Despite concerns of tighter market conditions and declines in new supply deliveries, public real estate investment trusts (REITs) expressed optimism toward economic conditions and apartment demand for 2025 during the latest round of earnings calls.
Overall, in the United States, projections suggest an average annual net inventory growth of 2.8% over the next four quarters; in the Sun Belt region, this growth is projected to be 4.6%. During earnings calls, REITs highlighted portfolios outside the Sun Belt region—in suburban coastal markets for Avalon Bay and the West Coast for companies including Equity Residential and Essex Property Trust—as reasons for optimism heading into 2025.
AvalonBay suggested positive job growth trends in the professional services and information sectors should produce above-average wage growth for a significant group of its resident portfolio. The REIT also highlighted the ongoing benefits the rental market will continue to experience relative to the for-sale market: AvalonBay renters looking to trade into median-priced homes in its regions of operation would experience cost increases of more than $2,000 per month.
Low turnover numbers remained a trend to close out the 2024 fiscal year, with several companies reporting record-low totals. At Equity Residential, the company’s fourth quarter turnover was 9%, and its full-year turnover was 42.5%, the lowest in the REIT’s 30-year history as a public company.
In addition to financial and operating results, several REITs shared the results and impacts of ongoing technology investments in 2024. At AvalonBay, the REIT is utilizing technology to handle more customer-facing interactions—including centralized leasing support. The company also invested in and adopted a leasing artificial intelligence (AI) tool in 2024, which AvalonBay will expand further into the customer journey in the year ahead.
UDR projects its investment in propertywide Wi-Fi and customer experience project will translate in resident turnover 100 basis points below 2024 levels in 2025. The REIT’s efforts to date have resulted in higher resident retention on a year-over-year basis for 21 consecutive months.
Elme Communities launched Elme Resident Services in 2024, which streamlined resident account management, the renewal process, and collections and started the first phase of its managed Wi-Fi initiative for its properties.
Veris Residential—which had previously launched virtual community and leasing assistant Quinn—introduced a new AI team member, Taylor, who focuses on delinquency matters, providing reminders to residents about upcoming rent payments, late payments, and unpaid balances. Together, Quinn and Taylor contributed to a 2% reduction in payroll expenses in 2024 for Veris Residential.
Quarterly Results
AvalonBay reported core funds from operation (FFO) per share of $2.80 for the fourth quarter and $11.01 for the full year, up 2.2% and 3.6% compared with the prior year periods, respectively. Fourth quarter same-store revenue and net operating income (NOI) increased 3.2% and 2.3% year over year, respectively. For the full year, same store revenue and NOI increased 3.4% and 2.7% compared with 2023, respectively.
Equity Residential generated FFO per share of $0.97 in the fourth quarter of 2024, a decrease of 3% compared with the fourth quarter of 2023. For the full year, the REIT’s FFO per share was $3.76, up 0.3% compared with 2023. Same-store total revenue in the fourth quarter increased 2.4%; for the full year, same-store revenue increased 0.4% compared with fiscal 2023. Same-store NOI increased 1.6% year over year in the fourth quarter and 1.5% for the full fiscal year.
Camden Property Trust recorded fourth quarter core FFO per share of $1.73, flat compared with the fourth quarter of 2023. For the full year, core FFO per share in 2024 was $6.85, up $0.03 from 2023. Same property revenue and NOI increased 0.8% and 1.2%, respectively, in the fourth quarter on a year-over-year basis and 1.3% and 1.1%, respectively, in 2024 compared with 2023.
UDR reported fourth quarter FFO per share of $0.63, flat compared with the same period in 2023. For the full year 2024, FFO per share decreased 7% to $2.29. Same-store revenue grew 2.5% in the fourth quarter and 2.3% for the full year compared with the same periods a year ago. Same-store NOI grew 2.1% in the fourth quarter and 1.5% for the full year compared with the prior-year periods.
Essex Property Trust’s core FFO increased 2.3% year over year in the fourth quarter to $3.92. For the full year, core FFO increased 3.8% to $15.60. In the fourth quarter, the company achieved same-property revenues and NOI growth of 2.6% and 1.7%, respectively. For the full-year 2024, Essex grew revenues and NOI 3.3% and 2.6%, respectively, both exceeding the high end of the company’s original guidance range.
