that facilitate evolving consumer trends.

Structural shifts in demand: Over the past decade, U.S. e‑commerce grew ~14% annually versus ~4% for brick‑and‑mortar retail¹—a sign of a secular shift in how Americans shop.

Demographic tailwinds: Young adults are driving the gains. Millennials make more digital purchases than any other generation (32% shopping online-only).² Gen Z is mobile‑first, and their aggregate spending rose by over 50% since 2019,³ reinforcing e‑commerce’s tailwinds.

Sticky post‑pandemic behaviors: Expectations for speed and convenience are rising; at the same time, the ways consumers shop through e-commerce channels is fundamentally different with the average return rates of nearly 25% for e‑commerce vs. over 8% in‑store.⁴

Implications for industrial real estate: Returns processing, inventory decentralization, and last‑mile optimization can increase logistics intensity, which in our view drives demand for more facilities closer to end demand with higher throughput.

U.S. E‑Commerce Is a Durable Driver of Logistics Demand

Over the past decade, e-commerce grew more than three times faster than traditional retail⁵

The growth of U.S. e‑commerce is driven by powerful demographic tailwinds and shifting consumer preferences, which we believe serve as a durable engine of U.S. logistics demand. Over the past decade, online sales compounded at ~14% annually, versus ~4% for traditional brick‑and‑mortar retail (see visual below). In our view, this secular trend is not cyclical but is instead a significant shift in how Americans shop.

Who is fueling the increased growth? Young adults. Millennials make more digital purchases than any other generation (32% shopping online-only), and Gen Z is mobile‑first, seamlessly integrating social media, digital wallets, and app‑based discovery into nearly every step of the purchase journey. Importantly, Gen Z (born after 1997) is gliding into peak spending years; from 2019 to 2023, their aggregate spending rose by more than 50% according to the latest BLS data. We believe that these cohorts reinforce e‑commerce’s growth runway and support sustained, logistics‑intensive fulfillment models.

Consumer expectations for the speed and convenience of home delivery accelerated during the pandemic, and we believe this could remain sticky. One clear example is “bracketing,” where shoppers buy multiple sizes or styles (especially in apparel) and return what does not fit. With apparel consistently among the largest online categories, bracketing magnifies reverse‑logistics volumes. The National Retail Federation estimates U.S. consumers returned $901 billion of merchandise in 2024, with average return rates of 24.5% for e‑commerce versus 8.71% for in‑store purchases. High and uneven return flows can require dedicated nodes, specialized labor, and technology to triage, refurbish, and reroute inventory.

Why it matters for commercial real estate investment. The implications for industrial real estate are tangible. Returns processing, inventory decentralization, and last‑mile optimization each increase logistics intensity—more facilities, closer to end demand, with higher throughput requirements. Retailers are expanding dedicated return‑processing hubs and micro‑fulfillment nodes while re‑configuring networks toward dense, infill submarkets that compress delivery windows. Facilities with flexible footprints, robust power infrastructure, and sorting capability are particularly well positioned as omnichannel supply chains continue to mature.

Bottom line: in our view, e‑commerce is not a pandemic‑era anomaly; it is a durable demand driver that continues to outperform store‑based retail and reshape supply chains. We expect these dynamics to underpin resilient absorption and pricing power for well‑located, modern logistics assets—especially last‑mile and returns‑capable facilities—in the years ahead.

1 U.S. Census Bureau, Retail Indicators Branch. Estimated Quarterly U.S. Retail Sales (Adjusted): Total and E-commerce. Last revised: August 19, 2025.
2 Capital One Shopping Research. Online Shopping Trends. Last updated: June 17, 2025
3 Bureau of Labor Statistics, U.S. Department of Labor. April 18, 2025. The Economics Daily, Which Generation Spends More? https://www.bls.gov/opub/ted/2025/which-generation-spends-more.htm accessed on October 7, 2025.
4 Capital One Shopping Research. Online Shopping Trends. Last updated: June 17, 2025
5 U.S. Census Bureau, Retail Indicators Branch. Estimated Quarterly U.S. Retail Sales (Adjusted): Total and E-commerce. Last revised: August 19, 2025.

