Apartment supply volumes are not expected to return to historically normal levels until at least mid-2025 after hitting a peak last year with a record 588,900 units delivered.
As a result of record supply, properties in the lease-up phase are taking longer to reach stabilization, according to an analysis by RealPage that defines stabilization as 85% occupancy or higher. At the end of last year, conventional properties in initial lease-up were taking about 16 months to reach stabilization. That’s substantially longer than in 2019 when properties were taking an average of 12 months to stabilize.
“That can significantly impact the bottom line for owners and operators," said RealPage. “It’s also not a surprising impact, given the sheer volume of competition coming online in recent years.”
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In addition, the wave of new supply has prompted operators to focus on retaining residents, resulting in decreased turnover. At the end of 2024, the 12-month average renewal rate was 54.5%, which is well ahead of the long-term average from 2010 to 2019 and in 2023, when retention was about 53%.
With increased competition for tenants, owners and operators are increasingly relying on concessions even in stabilized assets. The share of units offering a concession at the end of 2024 was close to the all-time highs recorded in the pandemic era of 2020. Roughly 8.5% of conventional stock in the U.S. offered concessions in December 2024, compared with only 7.5% in December 2023.
“The value of concessions has not increased quite as much as the volume of units offering concessions,” the report said. “The average value of concessions is about one month free.”
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Kristen Smithberg
Kristen Smithberg is a Colorado-based freelance writer who covers commercial real estate, insurance, benefits and retirement topics for BenefitsPRO and other industry publications.
