The historically high supply hitting the Sun Belt markets provided a major headwind for apartment REITs in the third quarter of 2024, muting rent growth, but there is some good news.
“The apartment excess supply has crested and will now be declining through the end of 2025,” Alexander Goldfarb, managing director and senior research analyst for investment bank and financial services company Piper Sandler, said in a recent report.
The good news is that strong demand helped REITs grow renewal rents and generally maintain occupancies. For instance, Chicago-based Equity Residential posted 96.1% occupancy and its lowest turnover on record in Q3.
“We see steady demand from a well-employed affluent renter base, a favorable supply picture [with] 90% of our NOI in the less supplied established markets and continuing cost and lifestyle preferences favoring rental housing,” EQR CEO Mark Parrell said on the firm’s earnings call in October.
If demand holds, apartment REITs should be in a better position in 2025 as new deliveries continue to decline.
“We expect to see normal seasonal leasing patterns for the next couple of quarters and remain convinced that the spring leasing season will usher in the start of a recovery cycle with more favorable leasing conditions as demand and absorption trends across our markets remain strong and the volume of new supply deliveries steadily declines,” said Eric Bolton, CEO of Memphis-based REIT MAA on the firm’s earnings call in October.
Here, Multifamily Dive rounds up recent earnings releases and news from the country’s major apartment REITs.