Disclosures

This material is for educational purposes only and should not be treated as research. This material may not be distributed, transmitted or otherwise communicated to others, in whole or in part, without the express written consent of Bridge Investment Group Holdings LLC (together with its affiliates, “Bridge”).

The views and opinions expressed in this material are the views and opinions of the author(s) of the material. They do not necessarily reflect the views and opinions of Bridge and are subject to change at any time without notice. Further, Bridge and its affiliates may have positions (long or short) or engage in securities transactions that are not consistent with the information and views expressed in this material. There can be no assurance that an investment strategy will be successful. Historic market trends are not reliable indicators of actual future market behavior or future performance of any particular investment which may differ materially and should not be relied upon as such. Target allocations contained herein are subject to change. There is no assurance that the target allocations will be achieved, and actual allocations may be significantly different than that shown here.

This material does not constitute an offer of any service or product of Bridge. It is not an invitation by or on behalf of Bridge to any person to buy or sell any security or to adopt any investment strategy, and shall not form the basis of, nor may it accompany nor form part of, any right or contract to buy or sell any security or to adopt any investment strategy. Nothing herein should be taken as investment advice or a recommendation to enter into any transaction.
Hyperlinks to third-party websites in this material are provided for reader convenience only. Unless otherwise noted, information included herein is presented as of the dates indicated. This material is not complete, and the information contained herein may change at any time without notice. Bridge does not have any responsibility to update the material to account for such changes. Bridge has not made any representation or warranty, expressed or implied, with respect to fairness, correctness, accuracy, reasonableness, or completeness of any of the information contained herein, and expressly disclaims any responsibility or liability, therefore. The information contained herein is not intended to provide, and should not be relied upon for, accounting, legal or tax advice or investment recommendations. Investors should make an independent investigation of the information contained herein, including consulting their tax, legal, accounting or other advisors about such information. Bridge does not act for you and is not responsible for providing you with the protections afforded to its clients.

Certain information contained herein may be “forward-looking” in nature. Due to various risks and uncertainties, actual events or results may differ materially from those reflected or contemplated in such forward-looking information. As such, undue reliance should not be placed on such information. Forward-looking statements may be identified by the use of terminology including, but not limited to, “may”, “will”, “should”, “expect”, “anticipate”, “target”, “project”, “estimate”, “intend”, “continue” or “believe” or the negatives thereof or other variations thereon or comparable terminology. Any reference to indices, benchmarks, or other measure of relative market performance over a specified period of time are provided for context and for your information only.
All rights to the trademarks and/or logos presented herein belong to their respective owners and Bridge’s use hereof does not imply an affiliation with, or endorsement by, the owners of these logos. This material may contain select images that are provided for illustrative purposes only and may not be representative of assets owned or managed by Bridge. Such images may include digital renderings or stock photos rather than actual photos of assets, residents or communities.

Past performance is not necessarily indicative of future results.

Additional information may be available upon request.

© 2025 Bridge Investment Group Holdings LLC. All Rights Reserved.

GWMS,20251016-4907431-15457273

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Executive Summary
U.S. reindustrialization is moving from promise to build‑out. Our review of more than 600 factory announcements over the past two years points to accelerating shovel‑ready activity and completions. We anticipate that this capex cycle will bolster demand for modern industrial real estate, high‑throughput last‑mile logistics, and supporting infrastructure.

Completions: Since mid‑2023, nearly 200 modern facilities have delivered; 86 disclosed capex totaling $55 B. Georgia and North Carolina are among the top states for recent deliveries, reflecting competitive incentives, land availability, and logistics connectivity.

Pipeline: 420 additional facilities are planned or breaking ground with $590 B in announced investment. Apple Inc. recently committed an additional $600 B to support over 450,000 jobs across all 50 U.S. states.

Megaprojects: We define megaprojects as facilities with capex $5 B or more. 20 are planned or underway, representing approximately $385 B with activity concentrated in semiconductors, EV batteries, and pharmaceuticals.

