Blended rate growth was 3%, driven by a 5.2% renewal rate with 60% of residents renewing in the quarter.
Equity Residential's second quarter 2025 results exceeded expectations with strong resident retention and sustained demand across markets.
Expansion markets such as Atlanta and Dallas performed in line with expectations, with suburban acquisitions outperforming urban submarkets facing supply pressure.
Markets like Los Angeles and Denver faced challenges from weak job growth, quality of life issues, and heavy concession use.
Other strong markets included New York City with the highest occupancy and strong blended rate growth, and Washington, D.C. with high occupancy and rent growth despite recent softening.
Physical occupancy was high at 96.6%, with new lease rates slightly negative due to price sensitivity and concession use in supply-heavy markets.
San Francisco led the portfolio with 5.8% blended rate growth, driven by strong new lease and renewal increases and favorable migration patterns.
Impact of Market Softening on Property and Casualty Segments
Management highlighted a 10% decline in Property gross premiums due to increased competition and rate pressure, especially on catastrophe-exposed business.
Casualty and Surety segments experienced growth, but Property's decline reflects a strategic shift away from less profitable lines amid market softening.
The company is emphasizing disciplined underwriting and selective growth, particularly in challenging segments like E&S Property and auto.
Despite headwinds, RLI remains optimistic about long-term opportunities, focusing on profitable niches rather than market share.
Management noted that rate decreases are primarily in specific lines like E&S Property and auto, with some segments still seeing rate increases to maintain profitability.
The company is actively managing exposure to natural catastrophe risks, including hurricane season, with a cautious approach to new business.
Shift in Supply Dynamics and Market Delivery Trends for 2025-2026
Supply growth in the company's markets is tapering off, with a reduction in deliveries to less than 2% in 2026, a 43% decrease from 2024 actual deliveries.
Delivery volumes are being pulled forward from 2026 into 2025, especially in markets like Dallas, Denver, and others, leading to a more compressed timeline for new supply.
This shift is expected to support a stronger leasing environment in 2026, with demand remaining robust despite macroeconomic uncertainties.
Dafinchi