An analysis of 3rd quarter earnings calls from the six largest multifamily REITs highlights how performance between July and September has influenced the outlook as the year draws to a close.
Apartment Demand Solid but Mixed
Demand remained largely resilient in major REIT markets nationwide, with many coastal markets benefiting from the AI boom and Sun Belt markets observing occupancy improvements alongside declining supply. Many REITs reported a pull-forward in demand during 2025’s 3rd quarter. Equity Residential’s CEO Mike Parrell noted, “earlier-than-usual seasonal leasing patterns,” with UDR Apartments also noting, “a little bit lower demand after Labor Day.” This slowdown in absorption in the latter part of 3rd quarter created a mixed view of quarterly demand performance, resulting in an overall slowdown in demand relative to recent quarters.
Northern California was repeatedly spotlighted as a top performer, with Essex Property Trust CEO Angela Kleinman citing benefits from, “declining forward supply, strong demand from AI start-ups and positive migration trends.” However, high-tech West Coast peer Seattle exhibited “soft demand and temporary supply pockets.”
Major gateway cities on the East Coast, New York in particular, continued to demonstrate resilience, supported by ongoing return-to-office momentum. Meanwhile, uncertainty surrounding government employment – such as layoffs and the recent lengthy shutdown – put pressure on performance in the D.C. market. Southern California (especially Los Angeles) and the Mid-Atlantic region also demonstrated relative softness, which AvalonBay’s COO Sean Breslin attributed to weaker job growth.
Meanwhile, Camden Property Trust and MAA also reported healthy to “robust” 3rd quarter demand in their Sun Belt-focused portfolios, with Camden CEO Richard Campo noting 2025 as “one of the best years for apartment absorption in the last 25 years.”
Along with positive “front door” apartment demand trends, operators have taken steps to shore up potential “back door” renter loss with most REITs continuing to report high retention rates. "We reported the highest third quarter resident retention in our company's history,” said Equity CEO Parrell, “allowing us to maintain high occupancy rates in the mid-96% range."
Pricing Softness Persists
Despite solid 3rd quarter apartment demand, weakened pricing remained a common theme among multifamily REITs. Most REITs reported a deceleration in new lease rates and modest blended rent growth, often near flat or slightly positive.
Sun Belt markets such as Austin, Dallas, Nashville and Phoenix were cited as underperforming due to ongoing levels of elevated new supply, forcing concessions and pressuring pricing power as properties compete for renters. Coastal markets performed relatively better, though growth was subdued compared to prior years. Denver, Los Angeles and the Mid-Atlantic were also identified as underperformers as these areas grapple with localized demand issues.
Still, with a focus on controllable factors, REITs have leaned into expense management as a key offset for limited rent growth. Expense control helped offset weaker revenue growth and supported Funds from Operations (FFO) guidance stability or slight increases.
Several REITs highlighted better-than-expected property tax trends and insurance savings. However, operating expense inflation remains a significant challenge for many operators, with AvalonBay in particular noting expense pressure, “especially in repairs and maintenance, insurance, [and] utilities.”
Performance Outlook Through Year-End 2025
Looking ahead, half of the six largest multifamily REITs lowered FFO guidance for full-year 2025, reflecting ongoing supply headwinds and softer demand. Yet three REITs – Essex, UDR and Camden - raised their full-year 2025 guidance based on their respective 3rd quarter performance results.
Essex cited benefits from strong performance in tech-driven coastal markets (particularly in Northern California). CEO Kleinman emphasized “the competitive advantage or our low supply markets.” UDR also raised full-year per share guidance, with CEO Tom Toomey stating, "we are encouraged by various indicators that suggest our residents are resilient and appreciative of the value of renting at UDR." UDR management emphasized, “continued innovation, data-driven capital allocation and defensive strategies such as strategic lease expiration management and asset recycling.” Similarly, Camden increased their full-year FFO guidance on the strength of moderating supply within their markets, accompanied by resilient demand and resident retention.
By contrast, AvalonBay Communities' 3rd quarter 2025 earnings call highlighted a more challenging operating environment, with management lowering full-year guidance due to softer demand and higher costs, especially in key regions like the Mid-Atlantic and Southern California. Equity Residential, meanwhile, indicated adjustments to its revenue guidance downward, “due to earlier-than-expected seasonal declines and supply pressures in select markets.” MAA lowered core FFO guidance slightly as well, citing, “persistent supply pressure, slower job growth and tempered pricing power in new leases as key challenges.”
This post is part of a series by Market Research Analyst Meggan Taylor covering themes from quarterly earnings calls for large multifamily REITs. For more on this data, read previous posts on REITs.