Why it matters: We believe that this surge of activity is creating multi‑year demand for high‑power, water‑intensive sites, near‑site logistics, and supplier parks—and can catalyze opportunities in private credit tied to equipment, construction, and mission‑critical utilities.

Momentum Is Building for U.S. Manufacturing
U.S. reindustrialization is moving from promise and aspirations to build‑out. Our review of more than 600 public factory announcements from the past two years shows an acceleration in shovel‑ready projects and completions (see visual below).¹ In our view, the accelerating momentum of capital investment will bolster demand for modern industrial real estate, high throughput last mile logistics, and supporting infrastructure.

Completions. In the two years since mid 2023, nearly 200 modern facilities have reached completion; 86 of the completed projects carried disclosed capital budgets totaling $55 billion. Georgia and North Carolina stand out among the top states for recent deliveries, reflecting competitive incentives, available land, and logistics connectivity.²

Pipeline. Looking ahead, 420 facilities are planned or breaking ground with $590 billion in announced capital investment—a figure that does not include Apple’s recent commitment to deploy $600 billion across all 50 U.S. states, which is planned to support over 450,000 jobs.³

A key driver is the rise of megaprojects—which we term as facilities with planned capex of $5 billion or more. Twenty megaprojects are planned or underway, representing approximately $385 billion (roughly three‑quarters of disclosed pipeline dollars) and averaging more than $19 billion per project. Activity is concentrated in advanced manufacturing, notably semiconductors, electric‑vehicle batteries, and pharmaceuticals.

Why it matters for commercial real estate investment. We believe this surge is creating multi‑year demand for modern industrial real estate and adjacent infrastructure—from high‑power, water‑intensive sites to near‑site logistics and supplier parks. In our view to stimulate opportunities in private credit tied to equipment, construction, and mission‑critical utilities. Early beneficiaries include Sun Belt markets with strong utility capacity and workforce pipelines.²

This recalls the old adage: jobs follow people, and people follow jobs.

Bottom line. In our view the U.S. manufacturing upcycle is gaining traction. With nearly 200 factory completions since mid‑2023 and a $590 billion pipeline led by $5‑billion‑plus megaprojects, advanced manufacturing is set to be a durable growth engine with positive spillovers for industrial real estate, private credit, and regional employment.

Announced Capital Investment in Completed Advanced Manufacturing Facilities Since Mid 2023²

1 Sources include publicly available reports and online press releases from Industry Select, Industry Week, Manufacturing Dive, Reuters, and US Manufacturing Report.
2 Statements and data analysis based on Bridge Research Analysts’ views as of the date of production.
3 Apple Inc. August 6, 2025. Apple increases U.S. commitment to $600 billion, announces American Manufacturing Program. Apple Newsroom. https://www.apple.com/newsroom/2025/08/apple-increases-us-commitment-to-600-billion-usd-announces-ambitious-program/. Accessed on October 2, 2025.

Disclosures

This material is for educational purposes only and should not be treated as research. This material may not be distributed, transmitted or otherwise communicated to others, in whole or in part, without the express written consent of Bridge Investment Group Holdings LLC (together with its affiliates, “Bridge”).

The views and opinions expressed in this material are the views and opinions of the author(s) of the material. They do not necessarily reflect the views and opinions of Bridge and are subject to change at any time without notice. Further, Bridge and its affiliates may have positions (long or short) or engage in securities transactions that are not consistent with the information and views expressed in this material. There can be no assurance that an investment strategy will be successful. Historic market trends are not reliable indicators of actual future market behavior or future performance of any particular investment which may differ materially and should not be relied upon as such. Target allocations contained herein are subject to change. There is no assurance that the target allocations will be achieved, and actual allocations may be significantly different than that shown here.

This material does not constitute an offer of any service or product of Bridge. It is not an invitation by or on behalf of Bridge to any person to buy or sell any security or to adopt any investment strategy, and shall not form the basis of, nor may it accompany nor form part of, any right or contract to buy or sell any security or to adopt any investment strategy. Nothing herein should be taken as investment advice or a recommendation to enter into any transaction.

