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May Apartment Occupancy Holds as Rent Recovery Stalls
Apartment demand stayed solid in May, but rent growth is losing steam—especially in the South.
Jordan B.
June 09, 2025
Together with
Good morning. Apartment demand stayed solid in May, but rent growth is losing steam—especially in the South. Plus, Boston’s office market slump could slash property values by 45% and cost the city $1.7B in tax revenue by 2029.
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Market Snapshot
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Market Watch
May Occupancy Holds as Rent Recovery Falters
US apartment occupancy held steady at 95.7% in May, but rent growth is losing traction—especially in oversupplied Southern metros.
Holding steady: US apartment occupancy held flat at 95.7% in May, maintaining a 90 bps gain YTD, per RealPage Market Analytics. All of the top 50 markets saw occupancy rise YoY, although about 40% posted monthly declines.
Zoom in: Regionally, the Midwest (+10 bps) and Northeast (+20 bps) edged up, while the South slipped (-10 bps) and the West held steady.
Rent growth slows: Effective rent growth ticked up just 0.26% in May, about half the pace of the same time last year (0.51%). Annual rent growth softened to 0.7%, down from 1% in April, as recovery momentum lost traction.
South slips further: The South continues to drag on national averages, posting a YoY cut of 0.9%. Key markets including Austin, Phoenix, Tampa, and Houston saw rents fall 0.4–0.9% month-over-month. Austin remains the national laggard with an 8% annual rent decline.
Coastal comeback: Conversely, several high-cost gateway cities saw a surge. San Francisco led all major markets in monthly rent growth, overtaking Chicago for the top annual rent growth spot for the first time in over a year. San Jose, New York, and Boston also posted monthly rent gains of 1% or more.
Leading the way: Despite losing the rent growth crown in May, the Midwest remains a top performer annually. Chicago, Cincinnati, and Kansas City continue to post some of the nation’s strongest year-over-year gains.
➥ THE TAKEAWAY
Big picture: The rental market’s recovery remains uneven—while national occupancy is firm, rent growth is increasingly bifurcated. Gateway cities are showing signs of resurgence, but oversupplied Sun Belt metros like Austin are still unwinding the excess supply from the pandemic.
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✍️ Editor’s Picks
Price problems: Early indicators—from bond spreads to falling hotel deal volume—suggest pricing pain may be on the horizon for US CRE.
Rebuild delays: Most wildfire victims in LA’s Palisades and Eaton neighborhoods want to return home, but frustration is mounting over slow government action and permitting.
Summer sizzle: Conflicting data—from a reported 30% drop to a 27% rise—underscore just how murky and fragmented the Hamptons rental market has become post-pandemic.
Tax trouble: Boston’s office market slump could slash property values by 45% and cost the city $1.7B in tax revenue by 2029, shifting more burden onto homeowners.
🏘️ MULTIFAMILY
Falling short: A NYU Furman Center report found that over 57% of housing units built in NYC Opportunity Zones between 2019 and 2024 were market-rate, and most were located in non-low-income neighborhoods.
HUD cuts: The Trump administration’s proposed 2025 budget would cut $532M from the US Department of Housing and Urban Development’s (HUD) homelessness programs.
Chicago eviction: Illinois slashed rental aid by 33% as Chicago rents jumped 2% in May and eviction filings surged past 8,000 through April.
Price-fix fallout: W.C. Smith will pay over $1M and halt use of RealPage software after settling DC allegations of rent-collusion tied to a broader antitrust probe affecting 60% of large multifamily units.
Tariff tactics: Apartment developers are bracing for Trump-era tariffs by stockpiling materials, reshuffling suppliers, and absorbing up to 5% cost hikes to keep projects on track.
🏭 Industrial
Fresh funds: Blackstone issued $231M in IOS financing to Jadian Capital’s JIOS platform for a 43-property portfolio.
AI infrastructure: Amazon will invest $10B in Richmond County, NC, to grow its AI-focused data center network.
Indy deals: Avison Young closed two $1.5M industrial sales in Indianapolis, totaling nearly 40 KSF, with buyers planning consolidation and potential expansion at the respective sites.
🏬 RETAIL
Debt under stress: Blue Owl Capital’s 6.5 MSF portfolio saw occupancy plunge from 100% to just over 36% after Big Lots and Conn’s Inc. filed for bankruptcy.
Grocery strong: Grocery-anchored retail stays resilient, but with $3.6B in debt maturing by 2026, refinancing pressures are building as margins tighten.
Tariff squeeze: New tariffs could push prices on Chinese and Vietnamese apparel up by as much as 93%, with a $30 sweater potentially jumping to $58—costs retailers say they can't fully absorb.
Franchise problems: Hooters is closing at least 30 corporate-owned US locations amid bankruptcy, pivoting to a franchise-only model backed by $5M in financing and plans to sell 100+ sites.
🏢 OFFICE
Trending: Leasing activity is picking up, space availability is tightening, and investor capital is flowing back into the office sector as pricing stabilizes and hybrid work norms settle.
On the market: SL Green Realty has listed two premium Manhattan office buildings for sale, amid rising demand in NYC’s office market.
Shuffling space: Brookfield sold a 52-story DTLA tower for $210M, below its $250M debt, as LA office deals topped $360M in a week of renewed investor interest.
CoWorking: Amazon is leasing 141 KSF from WeWork in Silicon Valley as part of a broader real estate push to meet its full return-to-office mandate.
🏨 HOSPITALITY
Starwood reboot: Barry Sternlicht is bringing back the Starwood Hotels brand under SH Hotels, emphasizing purpose-driven hospitality, sharp service, and the belief that if it’s not fun, you’re in the wrong business.
📈 CHART OF THE DAY
State-owned sovereign wealth funds quietly manage nearly $10 trillion in assets—surpassing traditional institutions in scale and global real estate influence, yet remain largely misunderstood outside financial circles. CRE Analyst breaks it down.
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