So far, more than half of the apartment REITs have reported their third quarter earnings. And the results indicate that the recovery is continuing into the fall, especially for those REITs in high barrier-to-entry markets.

Chicago-based Equity Residential reported that renewals remained strong in the fall, increasing 5.1 percent in September, 5.5 percent in October, and 5.7 percent so far in November. As the company pushes rents, its occupancy level is also staying strong at 94.8 percent. So far, asking rents are up 8.7 percent this year, helping the company recover a significant portion of the rent it gave away in 2008 and 2009.

“We now have only about 5 percent more growth needed to reestablish peak pricing across the portfolio, and that’s helped by some markets that have already surpassed the prior high watermarks and are now creating new peak pricing levels,” said CEO David Neithercut on the company’s third quarter conference call, as transcribed by “So we remain very optimistic as we wrap up the year and we move into 2011."

Equity isn’t alone in seeing sharp increases in fundamentals. Alexandria, Va.-based AvalonBay Communities had less dramatic guidance increases (possibly because they’re a bigger company, meaning it takes more to drive increases) than Atlanta-based Post Properties, Birmingham, Ala.-based Colonial Property Trust, and San Francisco-based BRE Properties.

Like Equity, however, AvalonBay is seeing improvements. It reported its first year-over-year same-store revenue increase since the fourth quarter of 2008. And AvalonBay CEO Bryce Blair says that while job growth is weak, 20-somethings are finding jobs, which benefits the apartment industry. “The pace of hiring among young adults under 30 has reportedly added its strongest pace since the mid-'80s,” he said in a conference call transcribed at “As this age group tends to be primarily runners, it does explain some of the unbundling the apartment sector is benefiting from, while the absorption of apartments during the first half of this year was at its highest [point] in over 15 years.”

Later in Recovering
But AvalonBay and Equity don’t tell the whole REIT story. They have strong footholds in cities such as Boston and Washington, D.C., which weren’t as hard hit by the recession and are seeing rents push back to peak levels. In some cases, a company such as Colonial, with a foothold in the recovering Sun Belt, could be a better gauge of what's really going on.

Colonial, who posted its first quarter of positive growth since the fourth quarter of 2008, is seeing improvements in both new and renewal leases. Its new lease rates turned positive in August, and renewal rates were positive 0.5 percent in September. But rents aren’t anywhere close to their peaks in its key cities.

In Atlanta, rents are $770, after falling to $758 in the second quarter of 2010. The high was $857 in the first quarter of 2010. In Orlando, rents fell to $863 in the first quarter of 2010 and are now at $877. The peak was $963 in the first quarter of 2010.

“Most of our markets peaked in 2008 between the first and fourth quarters, and then they all bottomed out around the same time in the second quarter,” said Paul Earle, COO of Colonial, on the company’s third quarter conference call, which was transcribed by

As more companies like Rochester, N.Y.-based Home Property Trust, Houston-based Camden Property Trust, and Memphis-based Mid-America Apartment Communities report their rsults in the coming weeks, we’ll get a better sense of which companies and markets have eaten most of the rent loss they absorbed in 2008 and 2009.