Hyperlinks to third-party websites in this material are provided for reader convenience only. Unless otherwise noted, information included herein is presented as of the dates indicated. This material is not complete, and the information contained herein may change at any time without notice. Bridge does not have any responsibility to update the material to account for such changes. Bridge has not made any representation or warranty, expressed or implied, with respect to fairness, correctness, accuracy, reasonableness, or completeness of any of the information contained herein, and expressly disclaims any responsibility or liability, therefore. The information contained herein is not intended to provide, and should not be relied upon for, accounting, legal or tax advice or investment recommendations. Investors should make an independent investigation of the information contained herein, including consulting their tax, legal, accounting or other advisors about such information. Bridge does not act for you and is not responsible for providing you with the protections afforded to its clients.

Certain information contained herein may be “forward-looking” in nature. Due to various risks and uncertainties, actual events or results may differ materially from those reflected or contemplated in such forward-looking information. As such, undue reliance should not be placed on such information. Forward-looking statements may be identified by the use of terminology including, but not limited to, “may”, “will”, “should”, “expect”, “anticipate”, “target”, “project”, “estimate”, “intend”, “continue” or “believe” or the negatives thereof or other variations thereon or comparable terminology. Any reference to indices, benchmarks, or other measure of relative market performance over a specified period of time are provided for context and for your information only.

All rights to the trademarks and/or logos presented herein belong to their respective owners and Apollo’s use hereof does not imply an affiliation with, or endorsement by, the owners of these logos. This material may contain select images that are provided for illustrative purposes only and may not be representative of assets owned or managed by Bridge. Such images may include digital renderings or stock photos rather than actual photos of assets, residents or communities.

Past performance is not necessarily indicative of future results.

Additional information may be available upon request.

© 2025 Bridge Investment Group Holdings LLC. All Rights Reserved.

ATLWAA-20251009-4875915-15401613

The post Momentum Is Building for U.S. Manufacturing appeared first on Bridge Investment Group.

Executive Summary

U.S. multifamily is moving steadily to an expansion phase of the cycle. Our analysis of the 50 largest markets shows nearly half are already in Early Expansion—occupancy is above historical levels and rent growth momentum is accelerating. By mid 2026, we expect 40 of 50 markets to be in this phase, assuming absorption trends track the 2017–2019 average (see the visual below).

What’s driving this shift?

• Demand has normalized: household formation and in‑migration to high‑growth markets continue; elevated ownership costs extend renter tenure.
• Supply is decelerating as the development pipeline rolls off, allowing occupancy to tighten and concessions to burn off.
• Fundamentals improve first where new supply has peaked, and employment remains resilient.

The Inflection Point in U.S. Multifamily Markets

Following a typical late-cycle supply surge and an associated decline in rent growth, many U.S. multifamily markets are entering an expansion phase in terms of fundamentals. Our market-by-market analysis of the 50 largest metros areas shows a transition from stabilization to growth—supporting our high conviction for the asset class.

We can segment markets into three phases: Still Distressed (where occupancy is below each market’s historical average and rents decline), Late Recovery (occupancy near average with flat to modest rent growth), and Early Expansion (occupancy above average with accelerating rent momentum). As of mid-2025, nearly half of the largest 50 markets are already in this Early Expansion phase. By mid-2026, Bridge analysts expect 40 of the 50 markets to enter Early Expansion, with accelerating rent growth and above-average occupancy, assuming absorption trends align with the 2017-2019 average. The accompanying visual illustrates this progression and the shrinking share of distressed markets.

Many of the Largest U.S. Metros Are Shifting to Expansion¹

What is driving the turn? Demand has normalized as household formation and in-migration to high-growth markets continue, while elevated costs of homeownership keep renters in place longer. At the same time, new supply is decelerating quickly as the development pipeline rolls off. The result: occupancy continues to rise and rent concessions to burn off. As fundamentals improve, we anticipate rent growth will rebound from late-cycle lows—first in markets where new supply has crested and where employment remains resilient.

The implications for multifamily investing are clear, in our view. This is an opportune time in the cycle. Acquisitions in Late Recovery and Early Expansion markets can position portfolios to capture the next leg of net operating income (“NOI”) growth as occupancy moves above trend and leasing velocity improves. We believe further advantages to capturing value can be achieved through hands-on operations and asset management, while at the same time prioritizing submarkets with moderating deliveries and measurable absorption.

