From left: David Neithercut, Equity Residential CEO, and UDR CEO Thomas ToomeyAs nationwide residential rental vacancy rates near their five-year lows, multi-family real estate investment trusts are performing well and believe more profit is on the way. Reporting from the National Association of Real Estate Investment Trusts’ conference in Dallas the Wall Street Journal said generational factors and the weak economy are driving rental strength, and large landlords will hike rents in their portfolios as a result.
Young adults prefer to live close to city centers, UDR CEO Thomas Toomey said, and the firm’s 62,000-unit portfolio is more than 96 percent occupied. “We don’t have a problem finding customers. This is now a time when we’re just going to end up increasing rents.”
And the stagnant job growth is actually helping the industry, according to Equity Residential CEO David Neithercut, who oversees the firm’s 119,00-unit portfolio. The slow economy is keeping people in rental apartments rather than hunting for a home to buy. Neithercut said the country’s home ownership rate will continue to decline before eventually landing at 60 percent. It currently sits at about 66.3 percent.
Equity recently purchased an Upper West Side residential development site for $76.5 million.
The REIT CEOs all said they were looking to grow their portfolios. “If fundamentals are this good for this long, you should be growing your enterprise,” said Toomey, whose UDR is part of the way through an investment plan of up to $1.8 billion in Manhattan rental apartments. [WSJ]