Apartment buildings, long considered a real-estate haven, are emerging as the next major trouble spot in the beleaguered commercial-property world.

• Investors bid up the prices of multifamily buildings for years, attracted by steadily rising rents and the prospect of outsize returns.
• Many took on too much debt, expecting they could raise rents fast enough to pay it down.

Unlike office buildings and malls, which have been hit hard by remote work and e-commerce, rental apartments have low vacancy rates.

• The apartment sector’s main problem isn’t a lack of demand—rents have soared since 2020—it is interest rates.

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