Three REITs on the State of Multifamily

The heads of the country’s largest apartment REITs are finally giving their two cents on how tariffs, trade wars and economic tumult might affect business.

An outlook during earnings season should be par for the course. But the industry has basically been mum since “Liberation Day,” making straight talk on earnings calls held by Equity Residential, AvalonBay Communities and Camden Property Trust a much-needed novelty.

“You’re like the only apartment REIT that so far has really talked about resident concerns,” Piper Sandler analyst Alexander Goldfarb said on AvalonBay’s Thursday call.

Execs admitted uncertainty clouded crystal balls. Still, they shared what they could divine.

The upshot: Market fundamentals are solid and poised to strengthen; the biggest unknown now is the jobs market.

Lagging, not leading

All three REITs said demand is about as robust as it gets — at least right now.

Mortgage rates and home prices are high, which has dissuaded would-be buyers from leaving leases and further pressured a nationally undersupplied housing market. Meanwhile, peak rental season is dawning, creating a perfect storm for owners.

The problem is the chatter.

AvalonBay CEO Sean Breslin said talk from tenants, both prospective and current, has centered on: “I have a job today; will I have a job tomorrow?”

The REIT, headquartered in Arlington, Virginia, owns multifamily in 12 states and, notably, Washington, D.C., where sweeping federal layoffs have marred the job market and stoked lasting fears among the still employed.

The federal workforce in D.C., alone, is projected to shrink 21 percent by September 30, according to the District’s Office of Revenue Analysis, which now forecasts the metro region to enter a mild recession by year’s end.

Swap the local lens for a national one and 260,000 federal employees have exited the workforce — by choice, force or some mix — since President Donald Trump took office, according to a May analysis by Reuters.

AvalonBay will feel that absence. About 12 percent of its residents work for the federal government, Breslin said.

Neither the REIT nor peers Equity and Camden said layoffs had hit leasing numbers. But impacts typically manifest six to eight months down the line, Breslin said; Equity’s CEO Mark Parrell echoed this.

“We are a lagging, not a leading indicator of changes in the economy,” Parrell said on the firm’s Wednesday earnings call.

“People, if they lose their jobs, don’t immediately give us the keys.”

Hunkering down

Right now, renters are holding on to those keys — tightly.

Equity reported a record low turnover rate in the first quarter at 7.9 percent, COO Michael Manelis said. Camden reported a 3.3 percent pop in lease renewals, one of the firm’s highest-ever rates, Executive Vice Chairman Keith Oden said.

That’s good news for right now. But it also signals tenants are responding to uncertainty, and hard times may be on the horizon.

Breslin outlined the typical chain of events when economic outlooks get dicey: tenants hunker down, then they cut the “wants” in their budget until they’re forced to trim the “needs” — critically, rent.

The signs are there. Discretionary spending is down. It has slipped precipitously since November 2025, according to Deloitte, though it remains above 2023 and 2024 lows. And tenants since February have reported higher expected costs for housing and utilities, signaling pocketbooks are being pinched.

“The probability of a recession remains at 60 percent,” J.P. Morgan bluntly proclaimed in its mid-April report.

Still, those jitters aren’t yet rattling the REITs. Or so they claim.

“As of today, we are not seeing any signs of consumer weakness,” Equity’s Manelis said. When weakness does show up, it manifests as broken leases, move-outs for lower rents, fewer renewals and late payments.

“We haven’t had people coming in and saying, ‘Oh my god, I’ve lost my job in the federal government, you need to let me off my lease,’” said Camden CEO Ric Campo.

“We just haven’t seen it.”

Positive supply signs

The good news, however, is the oversupply story seems to be in the rearview mirror, and, barring a surge in unemployment, dwindling deliveries should give rents a boost.

The first quarter marked the first time since 2021 that tenants nationally leased new units faster than developers could deliver them.

Last year, Washington, D.C. pumped out the greatest excess of apartments, as compared to tenant demand, according to RealPage. Then came Houston and Las Vegas.

The scales are tipping in landlords’ favor in Dallas, Atlanta and Denver, Equity Chief Investment Officer Alec Brackenridge said. Austin, Charlotte and Phoenix “haven’t cauterized the bleeding from all the supply that they’ve been under,” he added, but dwindling pipelines signal they soon may.

Austin, which has led the pack nationally in oversupply, produced fewer units than were leased in the first three months of 2025 — the first time in three and a half years it has recorded positive net absorption, according to the brokerage MMG.

The pipeline is still robust, but construction is slowing “pretty significantly towards the back half of 2025,” Camden’s Camp said.

After nearly two years of negative growth, rent changes are now projected to turn positive by 2026, according to Origin Investments.

Sun Belt snap back

Groups such as AvalonBay are betting on that sea change. The firm went into contract on eight Texas multifamily properties in the first quarter — two in Austin, the rest in Dallas-Fort Worth — for over $600 million.

“Look at the basis at which we can enter these markets,” Breslin said, specifying the Texas deal had priced out to $230,000 a door. By comparison, per-unit pricing in Austin topped out at $275,000 during the last cycle.

Houston-based Camden one-upped AvalonBay in Febraury, scooping up Austin’s Emerson at Leander for about $68 million or $192,000 a unit — a 16 percent discount from its appraised value.

Across the Sun Belt, distress that marred values from 2022 through last year is working its way through the system and investors eyeing the shift are stepping off the sidelines.

“Lenders have just kind of had it: they’re not extending loans anymore; they’re not extending caps on interest rates,” Equity’s Brackenridge said.

S2 Capital, for example, one of the multifamily syndicators to ride out the Sun Belt’s downturn, snapped up a good chunk of buildings owned by GVA – a syndicator that didn’t fare so well.

One of the cycle’s largest investors, GVA has lost dozens of assets to foreclosure and forced sales after interest rates soared on its floating-rate loans; it faces multiple investor suits alleging shady dealings.

S2, in partnership with WindMass Capital (a third syndicator), picked up one of GVA’s struggling Austin assets in January for $50 million. S2 also stepped in as the general partner on a 1,768-unit GVA portfolio with buildings in Dallas and Nashville, and Knoxville, Tennessee.

“We’re seeing some more products starting to come to the market,” Brackenridge underscored. “At the same time, there’s a lot of interest in buying that product.”

Equity is currently combing Dallas, Denver and Atlanta for acquisition opportunities. Unlike its peers, it doesn’t quite have the appetite for Austin yet.

“There’s such a glut of supply — that’s probably a little bit later for us,” CEO Parrell said.

What about tariffs?

All three REITs, which double as developers, said tariffs would pressure expenses. AvalonBay estimated a 5 percent jump in hard costs and said the uptick “could be enough to tip some projects into being infeasible.”

“Even with no change in costs, it’s really hard to make deals underwrite right now,” Brackenridge said. A mix of uncertainty and still-high rates is complicating the math.

But as new development activity dries up, contractors and subcontractors are more willing to come down on pricing, which figures to offset the higher price of materials, executives said.

“Contractors [are] getting really hungry,” Brackenridge added. “They see the pipeline dwindling and so they’re accepting less of a margin.”

AvalonBay, which acts as its own contractor, said, “Our phones are ringing off the hook with deeper bid coverage and stronger subcontractor availability than we have seen in years.”

“This bodes well,” Chief Investment Officer Matt Birenbaum said.