Essex Property Trust, a publicly traded REIT based in San Mateo, California, shifted to growth mode last year, acquiring and increasing its ownership interest in 13 apartment communities for a total contract price of approximately $1.4 billion on a gross basis.
With 62,510 multifamily units owned as of Jan. 1, Essex ranks No. 13 on this year’s National Multifamily Housing Council top 50 owners list. It also ranks No. 27 on the top 50 managers list.
The West Coast company has properties located in the coastal markets of Southern and Northern California as well as the Seattle metro.
According to president and CEO Angela Kleiman, Essex, which celebrated its 30th year as a public company in 2024, announced its 30th consecutive dividend increase and generated sector-leading core funds from operations per share growth of 3.8%. Kleiman shares her outlook for the REIT as well as the multifamily market with MFE.
You became CEO of Essex in 2023—how has your leadership approach evolved during your tenure so far, especially given current market challenges?
Since I became the CEO, my top three areas of focus have been talent development,external growth, and operating efficiency. While these areas of focus have not changed, the priorities have evolved with changing market conditions. For example, in 2023, while the U.S. economy had generally recovered from the COVID pandemic, the West Coast economy lagged due to the onerous shutdowns resulting in severe job loss and out-migration. From a business priority perspective, we prioritized enhancing our operating efficiencies. As such, in 2023 Essex acquired only one apartment community for $23 million. However, as we anticipate the West Coast economy heading into recovery, we’ve quickly pivoted to external growth andaccelerated our investment activities. This timely strategy shift allowed us to invest at attractive valuations ahead of most bidders. In 2024, we acquired and increased our ownership interest in approximately $1.4 billion of apartment communities in our markets.
What are your key strategic projects for Essex over the next 12 to 18 months?
We intend to continue executing our growth strategy with a focus on acquiring in ournorthern regions, Northern California in particular, where we see the most favorable supply/demand dynamics and long-term outperformance.
We have further runway to enhance our Property Collections Operating Model, which is our model for operating multiple properties, located in close proximity to one another, as a single business unit. This has led to quantifiable efficiencies, including sector-leading controllable operating margins, enhanced employee engagement, and improved customer satisfaction.
We plan to continue our progress on several key initiatives leveraging technology to enhance our operating efficiency, customer interaction, and associate experience.
Essex has long been a leader in West Coast multifamily markets. How are you navigating shifts in population, demand, and policy across your core regions?
Regarding shifts in population, we’ve seen a gradual reversal of COVID migration trends as people who relocated out of state or to tertiary markets have returned to employment centers in our markets. For example, remote hiring by the largest 20 technology companies has decreased from over 13% at the peak in mid-2023 to 5% today. Both in-migration and return to office have contributed to increased demand for housing in our markets. We anticipate this trend to continue to benefit our markets.
As for shifts in demand, we have a track record of being ahead of the curve as it relates to tenant preferences. For example, we reallocated our portfolio out of urban metros beginning in the mid-2010s, which proved timely as quality of life in the urban centers subsequently declined and many people moved to the suburbs.
Looking forward, we see the average renter age continuing to increase given the prohibitive cost of homeownership, which benefits our 85% suburban portfolio. Further, our predominately Class B portfolio appeals to the largest renter demographic and has outperformed over multiple cycles.
As it relates to policy, we are encouraged by the recent shift toward more moderate candidates and public policy with the results of the November 2024 election in California. We are cautiously optimistic this will lead to positive change and support economic growth.
How is Essex leveraging technology or innovation to improve operations, resident experience, or sustainability?
Essex is a founding member of RET Ventures, founded in 2017, which focuses on investing in real estate ventures primarily in the multifamily sector. Through our investment and partnership with many RET Ventures, we have achieved considerable improvements in proptech, which has allowed us to leverage technology to significantly increase efficiency and improve the resident experience.
This ranges from artificial intelligence (AI) functionality, which can augment leasing to procurement application on the expense side. We have a good pipeline of proptech opportunities to explore.
As it relates to the resident experience, technology has enabled us to conduct nearly all resident tours as self-guided since 2020, a preference among today’s renters. Further, enhanced communication via our online platform has led to expedited response times when assisting our residents on all inquiries, including maintenance and general requests.
Sustainability reporting is another way technology can support our business, which we are currently assessing.
How are you thinking about talent retention and company culture as the multifamily industry evolves?
Our commitment to our associates such as talent development, including retention, is an ongoing top priority. We have a multiyear track record ranking among overall Best Companies, Best in Real Estate, Best Companies in the West, and Top Work Environment in the list of Best Companies to Work For by U.S. News & World Report.
In 2025, we expanded our HR team in culture and learning and development department. Furthering what we have built upon talent and associate experience, including launching several new curriculum and augment mentorship programs. We are pleased that our efforts have resulted in industry-leading retention rate for the past three years, and we plan to continue to invest in resources to enhance our associate experience and talent development program.
What’s your outlook for the multifamily market for the remainder of 2025?
We’re pleased with our markets performing slightly ahead of plan to start 2025. As for the balance of the year, federal policies and their resulting impacts remain a wild card. However, the West Coast multifamily market is well positioned with attractive fundamentals, including: (1) low supply growth of just 50 basis points, which is projected to moderate throughout 2025 and further in 2026; (2) favorable affordability both relative to homeownership and to incomes; and (3) trends that support improving job growth. Putting it all together, the outlook for our markets is compelling.
