Equity Residential NYSE: EQR executives said first-quarter 2026 operating results met internal expectations, led by strength in San Francisco and New York and supported by high occupancy, improving resident credit trends, and easing concessions across much of the portfolio.
On the company’s earnings call, President and CEO Mark Parrell said the two gateway markets “share common elements of strong demand from our target higher earning renter demographic for our well-located apartment homes and low levels of new supply.” He also pointed to a favorable supply outlook, noting the company expects deliveries in its markets to be down 35% in 2026 versus 2025, with further declines expected in subsequent years.
Operating trends: high occupancy, improving bad debt, and lower concessions
Chief Operating Officer Michael Manelis said Equity Residential entered the spring leasing season with “solid demand and strong physical occupancy of 96.3%.” He added that bad debt improved during the quarter and that household incomes for new move-ins increased, with rent-to-income ratios falling to 19%.
Manelis said net effective prices had increased “just over 4% since January 1st,” describing that move as consistent with normal seasonal trends. On concessions, he said usage continued to decline across most markets and was down about 21% across the portfolio compared to the first quarter of last year. He framed concession reductions as an early step in the company’s typical supply-demand “continuum,” where occupancy gains are followed by lower concessions and then rental rate increases.
During the quarter, the company reported blended rate growth of 1.5%, which Manelis said matched the first quarter of last year on the same-store set but represented a 130-basis-point sequential improvement from the fourth quarter of 2025. He attributed the improvement to a 260-basis-point lift in new lease change and a 30-basis-point improvement in achieved renewal rate increases. Manelis said retention remained a key driver, with 61% of residents renewing at a 4.7% achieved renewal rate increase, “slightly better than what we expected.”
Market performance: San Francisco and New York lead, others mixed
Executives repeatedly emphasized the outperformance of San Francisco and New York, while acknowledging weaker trends in Boston and Seattle and more muted expectations in markets such as Los Angeles and Washington, D.C.
- San Francisco: Manelis called it the best-performing market in the portfolio and said “the tremendous growth in AI is making San Francisco, particularly the downtown, the place to be.” He cited strong office leasing activity and said concession use in the downtown submarket is “virtually nonexistent.” He added that 2026 competitive supply is expected to be “almost no new” in the market. Parrell said downtown rents have only recently moved above pre-COVID levels, while residents have seen “a 30% increase in nominal wages since 2019,” which he characterized as supportive of further pricing power.
- New York: Manelis said demand is outpacing supply and that the market has “almost no new competitive deliveries coming online in 2026.” He pointed to stable employment and record profits at large financial institutions. Parrell said Equity Residential’s New York allocation is about 14% of the portfolio and that the company is “more kind of in a trading mindset” in the market, adding that the current weighting “feels about right.”
- Boston: Manelis said performance was below expectations, citing challenging weather and ongoing impacts in Cambridge tied to life science funding. He said the company moderated its Boston outlook but called it “a very seasonal market.”
- Washington, D.C.: Manelis said results were in line with “modest expectations,” but pricing power was less than normal. He highlighted a steep decline in deliveries—about 4,000 units, down more than 65%—while noting uncertainty is “clearly holding back” the market. Looking out 12 to 18 months, he said the supply setup could support stronger results if confidence improves.
- Seattle: Manelis said Seattle is trending below expectations and is still absorbing 2025 deliveries. While concessions were down 22% in the quarter, he said demand remains price sensitive. He cited better traction in Bellevue/Redmond, including office leasing activity announcements and an increase in residents coming from outside the MSA.
- Los Angeles: Manelis said performance was in line with “tempered expectations,” citing uncertainty in the entertainment business and a lack of a job catalyst. Parrell later described a longer-term strategic goal of reducing California exposure over time—“probably mostly with a reduction in Los Angeles”—based on reduced conviction in employment drivers.
- Expansion markets (Atlanta, Dallas, Denver; Austin as laggard): Manelis said conditions improved in Atlanta and Dallas with concessions coming down, and that Atlanta had strengthened enough to potentially deliver slightly positive same-store revenue growth this year. He said Denver showed occupancy strength and signs it may have bottomed. Austin, where the company has three properties, was described as still facing a supply overhang.
