We recently compiled a list of the 12 Best Self Storage and Apartment Stocks to Invest In. In this article, we are going to take a look at where AvalonBay Communities, Inc. (NYSE:AVB) stands against the other self-storage and apartment stocks.
In the US, the apartment and self-storage markets are adapting to changing economic conditions and consumer needs. Both markets play a crucial role in the economy and are expected to maintain growth trajectories driven by the demand for housing and storage solutions.
The demand for safe storage solutions is supported by lifestyle changes such as the increasing prevalence of remote work and downsizing among retirees. Additionally, the rise of e-commerce is further supporting this trend. As businesses downsize their space and individuals declutter their homes, there is a rising demand for self-storage solutions.
READ ALSO: 10 Unrivaled Stocks of the Next 5 Years and 10 Best Stocks to Buy and Hold For 2025.
According to Nuveen Real Estate, the US apartment market saw record supply growth in 2024. This made it challenging for apartment operators to grow rents and keep occupancy levels above the sector’s long-term average. Despite these challenges, the demand for apartments remains robust due to a housing shortage and a growing preference for renting, particularly among younger generations who prefer flexibility over owning a home.
The apartment market saw an increase in resident retention in 2024 compared to the previous year. Middle-income households are expected to continue driving the ongoing demand for rental properties in the foreseeable future.
Methodology
To compile our list of the 12 best self-storage and apartment stocks to invest in, we looked for the largest apartment and self-storage companies. We reviewed our own rankings, financial media reports, and various online resources including ETFs to compile a list of the best self-storage and apartment stocks. Next, we focused on the top 12 stocks most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s Q3 2024 database of 900 elite hedge funds. The 12 best self-storage and apartment stocks to invest in were then ranked in ascending order based on the number of hedge funds holding stakes in them as of Q3 2024.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
An aerial view of a bustling metropolitan area with high-rise buildings and busy streets.
AvalonBay Communities, Inc. (NYSE:AVB)
Number of Hedge Fund Holders: 35
AvalonBay Communities, Inc. (NYSE:AVB) is an equity real estate investment trust (REIT) that invests in apartments. The company acquires, develops, and manages apartment communities in leading metropolitan areas in New England, the New York/New Jersey Metro area, the Mid-Atlantic, the Pacific Northwest, and Northern and Southern California, as well as in its expansion regions of Raleigh-Durham and Charlotte, North Carolina, Southeast Florida, Dallas and Austin, Texas, and Denver, Colorado. By the end of 2024, AvalonBay Communities, Inc. (NYSE:AVB) owned or held an ownership interest in 306 apartment communities with more than 93,000 apartment homes in 12 states and the District of Columbia. This includes 17 wholly-owned communities under development.
The company is focused on expanding its presence in high-demand metropolitan areas and its strategy includes developing new properties and acquiring existing communities in growing regions to enhance its portfolio. In Q4 2024, AvalonBay Communities, Inc. (NYSE:AVB) completed the development of 4 communities and added a total of 1,451 apartment homes to its portfolio. During the quarter, the company also began construction of 2 more wholly-owned apartment communities, which are expected to contain a total of 600 apartment homes. In addition to these developments, AvalonBay Communities, Inc. (NYSE:AVB) acquired 2 communities while selling 3 others during the quarter.
Overall, AVB ranks 2nd on our list of the best self-storage and apartment stocks to invest in. While we acknowledge the potential of AVB as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AVB but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
