Virginia Multifamily Market Report Q1 2026: Hampton Roads vs. Richmond — Where Should Investors Put Their Money?

By Justin Ferguson | First Vice President of Investments, Marcus & Millichap Data Source: CoStar Group, licensed to Marcus & Millichap, March 7, 2026

Most investors look at Virginia multifamily and see two markets. I see two different problems — and two completely different opportunities.

Hampton Roads is performing. Richmond is recovering. Both will reward disciplined investors who understand what the data is actually saying. But the thesis, the timing, and the execution look nothing alike.

Here's the full institutional-grade breakdown of both markets as of Q1 2026 — vacancy, rent, construction, sales comps, and the investment strategy that actually makes sense right now.

Table of Contents

1. Hampton Roads (Norfolk) Multifamily Market — Q1 2026 Overview
2. Richmond Multifamily Market — Q1 2026 Overview
3. Hampton Roads vs. Richmond: Side-by-Side Comparison
4. Where Is the Better Multifamily Opportunity in Virginia Right Now?
5. Frequently Asked Questions

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Hampton Roads (Norfolk) Multifamily Market — Q1 2026 Overview

The Headline Numbers

Hampton Roads is the story nobody on the national stage is covering, which is exactly why it keeps outperforming.

KPIHampton Roads (Q1 2026)National AverageTotal Inventory127,251 units—Vacancy Rate6.2%8.6%12-Month Rent Growth+4.2%+0.1%12-Month Delivered Units1,323—12-Month Net Absorption1,506—Units Under Construction648 (0.5% of inventory)—Trailing 12-Mo Sales Volume$992 million—Market Cap Rate6.4%—

The number that should stop you cold is the vacancy rate. The national average is 8.6%. Hampton Roads is sitting at 6.2%. That is a 240-basis-point spread in a market that most institutional investors still treat as a secondary footnote.

Rent growth of 4.2% year-over-year against a national figure of essentially zero is not a rounding error. It is a structural statement about supply and demand.

Vacancy: Tight, Stable, and Getting Better

The 6.2% vacancy rate reflects a market that has absorbed significant new supply — 1,323 units delivered over the past 12 months — without meaningful disruption. Renters absorbed 1,506 units over the same period, meaning absorption outpaced deliveries.

Performance by asset class tells the real story:

• 4 & 5 Star: 7.1% vacancy — the highest tier, where new supply concentrates
• 3 Star: 5.1% vacancy — the tightest segment in the market
• 1 & 2 Star: 7.0% vacancy — aging stock facing competition from mid-tier

The 3-Star cohort at 5.1% vacancy is the headline inside the headline. Workforce housing in Hampton Roads is effectively full. That segment absorbed 500 units over the past year while the 1 & 2 Star segment posted negative absorption of -380 units — a clear signal that renters are trading up when they can, and that the mid-market represents the most durable cash-flow profile available.

By submarket, Norfolk City led absorption at 527 units (2.0% of inventory). Virginia Beach followed at 424 units. Both submarkets also led investment volume, with Virginia Beach generating $267 million in sales and Norfolk City $225 million over the trailing 12 months.

The vacancy forecast is stable: CoStar projects Hampton Roads holding at or near 6.2% vacancy through 2026–2027, before modestly tightening as deliveries taper and absorption stabilizes. There is no supply wave coming. Only 648 units are currently under construction — just 0.5% of total inventory.

Rent: 4.2% Growth Is the Real Story

At its 2021 peak, Hampton Roads rents grew 10.3%. The current 4.2% rate represents normalized but strong performance — more than 40 times the national average of 0.1%.

Rent performance by class:

• 1 & 2 Star: +3.9% — driven by affordability pressure pushing renters into workforce housing
• 3 Star: +4.6% — the strongest growth segment, benefiting from both renter upgrades and zero new competitive supply
• 4 & 5 Star: +3.9% — solid, despite concentrated new delivery pressure

Average asking rents by class:

• 4 & 5 Star: $1,944/month
• 3 Star: $1,582/month
• 1 & 2 Star: $1,286/month
• Market overall: $1,613/month

Submarket leaders on rent growth include Poquoson (+5.2%), Norfolk City (+4.8%), and Virginia Beach (+4.6%). York County and Chesapeake command the highest average rents in the region at approximately $1,800/month — reflecting the premium suburban corridor that continues to attract military households and high-income professionals.

