As a whole, real estate investment trusts (REITs) have endured one of their most challenging environments in decades. For years, the sector benefited from historically low interest rates that made borrowing inexpensive, supported property values, and encouraged investors to seek income-producing assets. That landscape changed dramatically when the Federal Reserve launched its aggressive rate-hiking campaign to combat inflation, creating several major headwinds for nearly every corner of commercial real estate.
Apartment REITs faced an additional challenge: a surge in multifamily construction that began during the post-pandemic housing boom created the largest wave of new apartment supply in decades.
That supply glut is now turning into a shortage, pointing to better times ahead for apartment REITs. With rising rents, steady demand, and a wave of merger activity, the sector is poised to deliver strong returns once again.
