Most analysts predicted 2004 would be a year for the multifamily industry to regain some traction in rents and occupancy.

They were right.

“Demand has picked up,” says Peter Linneman , principal o f Linneman Associates, a real estate advisory and consulting firm in Philadelphia. “When interest rates dropped precipitously, a lot of people that would have owned over the next couple of years all ran to the front of the line. Now it's back to reasonable demand [to buy homes].”

As a result, many REITs have seen improving occupancies. AMLI Residential Properties Trust reported that occupancy went up 2 percent across its portfolio.

“The worst is behind us,” says Robert J. Chapman, the Chicago-based company's CFO. “We're gaining traction and hoping to raise rents and still hold occupancy.”

Bruce Duncan, president and CEO of Equity Residential in Chicago, saw rent growth in both the second and third quarters of 2004. He expects steady improvement into the future if the job outlook improves. “2005 will be a continuation of 2004,” he says. “We think it will continue to get better, but we don't see a dramatic improvement.”