Pacific Northwest Multi-Family: Moving Past Cap Compression—Even If Some Sellers Haven’t

^{This article written Q1, 2026}

Cap rate compression has been a driving force in real estate for much of the past decade. But that era is over.

Interest rates have reset. Risk tolerance has shifted. And buyers—especially institutional and seasoned sponsors—are underwriting more conservatively. Yet, we continue to see a disconnect: some sellers are still pricing assets as if cap rate compression is ongoing.

At Tamarack, we’re not buying into that.

What We’re Seeing

In markets like the Tri-Cities, WA, we’re actively pursuing new development and value-add opportunities. But in nearly every deal we review, we’re encountering owners who are holding onto 2022-era pricing expectations—even when the math no longer supports it.

We recently made a disciplined offer on a well-maintained 1970s asset. Solid bones, good location. But the seller chose a higher offer from a buyer willing to underwrite to outdated assumptions. That’s their prerogative—but it’s not our approach.

Why Discipline Matters More Now

When cap rates compress, it’s easy to look smart on paper. Rising prices cover mistakes. But in a flat or expanding cap rate environment, execution and alignment matter far more than momentum.

We don’t underwrite for best-case scenarios. We underwrite for what’s real:

• Rent growth supported by comps, not hope
• Renovation ROI with disciplined payback periods
• Debt structures that work in today’s rate climate
• Tax strategies that drive real, after-tax outcomes for our investors

Final Thought: Selectivity Is a Strategy

Not every deal pencils. Not every seller has caught up to the new reality. And that’s okay.

We’ll stay selective. We’ll stay patient. And we’ll keep bringing forward only those opportunities that offer true value—not just legacy pricing.