Why Multifamily Investing is Better Than Other Real Asset Classes

For high-net-worth investors evaluating a long-term private real estate allocation, the question is rarely whether to own real estate but which type. Office, retail, industrial, single-family rentals (SFR), and public real estate all have their advocates, but the reason why multifamily investing is better than most competing real estate sectors is its ability to generate stable results across recessions, inflationary periods, and interest-rate cycles.

This analysis compares multifamily against five alternatives using both quantitative measures (returns, vacancy, lease structure, liquidity) and qualitative measures that determine long-term investment durability (cash flow stability, inflation protection, tax efficiency, downside resilience). The framework is designed for investors, advisors, and active real estate owners evaluating long-term allocation decisions across property sectors.

How Multifamily Investments Compare Across Eight Performance and Structural Factors

The following table compares multifamily against five common alternatives using institutional data through 2025 and Q1 2026.

Source¹-NCREIF* | Source²-S&P 500 Factsheet* | Source³-NCREIF*

Different investors have different priorities, and the right real estate allocation depends on which trade-offs they are willing to make:

• Investors who need immediate access to their capital should weigh public equities and REITs, which trade daily and can be liquidated within seconds.
• Investors comfortable with significant volatility in exchange for higher long-term returns may benefit from holding a larger public equity position.
• Investors who want concentrated upside in a single sector or geography may find a better fit in direct ownership, industrial real estate, or sector-specific REITs that can outperform the broader market in favorable cycles.
• Investors who want direct ownership and are prepared for active management of specific properties may find single-family rentals a better fit than institutional multifamily. For investors prioritizing lower minimums or geographic diversification, multifamily REITs and syndications offer institutional access starting at $25,000, well below the down payment required for a single home, and exposure across dozens of properties in multiple markets.

For investors prioritizing consistent long-term performance, the reason why multifamily investing is better than the alternatives comes down to four factors working together. Multifamily:

• Generates passive income that can hold up through recessions and inflation cycles
• Delivers tax efficiency through depreciation and 1031 exchanges
• Maintains occupancy above 92% even during major downturns
• Avoids the structural problems facing office, retail, and industrial today

No other asset class compared here delivers all four at once.

Multifamily vs. Office

The shift to hybrid and remote work that began in 2020 has now defined office demand for six years. Many companies operate with smaller real estate footprints than they did pre-pandemic, and a significant share no longer maintains dedicated offices at all. The numbers reflect this reality: U.S. office vacancy reached approximately 20.7% in Q2 2025*, a record high marking the sixth consecutive quarterly increase. Office returns trailed every other commercial real estate sector over the past decade, and office values have continued to face writedowns as appraisals catch up to actual occupancy and lease performance.

The structural problem is one of timing. Most office landlords still have tenants on 5- to 10-year leases signed before the shift. As those leases expire, landlords face a difficult choice: cut rents substantially to keep tenants who want less space, or accept extended vacancies while waiting for the market to recover. Either outcome compresses net operating income for years to come.

Multifamily faces no equivalent challenge:

• People still need places to live, regardless of where they work
• Annual lease resets keep rents aligned with current market conditions
• Vacancy sits at 6.7%, well below office levels
• Demand drivers (population growth, household formation, housing shortages) remain in place

For investors weighing where occupancy and rent trends are headed, multifamily stands on far stronger ground than office.

Multifamily vs. Retail

Retail-led commercial real estate returns in 2025 at 6.8%, the strongest of any private real estate sector examined here. But the surface-level number hides concentration risks that multifamily does not carry.

A retail property typically depends on a small number of anchor tenants to drive customer traffic. When a major anchor leaves, smaller tenants often follow, and the property’s income can drop sharply within a single quarter. Recent closures have made the risk concrete. Forever 21 closed all 354 of its stores* by May 2025. Party City wound down roughly 700 corporate locations* in early 2025. Rite Aid* filed for its second bankruptcy in 2025 and closed every remaining pharmacy.

Coresight Research projects approximately 15,000 retail store closures in 2025 alone*, a net loss of more than 9,000 locations after accounting for openings. Lease terms of 5 to 15 years lock landlords into rates set years earlier, so they cannot reprice quickly when a major tenant departs or demands a shift.

Multifamily spreads tenant risk across hundreds of leases inside a single property:

• No single tenant departure can materially affect income
• Rent rolls reset annually as leases turn over
• Demand depends on essential housing needs, not discretionary consumer spending
• Income remains steady even when retail traffic patterns shift

While retail’s 2025 performance is real, its structural risks cannot be ignored. For investors who want diversified tenant exposure within a single asset and income that does not depend on consumer spending cycles, multifamily delivers structural breadth that retail cannot match.

Multifamily vs. Industrial

Industrial-led private real estate for much of the 2018–2022 period, driven by e-commerce growth, the buildout of last-mile delivery networks, and a wave of 3PL (third-party logistics) expansion. That outperformance has slowed significantly, and multifamily’s structural advantages become clearer over longer horizons.

Industrial returns fell to 4.5% in 2025, down from double-digit averages earlier in the decade. National vacancy and availability rates reached 6.7% and 9.2%, respectively, in Q1 2026, well above the sub-4% lows of 2022.

The cause is a supply correction: developers delivered over 1 billion square feet of new warehouse space between 2023 and 2025, and absorption could not keep pace. Industrial leases run 5 to 10 years, so today’s landlords often collect rents set when demand was at its peak.

The market is now showing signs of stabilization, with construction slowing and big-box leasing rebounding in early 2026, but the cyclical correction has been material.