Compared to Baltimore, Raleigh, and Washington D.C., Hampton Roads remains materially more affordable for renters — a competitive advantage that sustains demand from cost-conscious households and workforce relocations.

Construction: The Pipeline Has Already Dried Up

This is the most important forward-looking data point in the Hampton Roads market: development activity has collapsed.

Only 5 projects totaling 648 units are currently under construction — the smallest pipeline in years, representing just 0.5% of total inventory. Compare that to the 2024 peak, when 3,449 units were delivered in a single year.

The five active projects:

PropertyUnitsRatingEst. Completion900 Battlefield Blvd N215★★★★Aug 2026Kinship at Kindred (430 Church St)191★★★Dec 2026The Foundry at Williamsburg126★★★Jul 20262043 Scenic Pky66★★★Jan 2027Newport Gardens Apartments50★★★Apr 2026

Higher interest rates, tighter lending standards, and compressed development margins have effectively shut down the starts pipeline. The practical implication: no meaningful new supply enters this market through at least 2027. Rent growth and occupancy improvement will follow.

Sales: $992 Million and Institutional Buyers Are In

Investment activity in Hampton Roads generated $992 million in trailing 12-month volume as of Q1 2026 — up from $845 million in 2024 and approaching the five-year average of $1.0 billion.

The institutional trades set the pricing benchmark:

PropertyUnitsSale PricePrice/UnitSale DateLatitudes Apartments448$102,000,000$227,678Sep 2025Red Knot at Edinburgh336$95,750,000$284,970Nov 2025District 757295$91,000,000$308,474Nov 2025Reflections at Virginia Beach480$86,000,000$179,166Oct 2025Compass at City Center396$75,500,000$190,656Dec 2025Banyan Grove Apartments288$69,500,000$241,319Jun 2025

Average price per unit across 65 sale comparables: $179,105. Average cap rate: 6.5%. Market modeled pricing is $170,000/unit — well below the national average of $230,000/unit.

The pricing spread between Hampton Roads and the national average reflects an opportunity, not a discount for quality. District 757 — a brand-new, 5-Star property built in 2024 — traded at $308,474/unit. Institutional buyers are not uncertain about this market. They are buying.

Private investors represented 65% of transactions. Institutional buyers captured approximately 30%. Debt assumption strategies featured prominently in major deals — a sign that sophisticated capital is engineering creative structures to make the math work in a higher-rate environment.

Economy: Strengths, Risks, and the Federal Wildcard

Hampton Roads' economic base is anchored by the U.S. military, the Port of Virginia, shipbuilding, healthcare, and education — a diversification profile that has historically insulated the region from cyclical downturns.

The Port of Virginia — home to the deepest and widest channel on the East Coast — continues to expand capacity through the Gateway Investment Program, reinforcing Hampton Roads' role as a national logistics hub.

Key demographics as of Q1 2026:

MetricHampton RoadsNationalPopulation1,796,042342,214,844Median Household Income$85,232$84,467Unemployment Rate4.0%4.5%12-Month Income Growth+2.8%+2.8%

Total employment in the Norfolk MSA declined by approximately 5,700 jobs (-0.7%) over the past year — the primary risk factor in this market. Government employment, at 159,000 jobs and a 1.3x location quotient, carries meaningful exposure to federal workforce reduction. This is not theoretical risk in 2026; it is an active monitoring variable.

Five-year job growth is forecast at just 0.2% annually through 2029 — slower than historical averages. Investors should underwrite conservative absorption assumptions and prioritize stabilized assets over development plays.

The counterargument: Hampton Roads' affordability advantage relative to peer markets (Raleigh, Charlotte, Washington D.C.) provides a demand floor that slower job growth cannot erase on its own. The market's 6.2% vacancy is not the product of extraordinary hiring — it is the product of structural undersupply meeting stable, diversified demand.

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Richmond Multifamily Market — Q1 2026 Overview

The Headline Numbers

Richmond is a recovery story — and the market is right at the moment when patient investors get rewarded.

