Key Points
A version of this article first appeared in the CNBC Property Play newsletter with Diana Olick. Property Play covers new and evolving opportunities for the real estate investor, from individuals to venture capitalists, private equity funds, family offices, institutional investors and large public companies. Sign up to receive future editions, straight to your inbox. High supply and weakening renter demand have apartment landlords living in an ever-more competitive space. As a result, they are offering more concessions. Nationwide, 16.6% of stabilized apartments offered concessions in January, according to RealPage Market Analytics. That was a full percentage point higher than December (when concession activity actually dipped) and the highest rate since mid-2014. The average January discount was 10.7%, or roughly five weeks of free rent. That was essentially the same as the average in the fourth quarter of 2025, but slightly higher than October’s reading. Landlords are clearly seeing the need, as rents gained just 0.2% in February, according to Apartment List. While this was the first monthly gain in six months, rents are now down 1.5% year over year, and the national vacancy rate hit a new peak of 7.4%, suggesting that the bump up in rents is likely seasonal. “High levels of new deliveries—particularly in the Sun Belt—remain a primary structural headwind. Although starts and deliveries are down from peak levels, a sizable volume of units remain in lease-up and will take time to absorb,” wrote Paul Fiorilla, associate director of secondary research at Yardi, in its February apartment report. Not only has a massive supply of new apartments been hitting the market over the past two years, but the job market is weakening, domestic migration has slowed and immigration outflows have weighed on household formation, according to Fiorilla, who notes occupancy rates are down from a year ago in 28 of the top 30 markets Yardi covers. “This big wave of supply these last few years has conditioned renters to expect a deal,” said Jay Parsons, a rental housing economist. “It wouldn’t surprise me to see that when you get those effective rent growth numbers from the various providers, you could see some incremental improvement at the same time concessions remain high.” Parsons compares the current market to 2010, when unemployment was more than twice today’s rate, noting absorption today is much better than it was then. The trouble, again, is massive supply, at roughly 1.4 million new units, which is the highest count over any three-year period since the 1970s. Concessions are coming largely in the form of free rent for a month or more as well as gift cards for potential tenants. Rent concessions are often less favorable than gift cards, because they hit the reported income of the building. “When you do a rent concession, that’s going to hit the rent roll. It’s different than what they call a marketing concession, which is basically a giveaway,” Parsons said. “There are some companies that prefer to go that [giveaway] route, as when you give a rent concession, it’s harder to wean off of that concession,” he said.
