Better-than-expected job and wage growth supported healthy demand conditions for public real estate investment trusts (REITs) during the second quarter.
UDR chairman and CEO Thomas Toomey noted the wind has been at the back of the multifamily sector in 2025, supporting a record high absorption through the first six months of the year for the company. Camden Property Trust chairman and CEO Ric Campo shared that second quarter demand was among the strongest seen for the company in 25 years.
In addition to strong demand conditions supported by employment stability, affordability conditions continue to favor the multifamily sector over the for-sale single-family sector. The historic high costs of homeownership continue to support lease renewals, apartment demand, and fewer move-outs. Equity Residential expressed a focus on occupancy and renewal rate management over new lease growth “in a world that is more uncertain than usual for residents and landlords.”
New apartment supply also continues to decline across the country with lower levels of starts expected to continue given the barriers to new development. MAA president and CEO A. Bradley Hill noted the downward trend in new deliveries is helping firm up market conditions, while Toomey noted the demand-supply imbalance combined with the high homeownership costs “should bode well for occupancy and pricing going forward.”
In recent quarters, REITs have shared investments into new technologies and the benefits these investments have contributed to continuing operations. At Veris Residential, the company’s artificial intelligence (AI) assistants have achieved an above-average lease conversion rate, and its website is generating more than three times the virtual tour volume of other multifamily companies using the same tool, according to CEO Mahbod Nia. The REIT’s proprietary revenue management tool has eliminated over $250,000 of annualized costs associated with utilizing third-party tools.
At Equity Residential, AI leasing pilots have reduced application completion time by over 50% and significantly improved fraud detection.
Beyond market conditions and financial results, Elme Communities’ sale of 19 multifamily communities to Cortland Partners was one of the most noteworthy elements of the second quarter earnings. The deal is valued at $1.6 billion. In addition to the sale, Elme Communities announced its board of directors has approved a voluntary plan of sale and liquidation of its remaining assets and the liquidation and dissolution of Elme.
Quarterly Results
AvalonBay reported core funds from operations (FFO) per share of $2.82 in the second quarter, a 1.8% increase compared with the same period a year ago. Second quarter same-store revenue increased 3% year over year to $689.1 million, while same-store residential net operating income (NOI) increased 2.7% to $477.2 million.
Equity Residential generated FFO per share of $0.99 in the second quarter, a $0.02 per share increase on a year-over-year basis. The REIT grew same-store revenue and same-store NOI by 2.7% and 2.3%, respectively, compared with the second quarter of 2024.
At Camden Property Trust, core FFO per share decreased $0.01 to $1.70 in the second quarter. Same-store revenue increased 1%, and same-store NOI increased 0.2% compared with the prior-year period.
UDR’s FFO per share increased 2% to $0.61 in the second quarter. The company grew same-store revenue 2.5% in the period and grew same-store NOI 2.9% compared with the second quarter of 2024.
Essex Property Trust reported core FFO per share of $4.03, an increase of 2.3% compared with the same period a year ago. The REIT achieved same-store revenue and NOI growth of 3.2% and 3.3%, respectively, compared with the second quarter of 2024.
MAA generated core FFO per share of $2.15 in the second quarter, down from $2.22 per share in the second quarter of 2024. The company experienced a decline in same-store revenue of 0.3% and a 2.6% contraction of same-store NOI on a year-over-year basis.
Elme Communities reported core FFO per share of $0.24 in the second quarter, up $0.01 per share compared with the second quarter of 2024. The REIT achieved same-store NOI growth of 4.5%.
In the second quarter, Veris Residential reported core FFO per share of $0.17, down $0.01 per share compared with the second quarter of 2024. The company achieved same-store NOI growth of 5.6% for the second quarter.
Management Commentary and Outlook
“While our expectations for job growth in the second half of the year are a little more muted than they were in January, demand remains healthy across most of our portfolio. And importantly, new supply in our established regions continues to decline to levels not seen in over a decade. This low level of supply should continue for the foreseeable future given that the barriers to new development, particularly in our suburban established regions, are substantially greater than most markets in the country. We continue to believe that we are uniquely positioned to secure an outsized share of what will be a lower level of starts in the industry.” —Benjamin Schall, president and CEO, AvalonBay Communities
“We have a differentiated exposure from our competitors that includes a collection of assets across the urban centers of many coastal markets that gives us a distinct opportunity to outperform as improving conditions, particularly continuing declines in new supply and improvements in quality of life in these urban centers, drive faster cash flow growth. … While job growth is important to all apartment markets, it is especially important to drive absorption in oversupplied markets. So we expect our portfolio with its tilt toward lower-supply markets and relatively modest amount of development properties and lease-up to exhibit more resilience if job growth continues to wane.” —Mark Parrell, president and CEO, Equity Residential
“The historic high cost of homeownership continues to support apartment demand and lower move-outs to purchase homes. Resident retention has been strong across our markets as a direct result of the living excellence provided by our on-site teams who achieved our highest customer sentiment score ever. All other apartment macro demand drivers, including the outsized population growth and job growth, remain intact for our markets. New additions to supply have [also] peaked in our markets.” —Campo, Camden Property Trust
“The wind has been at our back in 2025, with employment and income growth exceeding consensus expectations, relative affordability squarely in the favor of apartments, and new supply pressures waning. This led to a healthy demand for apartments and record high absorption through the first six months of the year.” —Toomey, UDR
“We continue to expect modest U.S. GDP and job growth and, for the West Coast, a stable job environment. Year to date, our seasonal rent curves have generally matched our expectations, and our seasonal peak for rents occurred around late July. Accordingly, our guidance for the second half of the year assumes market rents to moderate consistent with normal seasonality.” —Angela Kleiman, president and CEO, Essex Property Trust
“The downward trend in new deliveries is helping market conditions to firm up with market-level occupancies improving in many of our markets, and we are seeing pockets of decreasing concessions, a combination that should lead to improved pricing power. With a stable employment sector and strong wage growth, our residents are financially healthy, leading to continued good collections and improving rent-to-income ratios.” —Hill, MAA
“After an extensive evaluation, we have entered into a definitive agreement to sell a portfolio of 19 assets to Cortland, an Atlanta-based multifamily real estate investment development and management company. … The Elme Communities board has determined that these proposed transactions are in the best interest of our shareholders and unanimously recommends to our shareholders that they approve them. We intend to commence the marketing and sale of our remaining assets in the near future with a view toward completing these asset sales over the next 12 months.” —Paul McDermott, president and CEO, Elme Communities
“The Northeast multifamily landscape continues to perform encouragingly well, driven by favorable supply-demand dynamics and resilient urban migration trends. New York City, to which Jersey City is highly correlated, remains one of the strongest markets nationwide, underpinned by historically low vacancy of below 3% metrowide despite the delivery of approximately 15,000 new units over the past year.” —Nia, Veris Residential