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

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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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Market Snapshot

RESILIENT DEMAND

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• 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.

• 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.

• 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 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.

•  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.

• 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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