EARLIER THIS YEAR, larger REITs such as Equity Residential, Essex Properties Trust, and AvalonBay Communities seemed to be the only public players closing deals. But recently, transactions by the smaller guys on Wall Street have picked up.

In the second quarter of 2010, Cleveland-based Associated Estates (AEC) bought one 304-unit deal in Woodbridge, Va., while Home Properties bought two deals totaling 318 units in suburban Maryland. Mid-America Apartment Communities (MAAC) announced in June that it has two properties under contract.

“Everybody is reporting more deal flow,” says Paula Poskon, a senior research analyst with Robert W. Baird & Co., a Milwaukeebased wealth management, capital markets, asset management, and private equity firm. “By virtue of their operating strategies and portfolio strategies, companies like Home Properties, Mid-America, and AEC are just finding it a little easier to find those one-off opportunities.”

REITs expect things to continue to pick up throughout the year. “There seems to be a lot more product being brought to market,” says Memphis-based MAAC CEO Eric Bolton. “We're seeing more activity from merchant builders and developers.”

Improving fundamentals are also helping buyers underwrite a little more aggressively. “Sellers are more realistic about what they can get,” says Ed Pettinella, CEO of Rochester, N.Y.-based Home. “Along with other companies, we think we can build in [rent] growth potential.”