- REITs across coastal and Sun Belt markets reported stronger-than-expected Q1 performance, driven by solid demand and wage growth.
- Sun Belt REITs are shifting toward operational optimization as new supply levels peak, while coastal REITs are ramping up acquisitions and development starts.
- Major REITs like AvalonBay, Essex, and Equity Residential posted strong financials and are increasing investment activity for 2025.
Coastal Strength, Sun Belt Shifts
Multifamily REITs posted better-than-expected results in Q1 2025, with coastal market players like AvalonBay Communities and Essex Property Trust leading the way in occupancy and revenue growth, reports GlobeSt. AvalonBay saw improved occupancy and lower available inventory, while Essex reported stronger same-store revenue growth and a 2.8% increase in blended net effective rents.
Equity Residential also recorded strong performance in traditional coastal strongholds like New York and San Francisco, with record-low resident turnover of 7.9% and portfolio-wide occupancy at 96.5%.
Sun Belt Recovery Mode
Sun Belt-focused REITs like Camden Property Trust and MAA are transitioning into a post-supply-peak phase. Camden reported that new construction starts have fallen to a 13-year low, with Q1 same-property revenue up 0.8%. MAA saw continued strength in demand, rent collections, and pricing, despite a modest $9 drop in effective rent year-over-year.
UDR, with a more diversified portfolio, also posted solid same-store performance and a decade-low 32% annualized turnover rate.
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Investment Strategies Evolve
Coastal REITs are aggressively targeting development and acquisition pipelines. AvalonBay aims for $3B in future developments, with $1.6B set to begin in 2025. Essex spent $345M on Northern California acquisitions in Q1, while Equity Residential reaffirmed its $2.5B transaction target for 2025.
Sun Belt activity remains measured, but REITs like Camden are pursuing $750M in acquisitions and dispositions, and MAA has committed $305M for future developments. UDR, meanwhile, sold two New York communities for $211.5M and broke ground on a Riverside project.
Looking Ahead
RealPage projects a return to rent growth for Sun Belt REITs by Q3 2025 as oversupply conditions ease. Coastal REITs continue to diversify into high-demand Sun Belt metros, while overall multifamily REIT investment remains buoyed by favorable fundamentals and stabilized occupancy.
Why It Matters
As development slows in supply-heavy Sun Belt markets, REITs are focusing on value creation through amenities and operations. Meanwhile, coastal market REITs are pushing expansion and acquisitions to capture demand, signaling a bifurcated but active phase in multifamily investment strategies.
