Multifamily real estate investment trusts (REITs) remain cautiously optimistic at the start of 2026, which many say will be a transitional year.
One positive for executives is that supply pressures are easing this year after an influx of new units, with benefits expecting to be seen in the second half of the year and into 2027. However, the biggest uncertainty comes around job growth.
“Among the positive factors are inflationary growth for GDP and wages as well as continued declines in homeownership in part due to challenging affordability. Importantly, after a couple of years of outsized new apartment supply, this factor is now working in our favor,” said David Bragg, UDR senior vice president and chief financial officer, on the REIT’s fourth quarter earnings call. “On the other hand, we anticipate a more muted job growth environment relative to recent years. And we are mindful of regulatory risk not just at the market level, but at the federal level given continued uncertainty over tariffs, immigration, and more. This has affected consumer confidence, which recently hit its lowest level in a decade.”
Equity Residential president and CEO Mark Parrell said he expects performance to steadily improve throughout the year.
“Looking forward to 2026, there is definitely a broad range of possible outcomes for the U.S. economy, especially as it relates to job growth. Our wider-than-usual same-store revenue guidance range acknowledges that uncertainty,” he said. “With S&P 500 corporate earnings and the economy as a whole continuing to grow at a brisk pace, we can certainly see a path to an improving job picture as we move through the year. With our portfolio occupancy currently over 96%, a significantly improving supply picture and social and cost factors that favor our business over owned housing and advantageous portfolio positioning due to 30% of our portfolio being in the well-performing San Francisco and New York markets, we feel like we just need a little bit of wind at our back in the form of improved job growth to see 2026 revenue growth accelerate beyond our current expectations.”
MAA president and CEO Brad Hill was in agreement.
“While new supply deliveries are still elevated by historical standards, we are optimistic that the current deceleration in new deliveries, combined with solid demand fundamentals and strong resident retention, will lead to strengthening revenue performance throughout the year as tightening market conditions provide increased support for new lease price recovery,” he said. “While economic uncertainty persists, the long-term outlook for rental housing in our high-demand region remains solid and our growing investments position MAA to deliver meaningful earnings growth as the recovery gains momentum.”
Camden chairman and CEO Ric Campo said every sign suggests that the first half of 2026 will be marked by the same cautious tone as last year; however, he focused instead on the knowns for the REIT.
“We are certain that people need a great place to live, and we provide that. We are certain that new supply has peaked and is falling like a knife in our markets. We are certain that 2025 had one of the highest levels of apartment absorption in the last 20 years. We are certain that our Sun Belt markets will continue to grow faster than the rest of the country, prompting us to market our California properties for sale,” he said on the latest earnings call. “We are certain that our residents are resilient, and the financial prospects are strong with rent payments at only 19% of their income. We are certain that apartments are significantly more affordable than owning a home and will be for the foreseeable future. We are certain that new lease rates and net operating income will grow in the future.”
Technology Advancements
The majority of the REITs noted they are continuing to invest in technology to drive net operating income (NOI) and long-term growth.
“Irrespective of the macro environment, we will continue to utilize our scale, particularly our investments in technology and centralized services, to drive incremental growth from our existing portfolio,” noted Benjamin Schall, president and CEO of AvalonBay Communities. “We’re now 60% of our way toward a target of $80 million of annual incremental NOI from our operating initiatives, with an incremental $7 million of NOI slated for this year.”
UDR is continuing its ongoing investments in innovation, advancing its customer experience project and integrating artificial intelligence (AI) tools. The top areas of focus for innovation for the REIT include elevating the customer experience, pricing, and enterprise effectiveness.
Equity Residential chief operating officer Michael Manelis noted the REIT also expects to automate additional processes and add more AI-enabled applications into the business over the next 18 months, including a new customer relationship manager platform and service application currently being deployed.
“This level of innovation is expected to deliver another 5% to 10% reduction in on-site payroll over the next several years, and will also enable us to have a more utilized service organization, which will benefit our overall repair and maintenance expenses, creating the foundation of what will be the most efficient and scalable operating platform in our business is very exciting,” he added.
Essex Property Trust president and CEO Angela Kleiman reported her company has a variety of initiatives in the pipeline, but it takes time to monetize the investment.
“On the sales and leasing front, it’s really more AI focused. And on the bottom line, as it relates to expenses, there’s some expense management opportunities and technology that we are implementing. Having said that, you’ll see that other income contributions from these initiatives are fantastic, but they are lumpy,” she said. “And when we start something, it usually takes a year or two to really monetize the opportunity. Last year, we had a nice pickup, and one of the reasons was electric vehicle parking, and that was rolled out in 2024.”