In our view, the cycle has turned. With almost half of major markets already in expansion—and the majority poised to join them by mid2026—the opportunity set in U.S. multifamily is compelling. We believe this is a crucial moment to lean into high-quality assets in submarkets with attractive fundamentals to capture value as the expansion gathers momentum.

1 RealPage as of August 2025 

Disclosures

The information herein is provided for educational purposes only and should not be construed as financial or investment advice, nor should any information in this document be relied on when making an investment decision. Opinions and views expressed reflect the current opinions and views of the author(s) and Bridge Analysts as of the date hereof and are subject to change at any time without notice. Please see the end of this document for important disclosure information.

Important Disclosure Information

This material is for educational purposes only and should not be treated as research. This material may not be distributed, transmitted or otherwise communicated to others, in whole or in part, without the express written consent of Bridge Investment Group Holdings LLC (together with its affiliates, “Bridge”).

The views and opinions expressed in this material are the views and opinions of the author(s) of the material. They do not necessarily reflect the views and opinions of Bridge and are subject to change at any time without notice. Further, Bridge and its affiliates may have positions (long or short) or engage in securities transactions that are not consistent with the information and views expressed in this material. There can be no assurance that an investment strategy will be successful. Historic market trends are not reliable indicators of actual future market behavior or future performance of any particular investment which may differ materially and should not be relied upon as such. Target allocations contained herein are subject to change. There is no assurance that the target allocations will be achieved, and actual allocations may be significantly different than that shown here.

This material does not constitute an offer of any service or product of Bridge. It is not an invitation by or on behalf of Bridge to any person to buy or sell any security or to adopt any investment strategy, and shall not form the basis of, nor may it accompany nor form part of, any right or contract to buy or sell any security or to adopt any investment strategy. Nothing herein should be taken as investment advice or a recommendation to enter into any transaction.

Hyperlinks to third-party websites in this material are provided for reader convenience only. Unless otherwise noted, information included herein is presented as of the dates indicated. This material is not complete, and the information contained herein may change at any time without notice. Bridge does not have any responsibility to update the material to account for such changes. Bridge has not made any representation or warranty, expressed or implied, with respect to fairness, correctness, accuracy, reasonableness, or completeness of any of the information contained herein, and expressly disclaims any responsibility or liability, therefore. The information contained herein is not intended to provide, and should not be relied upon for, accounting, legal or tax advice or investment recommendations. Investors should make an independent investigation of the information contained herein, including consulting their tax, legal, accounting or other advisors about such information. Bridge does not act for you and is not responsible for providing you with the protections afforded to its clients.

Certain information contained herein may be “forward-looking” in nature. Due to various risks and uncertainties, actual events or results may differ materially from those reflected or contemplated in such forward-looking information. As such, undue reliance should not be placed on such information. Forward-looking statements may be identified by the use of terminology including, but not limited to, “may”, “will”, “should”, “expect”, “anticipate”, “target”, “project”, “estimate”, “intend”, “continue” or “believe” or the negatives thereof or other variations thereon or comparable terminology. Any reference to indices, benchmarks, or other measure of relative market performance over a specified period of time are provided for context and for your information only.

Past performance is not necessarily indicative of future results.

Additional information may be available upon request.

© 2025 Bridge Investment Group Holdings LLC. “Bridge Investment Group” and certain logos contained herein are trademarks owned by Bridge.

ATLWAA-20250929-4853743-15313375

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Executive Summary

• Markets expect the start of an easing cycle at this week’s FOMC meeting. The policy challenge is explaining why policy easing is consistent with the Fed’s dual mandate—maximum employment and price stability—when inflation has not yet returned to the 2% PCE goal.
  
• Inflation progress has become more uneven. Shelter components are decelerating, but non-shelter core measures have firmed modestly since mid-last year, complicating the case for cuts framed purely as relief from “sticky shelter readings.”
  