KPIRichmond (Q1 2026)National AverageTotal Inventory108,013 units (1,097 properties)—Vacancy Rate8.9%8.6%12-Month Net Absorption2,743 units—Average Asking Rent$1,594/month$1,770/month12-Month Rent Growth+1.5%+0.6%Under Construction4,310 units (4.0% of inventory)2.6%12-Month Sales Volume$571 million—Market Cap Rate6.1–6.2%—

Richmond's 8.9% vacancy is the number investors anchor on — and the number most investors are misreading.

This is not structural weakness. This is temporary supply pressure from a construction wave that is already decelerating. The market has posted positive net absorption for 12 consecutive quarters. It absorbed 2,743 units over the past 12 months — 49% above its 10-year annual average of 1,838. Demand is not the problem. New supply arriving faster than it can be absorbed is the temporary condition.

The distinction matters enormously for underwriting.

Vacancy: Elevated, But the Composition Is the Reveal

Richmond's 8.9% market-wide vacancy significantly overstates risk for value-add investors. The breakdown by class is the most important data point in this report:

ClassVacancyTotal UnitsAvg Asking Rent4 & 5 Star11.4%41,694 (38.6%)$1,809/mo3 Star7.2%38,583 (35.7%)$1,550/mo1 & 2 Star7.6%27,736 (25.7%)$1,299/moMarket Total8.9%108,013$1,594/mo

The elevated vacancy is concentrated in newly-delivered Class A properties in lease-up. Stabilized Class B and C assets are running at 7.2%–7.6% — tight by historical standards, and disconnected from the headline number.

The more significant fact: there is zero new Class C construction in Richmond's pipeline. Not one unit. Construction costs of $185,000–$275,000 per unit, financing at 7.5–9.0%, and workforce housing rents around $1,300–$1,550/month make new development economically impossible below the luxury threshold. Existing Class B and C owners have no new competition coming.

Submarket vacancy tells the same story in geographic terms:

Tightest markets (lowest vacancy):

• Dinwiddie County: 0.5%
• Goochland County: 3.9%
• Hanover County: 4.0%

Highest vacancy (where new supply concentrated):

• West End: 15.4%
• Downtown Richmond: 11.8%
• Petersburg/Colonial Heights/Fort Gregg-Adams: 9.8%

The West End and Downtown Richmond elevated vacancy numbers reflect active lease-up, not demand failure. Downtown absorbed 603 units over the past year while simultaneously receiving 1,234 new units — a short-term imbalance, not a structural problem.

CoStar vacancy forecast:

PeriodProjected VacancyQ1 2026 (current)8.9%Q2–Q3 2026~9.2%Q4 2026–Q1 2027~9.2–9.3%Mid-2027 (peak)~9.4–9.5%Q4 2027 onwardBeginning decline2028–2029~8.9% (normalizing)

The vacancy peak is late 2027. Investors who close acquisitions in 2026 are buying at or just before the top of the vacancy cycle — a counterintuitive entry point that has historically produced above-average returns.

Rent: Outperforming the Nation on a Compressed Base

Richmond's +1.5% rent growth outperforms the national average of +0.6% — and does so while absorbing above-average new supply. The structural rent discount to national averages is the longer-term opportunity.

Richmond vs. national rents:

SegmentRichmondNationalDiscountAll Properties$1,594/mo$1,770/mo-9.9%4 & 5 Star$1,809/mo$2,180/mo-17.0%

The 17% Class A rent discount is not sustainable relative to Richmond's economic trajectory. Population growing at 4.5% over five years (vs. 3.1% nationally), employment recovery 6.5% above pre-pandemic levels (vs. 4.8% nationally), and median household income of $86,472 (above the national average of $84,467) all point to long-term rent convergence with comparable markets.

Submarket rent leaders:

SubmarketAsking Rent12-Mo GrowthGoochland County$1,976/mo+5.5%West End$1,926/mo+2.5%Midlothian$1,823/mo+1.8%Hanover County$1,761/mo+2.7%

Rent growth forecast:

PeriodRent Growth2026+1.5%2027+1.4%2028+2.2%2029+2.2%

The acceleration in 2028–2029 corresponds precisely with the pipeline clearing and vacancy normalizing. Investors who own stabilized Richmond assets by 2027 will be positioned to capture that growth from day one of the acceleration cycle.

