Although landlords offered more concessions last month than in any June on record, the trend of generous renter incentives is beginning to shift, according to a RealPage analysis.
Over the past decade, the multifamily market has witnessed some of the highest levels of concessions being offered in stabilized assets.
Now, the number of U.S. apartments offering concessions has actually started to trend downward, with approximately 12% of stabilized conventional apartments across the country currently marketing these generous incentives, the analysis found. While the number of U.S. apartments offering concessions is decreasing, the average value of them is increasing. The average discount rate is 9.3%, which translates to about 30 days of free rent. That is at least two days more than the average offered immediately following the pandemic, said RealPage.
“While this is some of the highest level of concession usage the U.S. has seen in stabilized assets in the last decade or so, there’s a key difference in today’s concessions versus the similarly high levels of concessions usage during the Great Financial Crisis in 2008 and 2009,” said the report.
“That difference is that what is driving concessions is not a lack of demand, but rather an intense barrage of supply.”
Following record apartment deliveries over the past few years, supply volumes have finally peaked and are on the decline in the majority of markets, RealPage said. Deliveries are expected to decline by 25% this year compared to 2024. If demand continues at its current robust pace, concession usage is likely to fall for most of the country in the near term, the property management software forecasts.
However, seasonal increases in concessions are expected in the fall and winter months. When prime leasing seasons kick off next spring, a more substantial concession burn-off is likely to occur, the report further predicts.
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