"Should multifamily fundamentals continue to improve in markets where we have sites ready for development, we would be more likely to start selective multifamily development that we had previously postponed so we can deliver units in late 2011 or 2012 where we expect significant rent growth," Lowder said.

During the first quarter, occupancy for Colonial Properties' apartment portfolio increased 200 basis points to 96.7%. "Early signs of recovery are broad-based," according to C. Reynolds Thompson III, president and CFO of Colonial Properties. In fact, the REIT saw occupancy improve in 11 out of 12 markets, and net rental income has trended positive for three months in a row, he notes.

In total, Colonial Properties has an apartment development pipeline totaling $74.6 million, according to its quarterly supplemental filings. During the first quarter, the REIT invested $25 million to $30 million in new development activity.