REITweek Insights Show Sunbelt Struggles and Office Rebound

REITweek Insights 2025 highlight Sunbelt struggles, industrial delays, and early signs of a premium office recovery.

July 2, 2025

Sunbelt apartment markets remain under pressure due to a persistent supply overhang, while coastal markets show stronger occupancy and pricing resilience.
Trade policy uncertainty is dampening industrial leasing, especially in port-adjacent markets, as tenants delay decisions.
Office sector sentiment is improving, with premium assets leading recovery and West Coast metros positioned for a rebound.

Key Takeaways

Sunbelt Renters Face Longer Road to Stability

As reported by Cohen and Steers, multifamily fundamentals were a central theme at REITweek, with panelists highlighting regional divergences. While leasing in coastal markets exceeded expectations, Sunbelt metros continue to contend with elevated supply.

Occupancy rates in the Sunbelt are approximately 3% below their long-term average, a meaningful gap that could take more than a year to close—particularly if job growth slows. Meanwhile, tighter inventory in coastal markets, especially on the West Coast, is supporting pricing power and more stable performance.

Sunbelt has a larger occupancy gap to close than the rest of the country

Industrial Sector Grapples with Trade Policy Whiplash

Industrial REITs struck a cautiously optimistic tone, reporting conditions as “better-than-feared” post-“Liberation Day”—a reference to recent tariff announcements. However, the lingering uncertainty has made tenants hesitant, particularly in logistics-heavy, port-adjacent markets.

Container volumes at the Port of LA dropped 5% in May, following a surge in April as importers moved goods early. As a result, REITs with significant exposure to trade-sensitive assets may see continued pressure until policy direction becomes clearer.

Port data suggests Liberation Day trade effects still materializing

Green Shoots for Office: Premium Assets Outperform

Surprisingly, the office sector drew some of the most upbeat commentary at REITweek. REIT executives cited an uptick in tenant engagement as companies move forward with return-to-office plans.

Class A and trophy properties—those with high-end amenities and the capital for upgrades—are leading the charge. West Coast office markets, once lagging behind, could be next to rebound, following the recovery pattern already observed in New York City over the last 18 months.

Why It Matters

Across sectors, the divergence between quality assets and the broader market remains stark. Apartment and office REITs with prime locations or balance sheet strength appear best positioned to weather near-term volatility. Meanwhile, industrial names may need to navigate a more uneven path as trade and macro risks unfold.