Quarterly and Full-Year Results
AvalonBay reported core funds from operation (FFO) per share of $2.85 for the fourth quarter and $11.24 for the full year, up 1.8% and 2.1% compared with the prior-year periods, respectively. Fourth quarter same-store revenue and NOI increased 1.8% and 1.3% year over year, respectively. For the full year, same store revenue and NOI increased 2.5% and 1.9% compared with 2024, respectively.
Camden Property Trust recorded fourth quarter core FFO per share of $1.76, up from $1.73 in the fourth quarter of 2024. For the full year, core FFO per share in 2025 was $6.88, up $0.03 from 2024. Same-property revenue increased 0.5% in the fourth quarter on a year-over-year basis and 0.8% in 2025 compared with 2024. Year-over-year NOI was flat in the fourth quarter and increased 0.3% for the full year.
Equity Residential generated FFO per share of $0.97 in the fourth quarter of 2025, flat with the fourth quarter of 2024. For the full year, the REIT’s FFO per share was $3.94, up 4.8% compared with 2024. Same-store total revenue in the fourth quarter increased 2.5%; for the full year, same-store revenue increased 2.6% compared with fiscal 2024. Same-store NOI increased 2.3% year over year in the fourth quarter and 2.2% for the full fiscal year.
Essex Property Trust’s core FFO increased 1.5% year over year in the fourth quarter to $3.98. For the full year, core FFO increased 2.2% to $15.94. In the fourth quarter, the company achieved same-property revenue and NOI growth of 3.8%. For full-year 2025, Essex grew revenues and NOI 3.3% and 3.2%, respectively.
MAA reported core FFO per share of $2.23 in the fourth quarter of 2025, flat from the same period in 2024. For the full year, the REIT generated core FFO per share of $8.74, down from $8.88 per share in 2024. MAA’s same-store revenue decreased 0.1% in the fourth quarter compared with the prior-year period; for the full year, same-store revenue also decreased 0.1%. Same-store NOI declined 0.5% year over year in the fourth quarter and 1.4% in full-year 2025 compared with 2024.
UDR reported fourth quarter FFO per share of $0.62, 29% more than the same period in 2024. For full-year 2025, FFO per share increased 6% to $2.43. Same-store revenue grew 1.8% in the fourth quarter and 2.4% for the full year compared with the same periods a year ago. Same-store NOI grew 1.7% in the fourth quarter and 2.3% for the full year compared with the prior-year periods.
Management Commentary and Outlook
“In a soft and uncertain demand environment, our view is markets that are going to be the relative winners are going to be those with the lowest levels of supply, and we feel well positioned there both in the near term and for the foreseeable future, particularly given our suburban coastal concentrations.” — AvalonBay Communities’ Schall
“There should be less uncertainty in 2026. We know that tax reform is off the table, we know inflation is coming down, we know that Federal Reserve’s lowering rates, and we know that there’s a midterm election coming, which means that the administration is going to do whatever they can to make sure the economy is good in November. The big tariff debates will likely be less of a debate during that period for all the obvious political reasons. And we have a 25% reduction in new deliveries in Camden’s markets. With all that said, generally speaking, when you have a midterm election in this environment—unless something really comes off the rails—it should be a reasonable environment to improve demand and to create a more optimistic scenario in 2026.” —Camden Property Trust’s Campo
“The results we are seeing in San Francisco and New York demonstrate the earnings power of our business when we are operating in markets with sustained demand and low levels of competitive new housing supply. We believe more markets we operate in will trend in that direction in the latter half of 2026 assuming the job situation is reasonably constructive.” —Equity Residential’s Parrell
“Given historically low levels of new housing supply across our markets, even a small inflection in demand could have an outsized impact on fundamentals. ... Activity in the technology sector remains constructive with companies expanding office footprints and investments in artificial intelligence continuing.” —Essex Property Trust’s Kleiman
“As market conditions continue to strengthen, improving fundamentals coupled with our strategic investments should provide meaningful opportunities to enhance performance and support a stronger revenue trajectory over the next few years.” —MAA’s Hill
“Looking ahead, we start 2026 in a position of relative strength with positive operating momentum, easing supply pressures, and relative affordability of apartments that remains attractive versus other forms of housing. Collectively, this creates a foundation for sequential earnings growth as the year progresses.” —UDR chairman, president, and CEO Tom Toomey