Affordability is Richmond's hidden structural strength: renters spend 22.1% of gross income on rent — well below the 30% cost-burden threshold and below the national average of ~23.9%. That cushion means rent increases can continue without triggering meaningful demand destruction.

Construction: A Massive Pipeline That Is Already Declining

Richmond's 4,310-unit under-construction pipeline is the most significant near-term risk factor — and the most misunderstood.

The critical context:

• 100% of new construction is Class A (4 & 5 Star). Zero Class B or C product is feasible at current construction costs.
• 69% of the pipeline (approximately 2,980 units) is concentrated in just two submarkets: Downtown Richmond (1,492 units) and Western Henrico County (1,488 units).
• New construction starts have collapsed as financing costs (7.5–9.0%) and building costs ($185,000–$275,000/unit) make new projects non-viable.

Top active developments:

PropertyUnitsEst. CompletionDeveloperHarp's Landing Apartments398Nov 2027Gumenick Properties2700 W Leigh St388Dec 2026Greystar3 Notch'd Flats325Jul 2026Edward Rose & SonsThe Rise at Regency II314Aug 2026Thalhimer/RebkeeThe Porter (Diamond District)306Oct 2026Mid-America

Delivery and absorption forecast:

YearProjected DeliveriesProjected Absorption20262,7782,18320271,7091,95120282,0461,79320291,4851,412

The 2027 inflection is the critical data point: deliveries fall to 1,709 units while absorption holds at 1,951. When absorption exceeds deliveries, vacancy declines and rent growth accelerates. That crossover is 18 months away.

Sales: Institutional Conviction at Compressed Multiples

Richmond multifamily sales totaled approximately $558 million in 2025 across 31 transactions, up from $442 million in 2024 — but still well below the 10-year annual average of $644 million and 60 deals.

Year-to-date 2026, five transactions have closed totaling $119.6 million.

Recent significant trades:

PropertyUnitsPricePrice/UnitDateMarshall Springs at Gayton Weg420$119,750,000$285,119Dec 2025Metropolis at Innsbrook402$98,000,000$243,781Jul 2025Triton Glen250$65,000,000$260,000Dec 2025The Boulders Lakeview212$51,500,000$242,924Jan 2026Innslake Place221$51,250,000$231,900Feb 2026Reserve South200$33,350,000$166,750Jul 2025Wellington Place200$31,000,000$155,000Sep 2025

The institutional Class A trades ($242,000–$285,000/unit) signal conviction in Richmond's long-term fundamentals. The Class B trades ($155,000–$167,000/unit) demonstrate the buy-below-replacement-cost thesis in practice. Current replacement cost for new construction in Richmond: $185,000–$275,000/unit.

Current cap rates by class:

ClassCurrent Cap RateForecast 2028–20294 & 5 Star6.0%5.8–5.9%3 Star6.2%6.0–6.1%1 & 2 Star6.4–6.5%6.3–6.4%

Cap rate compression of 20–40 basis points is forecast through 2028–2029 as rate cuts materialize, rent growth accelerates, and institutional capital returns to secondary markets.

Economy: Richmond Is Outgrowing Its Price Tag

Richmond's economic foundation is among the strongest in the Mid-Atlantic for apartment investors — and it is still not fully priced into rents.

MetricRichmondNationalPopulation (5-Year Growth)+4.5%+3.1%Total Employment~737,000—Unemployment Rate3.8%4.5%Employment Recovery vs. Pre-Pandemic+6.5%+4.8%Median Household Income$86,472$84,467

Major employer anchors driving apartment demand:

• CoStar Group: 3,000 cumulative new jobs in Downtown Richmond (2,000 in 2021 + 1,000 in 2025)
• Amazon: Multiple fulfillment and distribution facilities across the metro
• SanMar: 1,000 new jobs at a 1.1 million SF distribution center in Ashland (2023)
• Fort Gregg-Adams (formerly Fort Lee): Continued major employment anchor in the Petersburg submarket

Virginia was ranked #4 in CNBC's 2025 America's Top States for Business, having been ranked #1 three times in the past six years. The business climate creates durable, compounding demand for multifamily housing.