• The labor market has cooled from 2021–2023 peaks but remains resilient: unemployment (U-3) is still low by historical standards, broader under-employment (U-6) is contained, and reduced churn (lower quits and hires) may suggest normalization rather than deterioration. Recent BLS revisions show job growth over the past two years was slower than initially reported, yet hiring over the past year is still above Fed economists’ estimated breakeven levels.
  
• Market signals are mixed. A higher long end of the Treasury curve suggests lingering inflation risk or rebuilding term premium, while a re-steepened 2s/10s curve tempers hard-landing fears.
  
• Key risk now in focus: a form of stagflation-lite—slower growth alongside sticky non-shelter inflation. The Fed must thread the needle: acknowledge disinflation fatigue without loosening financial conditions so much that inflation re-accelerates.

What Is the Fed’s Dual Mandate

“The Federal Reserve works to promote a strong U.S. economy. Specifically, Congress has assigned the Fed to conduct the nation’s monetary policy to support the goals of maximum employment and stable prices. Those two goals are often referred to as the Fed’s ‘dual mandate.” ⁱ

Policy Backdrop: The Fed’s Mandate and the Target

When the Fed meets this week, markets expect the beginning of a rate cut cycle. The challenge for the Fed, however, will be how to articulate a meaningful policy shift in the context of their dual mandate. In our view, it will be a difficult case to make, and a cut is likely to be framed as managing the balance of risks with greater weight assigned to potential labor market deterioration.

By mandate, the Fed has two objectives in conducting monetary policy: promote maximum employment and price stability. The latter is more clearly defined as a long-term inflation rate of 2 percent as measured by the annual change in PCE.ⁱⁱ

The problem is that inflation has not reached the Fed’s target. In fact, inflation remains higher than the beginning of three of the four previous interest rate hiking cycles.

If the Fed does cut, one of the challenges in abandoning the 2 percent inflation target is that this is no longer a story about sticky, lagging shelter inflation (see below). Core CPI minus housing and Core PCE minus housing show that non-shelter components have moved up a bit since the middle of last year. Meanwhile, shelter components have decelerated.

Core CPI ex Shelter Increasing in Recent Monthsⁱⁱⁱ

Core PCE Readings In-line with Core ex Shelter^iv

If inflation is no longer the primary target, what does labor market data tell us?

From an unemployment perspective, the standard benchmark, the U-3 level, remains near historically low levels below 5 percent, signaling limited slack. Under-employment (the U-6 measure), which includes unemployed people having difficulty finding a job and involuntary part time workers, also appears contained and near historic lows (see below).

Low Rates for U-3 Unemployment and U-6 (Includes Marginally Attached and Involuntarily Part-Time Workers)^v

Turning to hiring data from the BLS JOLTS repot (“Job Opening and Labor Turnover Survey”), we see less labor market churn than in recent years (see below). Fewer people are voluntarily leaving their jobs on a monthly basis, and as fewer jobs are required to backfill their departures, we are seeing both the hiring and quits rates decline—arguably that is a measure of labor market stability.

The Churn of “Job Switchers” Has Subsided as Hiring Has Slowed^vi

Recent BLS revisions have come into focus as well. The first visual below is employment growth before the September 2024 jumbo-sized downward revision by the BLS. The second includes both the 2024 and 2025 BLS revisions, which shows that job growth after 2020 was less hot than initially believed, and the past year has seen relatively underwhelming job growth figures.

Nonfarm Employment Growth Prior to September 2024 Revisions^vii

Nonfarm Employment Growth After 2024 and 2025 Revisions^viii

However, it is important to note that underwhelming does not mean that the labor market is losing ground. According to St. Louis Fed economists who analyze the breakeven rate, expected lower immigration this year may have lowered the breakeven rate to somewhere between 32,000 and 82,000 jobs per month on average.^ix Over the past year, we have seen 122,000 jobs per month.

So, what does the market tell us right now? Rising yields on the long end of the curve might suggest a lack of confidence that inflation is under control. At the same time, the 2- and 10-year spread has been in positive territory for over a year following a two-year inversion, which is rare re-steepening without seeing a recession.