MAA reported core FFO per share of $2.23 in the fourth quarter of 2024, down from $2.32 per share in the same period in 2023. For the full year, the REIT generated core FFO per share of $8.88, down from $9.17 per share in 2023. MAA’s same-store revenue decreased 0.2% in the fourth quarter compared with the prior-year period; for the full year, same-store revenue increased 0.5%. Same-store NOI declined 2.1% year over year in the fourth quarter and 1.4% in the full-year 2024 compared with 2023.
Elme Communities reported fourth quarter core FFO per share of $0.24, flat compared with the fourth quarter of 2023. The REIT’s full-year core FFO per share declined $0.04 per share to $0.93 in 2024. Fourth quarter same-store NOI increased by 1.7% compared with the prior-year quarter while full-year same-store NOI increased by 1.4% compared with 2023.
Veris Residential reported fourth quarter core FFO per share of $0.11, down $0.01 per share from the fourth quarter of 2023. For the full-year 2024, Veris reported core FFO per share of $0.60, up 13% compared with 2023. The REIT achieved normalized same-store NOI growth of 7.9% for the full year and 7.3% for the fourth quarter.
Management Commentary and Outlook
“In the near term, our conviction for our suburban coastal portfolio is reinforced by the outlook for both steady demand and limited new supply. In the medium to longer term, we also believe that our suburban coastal portfolio is well positioned to capture future rental demand and particularly the lifestyle preferences of many aging millennials and downsizing baby boomers. We’re now 73% suburban, up from 70% just a year ago, making strong progress toward our 80% target allocation.” —Benjamin Schall, president and CEO, AvalonBay
“The pace of our historic quarter-over-quarter revenue growth should show acceleration throughout the year, with the back half of 2025 considerably better than the first half. … Based on third-party economic projections, we expect office-using job growth, which we see as a key driver of our business, to be higher in 2025 than in 2024, especially on the West Coast. Unemployment of college graduates—the bulk of our residents—is currently very low at 2.4%, and we expect it to stay in that range in 2025. With the supply of housing already tight in most of our markets, we see this setup as very positive for our business.” —Mark Parrell, president and CEO, Equity Residential
“After a few years waiting somewhat impatiently for better investment opportunities in our markets, we believe 2025 is the year for Camden to move on. In 2024, we saw multifamily deliveries reach a peak level not seen in over 40 years. We expect new supply pressure to lessen throughout 2025, setting the stage for a return to improved revenue and NOI growth. As the headwinds in recent years turn into tailwinds in 2025 and beyond, there are attractive opportunities for us to continue development starts and to pursue acquisitions.” —Richard Campo, chairman and CEO, Camden Property Trust
“Based on consensus estimates, we expect economic growth and apartment demand will remain resilient in 2025. This growth profile should be enhanced by supply pressures abating in the back half of the year from the historically high levels experienced in 2024. … [Additionally], ongoing investments in innovation including advancing our customer experience project should continue to drive incremental NOI growth in excess of the broader market in 2025.” —Tom Toomey, chairman and CEO, UDR
“The West Coast is well positioned with improving economic fundamentals as job growth is forecasted to outperform the U.S. after lagging in 2024. Job growth in the technology sector is the key driver of this outlook as we anticipate job postings to convert into new hires in 2025, resulting in better overall growth.” —Angela Kleiman, president and CEO, Essex Property Trust
“Calendar year 2025 will be a transition year for revenue performance as the decline in new supply deliveries will provide for increasingly tighter market conditions and resulting rent growth. As we reprice leases over the busy spring and summer leasing season, the compounding impact in overall revenue performance will becoming increasingly evident late this year and into 2026.” —Eric Bolton, chairman and CEO, MAA
“We are well positioned as we believe Elme submarkets will face less supply pressure than the U.S. and Sun Belt markets generally, with projected average annual net inventory growth of 2.2% over the next four quarters, while the U.S. and Sun Belt are expected to see 2.8% and 4.6% growth, respectively. Our DMV (D.C.-Maryland-Virginia) portfolio remains very well insulated from new supply, with quarterly net inventory ratios averaging 1.7% in Elme submarkets this year. On the demand side, the trends are healthy and stable, supported by the limited availability of high-quality housing that is affordable to middle-income residents.” —Tiffany Butcher, executive vice president and chief operating officer, Elme Communities
“Looking ahead, we remain focused on continuing to upgrade, enhance, and find efficiencies in our operating platform, solidifying Veris Residential's position as a leader at the forefront of innovation in the multifamily sector, reimagining how multifamily properties are managed and how elevated resident experiences are curated.” —Mahbod Nia, CEO, Veris Residential
