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.