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Apartment Demand Roars Back, But Rent Growth Still Cooled in Q225

The US apartment market absorbed over 227K units in Q2, surpassing even the pandemic-era highs of 2021 and early 2022.

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Good morning. Apartment demand reached record levels in Q2, even as rent growth remained soft and operators prioritized occupancy over pricing. The market continues to show strength, albeit with trade-offs.

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🎙️ This week on No Cap podcast, Andover Properties CEO Brian Cohen shares how he scaled a self-storage empire, why today’s best deals are in once-overlooked assets, and how AI and data are driving their competitive edge.

Market Snapshot

S&P 500
GSPC
6,225.52
Pct Chg:
-0.79%
FTSE NAREIT
FNER
763.56
Pct Chg:
-0.46%
10Y Treasury
TNX
4.405%
Pct Chg:
-0.02
SOFR
30-DAY AVERAGE
4.303%
Pct Chg:
-0.00
*Data as of 07/8/2025 market close.

RESILIENT DEMAND

Demand Roars Back, But Rent Growth Still Cooled in Q225

The US apartment market absorbed an unprecedented number of units in Q225, but rent growth continues to lag as operators focus on keeping units full.

Record-breaking: According to RealPage, the US apartment market absorbed over 227K units in Q2 2025, surpassing highs from 2021–2022 and setting a new annual record despite economic uncertainty. Completions totaled 535K over the past year, including 108K in Q2—still elevated, but down from recent peaks.

Heads in beds: June rent growth was just 0.19%, with flat annual trends as leases renew at similar rates. Occupancy, however, rose to 95.6% nationally—up 140 bps YoY—and 160 bps in the South, where rents fell 1.1%, highlighting a focus on filling units over raising rents.

RealPage’s take: “The word for the apartment market in mid-2025 is resilient,” said Carl Whitaker, Chief Economist at RealPage. Despite economic noise—like softer job growth, shaky sentiment, and uncertainty—renter demand hasn’t flinched. While rent growth may look soft on the surface, Whitaker notes the industry’s ability to generate record demand even as supply surges is the real headline.

Leasing levers: As the push to fill units continues, concessions may increase, making headline rent growth an incomplete measure of true revenue trends. On a positive note, the renewal conversion rate hit 55.1% at the end of June, up 2% YoY, signaling improved resident retention.

Market movers and laggards: Tech hubs like San Francisco, NY, and Boston saw Q2 gains, boosted by slower supply and RTO trends. Sun Belt cities like Dallas and Atlanta also rebounded, while demand softened in tourism-heavy metros like Las Vegas and Orlando. Rent cuts persisted in supply-heavy markets—Austin, Phoenix, and Denver—as well as macro-sensitive cities like Houston and DC.

➥ THE TAKEAWAY

Big picture: Demand isn’t the issue—it’s pricing power. With operators laser-focused on occupancy, true rent gains may remain elusive until concessions fade and supply normalizes. For now, resilience—not rent—is the story.

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✍️ Editor’s Picks

  • Growth mode: Multifamily investors are rapidly embracing Build-to-Rent as a higher-yield alternative to traditional apartments. (sponsored)

  • Smart parking: AirGarage has raised $23M to scale its end-to-end tech platform, transforming underutilized parking real estate into AI-powered, revenue-generating infrastructure.

  • Breaking records: With first-time homebuyers sidelined by high prices and mortgage rates, US renter households have hit a record high.

  • Capital push: Apollo is aiming to raise $5B through its nontraded REIT as part of a broader strategy to expand its real estate footprint.

  • Income lift: Eighteen US REITs are expected to boost dividends in Q325, while over 75% of the sector is forecast to hold payouts steady.

  • Talent trouble: June’s job gains mask white-collar losses and weak private hiring, raising concerns for office demand and CRE stability.

  • Price plateau: Green Street’s Commercial Property Price Index held steady in June, reflecting little movement across all property types.

🏘️ MULTIFAMILY

  • Senior housing expansion: Strawberry Fields REIT has acquired nine Missouri skilled nursing facilities for $59M, expanding its state portfolio to 17 properties.

  • Housing restart: San Jose’s Santana Row is set to add new residential units for the first time in a decade.

  • Code confusion: A court order voiding Charlottesville’s new zoning code has left key affordable housing projects in limbo.

  • Foreclosure fight: A stalled Miami Worldcenter tower has sparked dueling lawsuits, with Monarch seeking foreclosure and developer Royal Palm accusing it of predatory lending.

  • Big build: True Ground Housing Partners plans to replace its 40-unit Arlington complex with a 249-unit all-affordable development.

  • Rental ban: Beverly Hills is advancing a ban on short-term rentals under 12 months for both single-family and multifamily homes.

🏭 Industrial

  • Tariff turbulence: Trade uncertainty and rising tariffs slowed shipping activity at Western ports in May, pressuring industrial supply chains as firms seek cost-cutting workarounds 

  • Data pushback: A 165-acre EdgeConneX data center project in suburban Dallas hit a major hurdle after Lancaster’s planning board voted it down.

  • Green rollback: The rollback of clean energy tax credits under the “Big, Beautiful Bill” has triggered cancellations and delays for dozens of green factory projects.

  • Onshoring boom: Drugmakers are fast-tracking US manufacturing amid looming pharmaceutical tariffs.

🏬 RETAIL

  • Retail reversal: Retail saw its first negative absorption since 2020 amid slowing in-store spending and rising closures.

  • CBL comeback: Nearly four years post-bankruptcy, CBL Properties is turning a profit, selling malls, paying down debt, and capitalizing on renewed retailer interest.

  • Back-to-school boost: The “Denim Days” back-to-school campaign boosted traffic and sales by combining sustainability, community, and trend-driven marketing.

🏢 OFFICE

  •  AI uncertainty: AI-driven job disruption is adding new risks to the office sector, deepening investor uncertainty about future demand.

  • Flexible growth: WeWork leased 60K SF in Lower Manhattan, signaling renewed growth as NYC coworking demand rebounds.

  • Space reuse: San Mateo is eyeing the demolition or conversion of up to 1.5M SF of obsolete office space.

  • Zombie space: Roughly 5.6M SF of DC office inventory is effectively unleaseable, as financially strapped owners lack the capital to sign new tenants.

  • Refi secured: Tishman Speyer completed a $385M refinancing of its fully leased 300 Park Avenue office tower, continuing a string of major NYC debt deals.

🏨 HOSPITALITY

  • Digital spend: Hotel IT expenses rose 4.6% in 2024—outpacing total hotel costs—as operators invest in guest tech and system upgrades.

  • Luxury exit: LVMH is selling Santa Barbara’s El Encanto hotel for $82.2M, exiting its only US hotel asset.

  • Hotel rebrand: Cain International is close to acquiring the former Trump SoHo, now the Dominick Hotel, for over $175M.


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📈 CHART OF THE DAY

Consumer spending has stalled in 2025 as high-income households have pulled back, and lower-income groups struggle with rising debt and costs. With inflation and tariffs looming, concerns are growing over the sustainability of demand and broader economic growth.


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