The outlook for coastal apartment REITs has lowered as uncertainties around COVID-19 vaccine distribution continue, case counts tick up, and return-to-work plans are increasingly delayed.
While coastal apartment REITs have been among the better performers in "riskier" sectors since November, a new report by Mizuho Securities predicts downside risk to return-to-work timing. The report forecasts a return-to-work (and a corresponding increase in demand and rents) in September or October 2021, a timeline adjusted from previous May/June estimates that assumed coastal CBDs would stabilize by the fourth quarter of 2020 or first quarter of 2021.
The likely delay in return-to-work could negatively impact both CBD market demand and stock prices for coastal apartments, with Sun Belt markets potentially performing better in the near term.
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