It appears that stagflation has emerged as the front running concern that may require the Fed to adjust its policy stance. And since that is outside of the Fed’s dual mandate, we will see how they thread the needle on this this week—both with respect to providing an understanding of a policy framework going forward as well as providing assurance to markets.

i Board of Governors of the Federal Reserve System. FAQs: What economic goals does the Federal Reserve seek to achieve through its monetary policy? As of September 12, 2025. Accessed at: https://www.federalreserve.gov/faqs/what-economic-goals-does-federal-reserve-seek-to-achieve-through-monetary-policy.htm
ii Board of Governors of the Federal Reserve System. FAQs: What economic goals does the Federal Reserve seek to achieve through its monetary policy? As of September 12, 2025. Accessed at: https://www.federalreserve.gov/faqs/what-economic-goals-does-federal-reserve-seek-to-achieve-through-monetary-policy.htm
iii Bloomberg as of September 11, 2025.
iv Bloomberg as of September 11, 2025.
v Bloomberg as of September 11, 2025.
vi Bloomberg as of September 11, 2025.
vii Bloomberg as of September 4, 2024.
viii Bloomberg as of September 11, 2025.
ix Bick, Alexander. August 28, 2025. Lower Immigration Projections Mean Lower Breakeven Employment Growth Estimates. Federal Reserve Bank of St. Louis.   

Disclosures

The information herein is provided for educational purposes only and should not be construed as financial or investment advice, nor should any information in this document be relied on when making an investment decision. Opinions and views expressed reflect the current opinions and views of the author(s) and Bridge Analysts as of the date hereof and are subject to change at any time without notice. Please see the end of this document for important disclosure information.

Important Disclosure Information

This material is for educational purposes only and should not be treated as research. This material may not be distributed, transmitted or otherwise communicated to others, in whole or in part, without the express written consent of Bridge Investment Group Holdings LLC (together with its affiliates, “Bridge”).

The views and opinions expressed in this material are the views and opinions of the author(s) of the material. They do not necessarily reflect the views and opinions of Bridge and are subject to change at any time without notice. Further, Bridge and its affiliates may have positions (long or short) or engage in securities transactions that are not consistent with the information and views expressed in this material. There can be no assurance that an investment strategy will be successful. Historic market trends are not reliable indicators of actual future market behavior or future performance of any particular investment which may differ materially and should not be relied upon as such. Target allocations contained herein are subject to change. There is no assurance that the target allocations will be achieved, and actual allocations may be significantly different than that shown here.

This material does not constitute an offer of any service or product of Bridge. It is not an invitation by or on behalf of Bridge to any person to buy or sell any security or to adopt any investment strategy, and shall not form the basis of, nor may it accompany nor form part of, any right or contract to buy or sell any security or to adopt any investment strategy. Nothing herein should be taken as investment advice or a recommendation to enter into any transaction.

Hyperlinks to third-party websites in this material are provided for reader convenience only. Unless otherwise noted, information included herein is presented as of the dates indicated. This material is not complete, and the information contained herein may change at any time without notice. Bridge does not have any responsibility to update the material to account for such changes. Bridge has not made any representation or warranty, expressed or implied, with respect to fairness, correctness, accuracy, reasonableness, or completeness of any of the information contained herein, and expressly disclaims any responsibility or liability, therefore. The information contained herein is not intended to provide, and should not be relied upon for, accounting, legal or tax advice or investment recommendations. Investors should make an independent investigation of the information contained herein, including consulting their tax, legal, accounting or other advisors about such information. Bridge does not act for you and is not responsible for providing you with the protections afforded to its clients.

Certain information contained herein may be “forward-looking” in nature. Due to various risks and uncertainties, actual events or results may differ materially from those reflected or contemplated in such forward-looking information. As such, undue reliance should not be placed on such information. Forward-looking statements may be identified by the use of terminology including, but not limited to, “may”, “will”, “should”, “expect”, “anticipate”, “target”, “project”, “estimate”, “intend”, “continue” or “believe” or the negatives thereof or other variations thereon or comparable terminology. Any reference to indices, benchmarks, or other measure of relative market performance over a specified period of time are provided for context and for your information only.

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