One risk worth monitoring: Richmond's government employment at 114,000 jobs (1.1x location quotient) carries some federal workforce reduction exposure, though it is less concentrated than Hampton Roads' direct military dependency.

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Hampton Roads vs. Richmond: Side-by-Side Comparison

MetricHampton RoadsRichmondTotal Inventory127,251 units108,013 unitsVacancy Rate6.2%8.9%National Vacancy8.6%8.6%Vacancy vs. National240 bps below30 bps above12-Mo Rent Growth+4.2%+1.5%National Rent Growth+0.1%+0.6%Units Under Construction648 (0.5%)4,310 (4.0%)Market Cap Rate6.4%6.1–6.2%Avg Price/Unit (Sales Comps)$179,000$155,000–$220,000Class B/C New SupplyZeroZeroFederal ExposureHigh (military)Moderate (government)Population Growth (5-Yr)~0.3%+4.5%Employment Growth (5-Yr)+0.65%+6.5%Investment TimingBuy now — stableBuy now — before recovery

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Where Is the Better Multifamily Opportunity in Virginia Right Now?

The answer is not either/or. It depends on what you are trying to solve for.

Hampton Roads: Buy for Current Income and Stability

Hampton Roads is the better market if your primary objective is current cash flow and occupancy stability. At 6.2% vacancy with 4.2% rent growth, the market is performing now. The 648-unit construction pipeline means no supply pressure through at least mid-2027. The institutional buyers — Briar Capital, Kushner Companies — have already voted with their capital.

Best strategies in Hampton Roads:

1. Class B Value-Add in Stabilized SubmarketsTarget 1990s–2000s vintage product in Chesapeake, Virginia Beach, or York County at $130,000–$175,000/unit. The 3-Star segment at 5.1% vacancy and 4.6% rent growth is the strongest risk-adjusted profile in the market. Invest $5,000–$10,000/unit in targeted renovations and push rents $75–$125/month on turnover.

2. Class C Workforce HousingNewport News and Portsmouth offer 1970s–1980s product in the $80,000–$120,000/unit range. At 6.7–6.8% cap rates with zero new competitive supply, the cash-on-cash return profile is among the best available in the Mid-Atlantic.

3. Stabilized Core-Plus HoldVirginia Beach and Norfolk City — $175,000–$230,000/unit for well-located 3 and 4-Star assets positioned for cap rate compression as rates decline through 2027–2028.

Underwrite conservatively: Model vacancy at 7.5%–8.0%, federal employment headwinds, and rent growth at 2.5%–3.5% (below the current 4.2%) to stress-test against downside scenarios.

Richmond: Buy for Recovery, Appreciation, and Long-Term Compounding

Richmond is the better market if your primary objective is total return over a 3–7 year hold. You are buying at the top of the vacancy cycle, below replacement cost, with a demand profile that clearly outperforms the national average across every metric that drives long-term rent growth.

Best strategies in Richmond:

1. Class B Value-Add — Core ThesisPurchase 1990s–2000s vintage product at $130,000–$175,000/unit (confirmed by Reserve South at $166,750 and Wellington Place at $155,000), invest $5,000–$10,000/unit, and drive $75–$150/month rent premiums. At $130,000–$175,000/unit against $185,000–$275,000+ replacement cost, the margin of safety is structural.

Best submarkets: Western Henrico County (28,018 units, highest absorption in the market), Midlothian (strongest rent levels in suburban Richmond), Hanover County (4.0% vacancy, no new supply).

2. Class C Workforce HousingPetersburg, Eastern Henrico, and Northside submarkets offer 1970s–1980s vintage at $80,000–$120,000/unit. With Class C generating 6.4–6.5% cap rates and zero competitive supply in any foreseeable timeframe, this is a durable yield play with asymmetric upside as Richmond's income growth compounds.

