There are many different reports on multifamily rents — slight growth month-over-month, some drop year-over-year, all depending on where a property sits in the country.
According to a Trepp fall report looking back at the second quarter, 11 major multifamily REITs that combined own 526,347 units were doing somewhat better, with an average of 1.82% year-over-year increase. That was a lift of 0.62% from Q1. Even then, rent changes depended on where in the country the REIT operated, with major market holdings doing far better than properties in the Sun Belt.
That last point is a big change. Sun Belt apartments had seen "outsize rent growth" after pandemic shutdowns, said Trepp. The advantage is now largely gone. The amount of construction that happened in the most popular markets in the region caused a demand and supply imbalance that has depressed rent growth and increased vacancies.
Rent growth or drops year-over-year and quarter-over-quarter, in addition to average 2024 Q2 average rents, for these top REITs were: Veris Residential, 5.01%, 0.62%, $3,923; NexPoint Residential Trust, -.098%, 0%, $1,520; Centerspace, 2.84%, 0.71%, and $1,558; Camden Property Trust, 0.76%, -0.10%, $1,990; Mid-America Apartment Communities, 0.54%, 0%, $1,690; UDR, 2.25%, 0.63%, $2,543; Essex Property Trust, 1.81%, 0.68%, $2,649; Equity Residential, 2.98%, 0.97%, $3,107; AvalonBay Communities, 3.18%, 0.74%, $2,989; Independence Realty Trust, 1.57%, 0.26%, $1,555; and Apartment Investment Management, 0.04%, 1.87%, and $2,392.
And Q2 2024 occupancy, year-over-year change, and number of units for the top REITs were: Veris Residential, 95.1%, -0.52%, 7,621; NexPoint Residential Trust, 94.1%, 0%, 12963; Centerspace, 95.3%, 0.11%, 12,883; Camden Property Trust, 95.3%, -0.21%, 58,250; Mid-America Apartment Communities, 95.5%, 0%, 103,614; UDR, 96.8%, 0.21%, 60,126; Essex Property Trust, 96.2%, -0.41%, 62,000; Equity Residential, 96.4%, 0.52%, 79,738; AvalonBay Communities, 96%, 0%, 91,399; Independence Realty Trust, 95.4%, 1.27%, 32,153; and Apartment Investment Management, 96.3%, 0.10%, and 5,600.
For comparison, national apartment rents increased in Q3 year-over-year by 0.75% to an average of $1,739 a unit.
Four of the REITS — NexPoint Residential, Centerspace, Mid-America Apartment Communities, and Independence Realty Trust — have average rents below the national average. Of those, three primarily own properties in the Sun Belt. The exception, Centerspace, focuses on the Midwest, which is the last affordable area for rentals and where the average monthly rent was $1,432 according to Cushman & Wakefield.
Multifamily owners of all types are seeing rent revenues increasing on the whole far below inflation and skyrocketing expenses increasing much faster. That leaves many in challenging positions, especially if they will soon face refinancing at rates above what their financials will support.