Michael Glenwood

Few places are better than Chicago in June. The arctic frost of the winter has long softened its grip on the Windy City, giving way to warm, gentle breezes off of Lake Michigan. And for REIT CEOs gathered in the city at that time for the National Association of Real Estate Trusts’ (NAREIT) investor meeting, the sentiment may have been even sweeter. After spending two years mired in a nasty recession, many of these top-tier executives weren’t just seeing a light at the end of the tunnel. They were lifting off into full recovery mode—an impressive six to nine months earlier than anyone expected. “Everyone is surprised—as are we—that things have gotten so good, so fast, without job growth,” says Thomas H. Lowder, CEO of Birmingham, Ala.-based Colonial Property Trust, an apartment REIT with more than 30,000 units, as he echoed the common theme of the conference. “It’s adding some pricing strength that no one anticipated.”

Market watchers saw it as well. “The improvement seen in the first half of the year certainly goes beyond what we were anticipating or really beyond what anybody was anticipating,” says Greg Willett, vice president of research and analysis for M/PF Research, a Carrollton, Texas-based provider of research on the apartment market. And they’re all right. Any way you shake and bake the occupancy, vacancy, rental, and concession numbers from the first half of the year, you come to one conclusion—the country is experiencing a rental recovery. The trouble with this sweeping, bold statement? Job growth is nowhere to be found. And without a significant rise in employment levels, economists, executives, and analysts alike have been searching for what exactly is driving 2010’s surprising surge with little luck in explaining the phenomenon. The one thing they know for sure is that unemployment could deflate the recovery just as quickly as it came.