Apartment REITs: No Rent Strike, But Fears Of Urban Exodus
Apartment REITs - along with the broader housing industry - were firing on all cylinders before the pandemic, driven by highly favorable demographic trends and the lingering housing shortage.
What Rent Strikes? Apartment REITs reported limit issues with rent collection in April and early-May amid the depths of the pandemic-related shutdowns as more than 95% of rents were collected.
The magnitude of job losses resulting from government-mandated economic shutdowns, however, warrants a fundamental revaluation if these tens of millions of "temporary" furloughs become permanent layoffs.
Urban exodus? Ultra-dense metros like NYC, Chicago, and San Francisco may see lasting pain as residents flee to lower-cost and “safer” semi-urban and suburban markets, including faster-growing Sunbelt metros.
As one of the more defensively-oriented and countercyclical REIT sectors, we remain bullish on long-term rental fundamentals and expect the housing industry to be a leader of the economic rebound.