Apartment REITs: Urban Exodus
- An urban exodus is in full swing in the coastal "shutdown cities" where lockdown policies have plunged local economies into an uncontrolled tailspin, backtracking a two-decade-long trend of urban revival.
- Apartment REITs in these "shutdown cities" - NYC, L.A., Chicago, and San Francisco – have seen residents flee to lower-cost and safer suburban markets and more business-friendly Sunbelt metros.
- Outside of these troubled markets, however, national apartment markets have been remarkably resilient during the pandemic. Aided by fiscal stimulus measures, rent collection has been essentially on par with 2019.
- Apartment REIT earnings were negatively impacted by generous pandemic-related concessions. New lease rates dipped, but rent growth remained firmly positive for the REITs that took a more case-by-case approach.
- Selectivity is especially essential, and we’ve continued to prefer Sunbelt and suburban-focused multifamily REITs, which will be beneficiaries of the highly favorable trends in the housing sector over the next decade.