3. Opportunistic Class A Lease-Up DistressWestern Henrico County and Downtown Richmond both carry lease-up assets where sellers face maturity pressure. The right Class A acquisition at $200,000–$230,000/unit in a lease-up can deliver significant upside as occupancy normalizes through 2027.

Underwrite conservatively: Model 9–10% vacancy and 1–1.5% rent growth for the first 24 months. Focus on stabilized, 90%+ occupied assets to avoid lease-up execution risk. Lock fixed-rate debt.

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Frequently Asked Questions

What is the current vacancy rate in Hampton Roads (Norfolk) multifamily?As of Q1 2026, the Hampton Roads multifamily vacancy rate is 6.2% — significantly below the national average of 8.6%. The 3-Star (Class B) segment is the tightest at 5.1%.

What is the current vacancy rate in Richmond multifamily?As of Q1 2026, Richmond's vacancy rate is 8.9% — modestly above the national average of 8.6%. The elevated vacancy is concentrated in newly-delivered luxury (4 & 5 Star) properties in lease-up. Stabilized Class B and C assets are running 7.2%–7.6%.

How much rent growth are Virginia multifamily markets seeing in 2026?Hampton Roads is generating +4.2% annual rent growth (vs. +0.1% nationally). Richmond is generating +1.5% (vs. +0.6% nationally). Both markets are outperforming the national average.

What cap rates are Virginia multifamily properties trading at in 2026?Hampton Roads multifamily cap rates average approximately 6.4% across all classes. Richmond cap rates range from 6.0%–6.5% depending on asset class and submarket, with Class A trading closer to 6.0% and Class C at 6.4%–6.5%.

Is there new multifamily construction coming to Hampton Roads?Effectively no. Only 648 units are currently under construction across 5 properties in the Hampton Roads / Norfolk market — just 0.5% of total inventory. Development activity has collapsed due to higher financing costs and tighter lending standards.

When will Richmond's vacancy peak?CoStar projects Richmond vacancy to peak at approximately 9.4%–9.5% in mid-2027, then begin declining as the construction pipeline clears and absorption holds steady at 1,700–2,200 units annually.

What are apartments selling for per unit in Hampton Roads?The average sale price per unit across 65 transactions in the trailing 12 months is $179,105 in Hampton Roads. Institutional-grade Class A assets are trading at $228,000–$309,000/unit. Class B stabilized product trades at $115,000–$175,000/unit.

What are apartments selling for per unit in Richmond?Recent Richmond comparable sales range from $155,000/unit (Class B, 1991 vintage) to $285,000/unit (Class A, 2014 vintage). The 2025 average price per unit across all transactions was $220,377 — up sharply from $160,462 in 2024, reflecting the higher quality of assets that traded.

Should I invest in Hampton Roads or Richmond multifamily right now?Hampton Roads is the stronger immediate cash-flow play with lower vacancy and higher rent growth. Richmond is the better recovery and appreciation play, offering below-replacement-cost pricing and a clear 2027–2028 inflection point. Both markets offer compelling risk-adjusted returns for investors with disciplined underwriting and a 3–7 year horizon.

What submarket has the strongest multifamily fundamentals in Hampton Roads?Norfolk City leads absorption (527 units, 2.0% of inventory) and rent growth (+4.8%). Virginia Beach leads investment volume ($267 million) and rent levels. For workforce housing, the 3-Star corridor in Chesapeake and Virginia Beach offers the best combination of occupancy and rent growth momentum.

What submarket has the strongest multifamily fundamentals in Richmond?Western Henrico County leads with 28,018 units, 8.2% vacancy, and 733 units of absorption — the highest in the market. Midlothian commands the highest rents at $1,823/month and absorbed 592 units. Hanover County offers some of the tightest vacancy in the metro at 4.0% with zero new supply.

This market analysis was prepared using CoStar Group data licensed to Marcus & Millichap (March 7, 2026) and Oxford Economics. Data reflects market conditions as of Q1 2026.

Justin Ferguson is First Vice President of Investments at Marcus & Millichap, specializing in multifamily properties in Hampton Roads and Richmond, Virginia. For investment opportunities, market data, or property valuation inquiries, contact Justin Ferguson at Marcus & Millichap.

Next report update: June 2026.

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