Class A Occupancy Hits Two-Year High, But Class B Still Leads

Occupancy in stabilized Class A apartments hit 95.7% in May 2025—their highest level since June 2022.

Jordan B.
June 13, 2025

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Good morning. Occupancy is rising across all apartment classes, with Class A units seeing the strongest rebound. But despite the gains, they still trail their mid-tier counterparts.

Today’s issue is sponsored by AirGarage—maximize parking income this summer with smarter operations.

🎙️ Season 3 of the No Cap kicks off with J.P. Morgan’s Tom Kennedy dropping bold market calls, Fed critiques, and must-hear 2025 investment insights.

Market Snapshot

S&P 500

GSPC

6,022.24

Pct Chg:
-0.23%

FTSE NAREIT

FNER

773.31

Pct Chg:
-0.49%

10Y Treasury

TNX

4.42%

Pct Chg:
+0.111

SOFR

30-DAY AVERAGE

4.34%

Pct Chg:
-0.00

*Data as of 06/10/2025 market close.

Occupancy Trends

Class A Occupancy Hits Two-Year High, But Class B Still Leads

Despite big gains, the most expensive apartment tier hasn’t quite caught up to its more affordable counterparts.

Top tier recovery: Occupancy in stabilized Class A apartments hit 95.7% in May 2025—their highest level since June 2022. This marked a 170 bps increase YoY, the biggest gain across the apartment class spectrum. However, Class A still lagged slightly behind Class B (95.8%) and only just edged past Class C (95.6%).

Historical shifts: Before the pandemic, Class C units had the highest occupancy, followed by Class B, then Class A. That flipped in late 2023, with Class B now leading. Class A—historically more volatile due to turnover and new supply—has finally edged above its pre-COVID average of 94.7%.

Supply pressure: Class A units still face pressure from new lease-ups and resident turnover from homebuying, which kept occupancy below average for much of the past two years. But with demand and absorption improving, all asset classes are now above their pre-pandemic five-year norms.

➥ THE TAKEAWAY

Class A comeback: Class A apartments are bouncing back, signaling strong renter demand even at the high end—but they’re still feeling the aftershocks of supply pressure and affordability shifts, keeping Class B in the driver’s seat for now.

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✍️ Editor’s Picks

MHP framework: Learn how top investors assess mobile home parks using star ratings, utility types, and tenant profiles to navigate sub-institutional deals. (sponsored)
Mixed market: Crexi’s May 2025 data shows resilient multifamily and rising office prices, while retail and industrial are feeling the pressure.
Steady strength: REITs posted solid net operating income growth in Q125, outperforming inflation in many sectors despite muted transaction activity and economic uncertainty.
Investor shift: Small investors set a record in 2024 by purchasing nearly 60% of all investor-acquired homes, while large investor activity dropped to its lowest since 2018.
Real rent decline: Inflation-adjusted rents for NYC’s rent-stabilized units have fallen for a decade, straining building finances as operating costs rise and collections lag.
Leadership change: Brookfield Asset Management has appointed Lowell Baron as CEO of its real estate division, part of a broader executive shakeup.
FARE fallout: StreetEasy listings dropped by over 1,000 within hours of NYC’s new FARE Act taking effect.

🏘️ MULTIFAMILY

Housing deal: Mayor Adams and Related Cos. reached a deal to add 625 affordable units—up nearly 50%—to Hudson Yards' $12B second phase.
Think small: Micro-apartments under 441 square feet are surging in cities like Seattle and Boston, now comprising over half of new units there.
Affordable expansion: Investment giant Sixth Street has partnered with L+M Development Partners to back affordable housing growth in New York, Texas, and California.
Design fast track: Seattle’s mayor aims to slash housing approval times by up to two years through major design review reforms.

🏭 Industrial

Grid breaker: Startup GridFree AI is building modular, gas-powered data centers that operate off-grid, promising faster builds, lower costs, and a smaller carbon footprint.
Data dollars: Crusoe has landed a $750M credit facility from Brookfield to ramp up AI-powered data center expansion nationwide.
Big buy: Dermody Properties acquired a 1.1 MSF Class A industrial facility in California’s Central Valley, expanding its West Coast logistics footprint.

🏬 RETAIL

Investor appetite: Bojangles is considering a sale that could value the fast-food chain at over $1.5B, riding a wave of hot investor appetite for chicken-focused restaurant brands.
Concert capital: Live Nation will invest $1B to build or revamp 18 music venues across the US, aiming to boost local economies and meet surging demand for live entertainment.
Influencer initiative: Lowe’s has launched a creator network to engage younger shoppers, kicking off with MrBeast as its flagship partner.

🏢 OFFICE

Deal frenzy: High-value office sales are up nearly 50% in early 2025 as investors rush to seize arbitrage opportunities before pricing normalizes.
Now trending: Companies are refining hybrid strategies with higher seat-sharing ratios, reduced individual space, and a growing emphasis on collaboration and amenities.
MOB mentality: Medical office buildings are seeing strong demand and rising occupancy, driven by a shift to outpatient care.
Stalled return: Office visits fell 1% in May, signaling a plateau in the office recovery as hybrid work remains firmly entrenched.
Remote advantage: Despite flashy office perks, long commute times remain a major barrier to return-to-office efforts, especially in cities like NY, Chicago, and LA.
Distressed deal: Hudson Pacific sold its most vacant San Francisco office asset for $28M, half its original purchase price.

🏨 HOSPITALITY

Hotel outlook: Hotel sector trends remain mixed heading into summer, with solid wage growth supporting travel demand but rising costs and softening occupancy pressuring profits.

A MESSAGE FROM IWF

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📈 CHART OF THE DAY

While apartment supply is peaking in several West Coast markets through 2026, new tariffs are beginning to delay construction timelines, potentially disrupting the delivery pace of future multifamily projects.