Guidance commentary: renewals firmer, new leases lighter
In response to questions on pricing seasonality, Manelis said Equity Residential’s setup differs from last year due to what he described as “unprecedented times with such low levels of new supply.” He said renewal quotes for the next three months were “just over 6%,” and he expressed confidence the company would achieve renewal rate increases around the 5% range in coming months.
Manelis said the company was not changing its full-year blended rate growth expectations, which he described as “about a 1.5%-3% kind of growth rate,” with implied new lease change roughly flat and renewals around 4.5% to 4.75%. He said renewals were running a bit better than expected, while new leases were “a little bit lighter.” Discussing April trends, he told analysts he expected continued sequential improvement in new lease change and that the company did not expect to end the quarter at negative 1% for new leases, anticipating progress “closer to counter flat.”
Capital allocation: buybacks, dispositions, and selective development
Parrell said the company did not acquire or sell assets in the first quarter, but it updated transaction guidance to reflect the “likely sale of a couple of properties.” He described dispositions as part of an ongoing process to improve the portfolio by selling older capital-intensive assets or assets where concentrations are heavy.
Parrell also reiterated a focus on share repurchases, noting the company repurchased $220 million of common shares during the first quarter and $500 million total since August 2025. In discussing capital allocation, he said Equity Residential is open to more buybacks and likes “the match of selling these lower growth assets and buying the stock.” He added that while the company could use debt to repurchase shares, it views that as a different decision because it changes the capital structure, though he noted the company is “relatively under-levered” at 4.3x.
Chief Investment Officer Bob Garechana said the company introduced disposition guidance of $165 million for the first time, reflecting assets it is “pretty confident” it will execute on. He said private-market interest in multifamily remains robust, with “bidding trends that are very large” and “a lot of private capital.” However, he noted that larger, more capital expenditure-intensive assets were hard to sell six to eight months ago and “continue to be hard to sell today.”
On development, Parrell emphasized that Equity Residential rarely funds development without a clear path to ownership. Garechana said that, aside from stock repurchases, development is currently the next most compelling capital deployment choice, while acquisitions are challenging given what private capital is underwriting. Parrell said the company evaluates spot construction costs against spot rents, citing an Atlanta-area project where the company believed it could build at a meaningfully higher yield than a recent comparable transaction in the submarket.
Expenses, insurance, and operational initiatives
Manelis said expense pressure from Northeast snow removal and utilities was offset by very low payroll growth of 20 basis points. On insurance, he said property insurance premiums declined, which allowed the company to purchase additional coverage, though general liability premiums increased and general liability expenses also rose. He said the net effect—an insurance-related increase of 4.5% quarter over quarter—was anticipated in guidance.
Utility costs ran higher than expected in part due to storms in the Northeast, Manelis said, adding the company hedges energy prices where possible. Executives also noted that higher utility costs were partially offset by higher fees, contributing to what Manelis described as a roughly 60-basis-point benefit in other income during the quarter.
On operations and technology, Manelis said the company was about six months into a full deployment of an AI-assisted application and screening process, with delinquency from new residents trending down. He also said the bulk internet program rollout remained on track, with about 60% of the portfolio expected to be live by year-end.
In response to a question about marketing and AI-driven search behavior, executives said the company is focused on how large language model-driven search could change apartment search dynamics. Manelis said the company believes “there’s absolutely ways to become more relevant in that environment,” and that those who invest the resources could gain an advantage.
Regulatory issues were also discussed. Parrell said Massachusetts rent control is the company’s primary focus, describing it as likely to go to voters and as “a very negative proposal for housing supply and long-term affordability.” He said Equity Residential paused consideration of a couple of Massachusetts development deals due to the proposal. He also said the company is watching a measure in Washington, D.C. that would freeze rents for two years, though he added much of the company’s D.C. portfolio is already rent-controlled.
Parrell closed by thanking participants for their interest in the company.
About Equity Residential NYSE: EQR
Equity Residential NYSE: EQR is a publicly traded real estate investment trust that acquires, develops, owns and operates rental apartment properties. Headquartered in Chicago, the company focuses on delivering professionally managed, market-rate apartment homes and related services to renters. Its operations cover a range of property types, including high-rise and mid-rise assets, with amenities and on-site management designed to support resident retention and occupancy.
The company's core activities include property acquisitions, development and redevelopment, leasing, and day-to-day property management.
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