Multifamily offers different and more durable characteristics:

• Annual lease resets capture inflation faster than industrial’s long leases
• Demand depends on essential housing, not on industrial cycles or trade patterns
• Performance has held up across multiple decades, not a single growth period
• The tenant base is broader and less concentrated than that of industrial tenants

Industrial may continue to perform well as the supply correction works through. But its returns depend on continued e-commerce growth, supply chain expansion, and global trade patterns, none of which are guaranteed to repeat. For investors weighing a single decade, industrial may show the stronger number.

For investors weighing multiple decades, multifamily delivers more consistent results across the conditions investors actually encounter.

Multifamily vs. Single-Family Rentals

Multifamily and single-family rentals share nearly identical durability profiles. Both reset rents annually, both perform well in recessions, and both qualify for the same tax structures. The right choice depends on how an investor wants to access and manage the asset

A single multifamily property combines 100 or more units under one roof, one set of operations, and one financing structure. A single-family rental portfolio of equivalent value requires assembling and managing dozens or hundreds of separate homes spread across neighborhoods.

Even institutional SFR ownership remains widely scattered across many small players. Pretium Partners*, operating under the Progress Residential brand, held over 89,000 SFRs as of June 2026, making it the largest operator overall; Invitation Homes*, the largest publicly traded REIT, owned approximately 97,000 homes (including joint ventures) as of Q4 2025. Yet institutional ownership accounts for just 3-4%* of the U.S. single-family rental market — individual landlords still own roughly 11 million* of the country’s 14 million SFR units*.

The operational differences between multifamily and single-family rentals are significant:

• Multifamily concentrates capital into fewer assets, reducing transaction and due diligence costs.
• One on-site management team oversees all units at a multifamily property, whereas third-party management is dispersed across SFR markets.
• Multifamily financing benefits from agency debt markets (Fannie Mae, Freddie Mac, HUD) with longer terms and lower rates than typical SFR portfolio loans.
• Tax planning is more efficient because the same depreciation and tax strategies cover the entire multifamily property; in SFR, those same strategies must be applied home by home, often making the cost outweigh the benefit.
• Multifamily offers truly passive ownership through institutional vehicles (syndications, DSTs, private funds); SFR ownership generally requires active investor involvement, even when third-party managers handle day-to-day operations.

Institutional multifamily is accessible across a wide range of allocation sizes. Bonaventure’s BMIT® carries a $25,000 minimum; DST interests typically start at around $100,000; and custom 1031 exchange structures are available for allocations of $7 million or more.
Single-family rentals suit investors who prefer direct ownership of individual properties and are comfortable managing the more hands-on operation that comes with it.

Multifamily vs. Public Equities

Public equities and multifamily serve different roles in a portfolio. Public equities have delivered higher returns and greater liquidity, while multifamily has historically offered a steadier, more tax-efficient profile.

Public equities returned 14.8% annualized over the past decade*, compared to roughly 6% to 7% for multifamily. They also provide immediate liquidity, allowing investors to buy and sell in seconds. For investors seeking liquid real estate exposure, REITs and publicly traded real estate companies can fill that role.

Those are raw, pre-tax returns, and three factors reshape the comparison:

• On a risk-adjusted basis, the gap narrows sharply because equities earned that return only by absorbing drawdowns of 57% in 2008, 34% in 2020, 25% in 2022, and 19% in early 2025, while multifamily held occupancy above 92% with uninterrupted income, leaving its return far more competitive per unit of risk taken
• Multifamily has low correlation to public equities, the source of its real diversification value, since equity returns track corporate earnings, market sentiment, and interest rates, while apartment demand tracks household formation and the ongoing need for housing, so the two move independently, and combining them lowers overall portfolio volatility
• After tax, the comparison changes materially, because equity dividends and gains are taxed as they occur, whereas depreciation and 1031 exchanges let multifamily defer tax and keep the full balance compounding, narrowing the real gap well below what the headline returns suggest

For investors focused on after-tax wealth creation, multifamily earns its place by doing three things that public equities cannot: holding income through downturns, offsetting equity-market swings, and compounding capital without a tax bill interrupting the compounding.

How Multifamily Fits in a Portfolio

For high-net-worth investors, real estate typically represents 11–18% of total wealth*. The exact share depends on overall portfolio size, liquidity needs, time horizon, and existing holdings.

Multifamily can be accessed through several different structures, each suited to different investor profiles:

• Direct ownership for investors with significant capital and operational expertise
• Syndications and joint ventures for institutional-scale exposure alongside a sponsor
• Delaware Statutory Trusts (DSTs) for 1031 exchange-eligible passive ownership
• Private and public REITs for higher liquidity at the cost of property-level fundamentals

Across vehicles, sponsor quality matters more than market timing. Track record across full cycles, principal co-investment alongside investors, and conservative fixed-rate financing are the most reliable indicators of long-term execution.

Why Multifamily Investing is Better for the Long Term

Multifamily investing is often preferable to other asset classes because it offers the potential for stable income, inflation protection, tax advantages, and multiple paths to long-term value creation. These advantages reward disciplined execution. Platforms with sponsor-led operations, conservative capital structures, and multi-cycle experience deliver these returns more consistently than those without.

Bonaventure has invested in multifamily for over 26 years, with $600 million of its own capital alongside investors, 92.6% fixed-rate debt at an average rate of 3.9% as of the end of Q1 2026, and 36 completed full-cycle transactions through the 2008 financial crisis, the 2020 pandemic, and the 2022 rate-hike cycle.

To discuss how Bonaventure’s multifamily strategy fits within a specific allocation, or why multifamily investing is better, speak with the Bonaventure team.