Apartment rent, demand, sales volume, revenue — pick one, and it’s probably surging.

Some of the largest U.S. apartment real estate investment trusts, including Mid-America Apartment Communities and AvalonBay Communities, reported strong third-quarter numbers by virtually all major measures, an illustration of the multifamily market’s adjustment to the pandemic.

Mark Stern, managing director of capital markets at real estate firm JLL in Chicago, attributed the recovery’s speed to the nature of the health crisis. It’s a single, swift pandemic, as opposed to a drawn-out financial quagmire years in the making, and the pace at which the apartment market is bouncing back is bucking even the most optimistic expectations.

“I think it came back faster than anyone predicted,” Stern told CoStar News in a phone interview.

MAA’s year-over-year revenue increase of 6.7% was ahead of expectations, executives said on the company’s earnings call. AvalonBay, the Virginia-based REIT that buys and develops apartments in large and midsize cities such as Boston, Massachusetts, and Austin, Texas, said its strategy is working with third-quarter revenue rising 1.2% to $519.8 million from a year earlier.

“Unlike the last downturn, which was the great financial crisis where we took a long time to go down and a long time to come back … overnight, the market cratered and overnight, the market came back,” Stern said.

In most U.S. regions, apartment developers, investors and brokers are experiencing what many of them have called among the best years on record for their respective line of work.

Rent growth is up because of increased demand, and since so many leases were signed during 2020 at below-market rates, there’s plenty of room to go even higher.

“We see terrific tailwinds in our portfolio as we head into next year,” Sean Breslin, chief operating officer at AvalonBay, said on the company’s earnings call.

AvalonBay’s rents were up 7.8% in the third quarter over the year-earlier period. MAA’s rents were 6.3% higher.

Another major apartment landlord, Equity Residential, reported higher third-quarter earnings even though 86% of its renters are paying below-market rates as a result of the pandemic. National multifamily owner UDR also posted improved revenue and net operating income.

The apartment industry still faces hurdles. They include a dire shortage of construction materials, which has caused development costs to inflate to historic levels, pinching the finances of builders who are beginning to pass these added expenses on to renters and investors. The supply chain delays stem from the pandemic, which supercharged the cyclical nature of the cost of commodities and led to record-high pricing for materials such as softwood lumber and steel for multiple consecutive months this year, according to the National Association of Home Builders.

‘More Dollars Than Deals’

Investments are also growing because of multifamily’s stable fundamentals, as apartments are poised to be in high demand for the foreseeable future given the national housing shortage.

Developers are on pace to add 1.5 million housing units in 2021, but on average, they need to be building at least 1.8 million units per year to keep up with demand, according to the National Low Income Housing Coalition.

“There are more dollars than deals,” Mike Kemether, executive vice chairman of Cushman & Wakefield’s Sun Belt apartments advisory group, said in an interview. “Capital flowing into multifamily has been pretty prolific.”

Kemether’s team covers apartment sales from North Carolina to Texas.

Finding success in the Sun Belt is a familiar tale in the multifamily industry. The region has benefited immensely from inward migration during the pandemic, as renters who might have lived in more expensive cities for their jobs opted to relocate to more affordable hometowns or a different city altogether where they can stretch their dollar further.

“Growing demand across our Sun Belt market continues to drive strong rent growth and high occupancies,” H. Eric Bolton, Tennessee-based MAA’s CEO, said on the company’s earnings call.

So far in 2021, more than 600,000 apartment units have been rented throughout the United States, pushing the national occupancy rate to an all-time high of 95.5%, according to CoStar analysis.

Kemether has seen the Sun Belt’s recovery up close. In a given year, his team typically closes roughly $7 billion or $8 billion in deals. In the group’s best year, it closed a little more than $8 billion in deals.

This year, it’s approaching $12 billion in deals, which would make 2021 Cushman & Wakefield’s best-ever year for apartment investment sales in the Sun Belt.

“Occupancies are up, rents are up throughout the southeast, delinquency is dropping, interest rates are low, debt funds are plentiful,” Kemether said. “So, you have this kind of perfect storm where properties have really increased in value in a relatively short period of time.”

Of course, the recovery isn’t just limited to the Sun Belt and other sunny, affordable regions. Chicago, which was acutely affected by renters flocking to cheaper, more temperate cities, is bouncing back. Over the past year, about 20,000 more units have been moved into than vacated — nearly twice the city’s prior record for trailing 12-month rate of 11,000 units, which was set in early 2019, CoStar data shows.

That demand is translating into “peak rents” for the city, JLL’s Stern said