Multifamily NOI growth weakens even as expenses cool

Multifamily owners got a break on expenses in 2025, and it did them no good. Trepp's annual medians show operating expense growth cooling to 3.7% from 5.1%, with property insurance—the category that had been running hottest—decelerating from 10.9% to 2.7%. Revenue growth slowed by the same amount, to 2.8% from 4.2%, so median NOI growth weakened to 1.8% from 3.4% and expenses still outran revenue by 0.9 percentage points; the relief was real, but the bottom line did not get to keep it.

Compound the 2021 through 2025 medians and the cumulative picture worsens: operating expenses are up 32.4%, revenues 26.6%, and NOI 21.9%, leaving a 5.8-point gap between the cost line and the income line. Insurance stands out even after its slowdown, with an implied five-year increase of 57.9%, while utilities moved the other way in 2025, accelerating to 6.7% from 3.9% as most other expense categories decelerated alongside insurance.

Geography offers no clean escape: Trepp's operating-expense measure exceeded revenue in each of the nine census divisions, so the cost-revenue gap is not a Sun Belt or coastal artifact. Among the seven metros in the report, implied five-year NOI growth ran from 3.4% in San Francisco to 33.9% in Miami. A loan's performance depends on where the property sits as much as when the loan was made, and medians by definition obscure the tails—half the properties grew NOI slower than 1.8%.

That should matter to CMBS lenders looking at the 2023-2024 conduit vintages. Trepp ties the 2023 vintage's delinquency to thin underwriting cushions, as reported last week, and these income statements show the cushion still losing air. The 2025 expense relief is not an all-clear; the cost line caught its breath, but the revenue line did not pick up the pace.

For allocators and lenders, Trepp's numbers reinforce the argument this publication has been making about apartments: prices are resetting on current cash flow, and 1.8% median NOI growth is the cash flow underneath the reset. The cap rates that rose in all nine census divisions are the market pricing an income statement that grows slower than its own costs.