South and West Markets Lean Harder on Concessions as New Supply Mounts

In the South and West, operators are using short‑term giveaways to protect published rent levels and preserve longer‑term pricing power in markets where headline growth has already cooled.

In the Northeast and Midwest, lower concession penetration suggests comparatively tighter fundamentals or at least less urgency to chase demand with upfront offers.

Texas and the Mountain West stay on the front line

At the market level, a familiar cast of high‑supply metros is doing most of the heavy lifting on discounting. According to the RealPage report, major Texas markets dominated the list of metros offering the most concessions in January, with four large Lone Star markets in the top tier. Austin, Denver and San Antonio held onto the top three spots for concession usage, with each market offering discounts on roughly one‑third of stabilized units.

That level of concession penetration effectively means that for many properties in these metros, the "real" achieved rent at move‑in is materially below the face rate, even if operators are reluctant to concede that in published pricing.

Houston joined the top 10 list in January, displacing Fort Worth but otherwise leaving the ranking largely unchanged from December, a sign that this is not a one‑off seasonal blip but a sustained response to supply. For investors underwriting these markets, the persistence of the same names near the top of the concession rankings points to prolonged lease‑up pressure rather than a quick normalization.

Depth of discounts narrows the margin

It is not just how many units carry concessions, but how deep those discounts run. Across the top 10 concession markets, depths ranged from roughly 10% to 15%, according to RealPage Market Analytics, putting a sizable wedge between asking rents and net effective performance. Austin replaced Phoenix as the metro with the highest average discount, at 14.8% in January, further evidence that operators in that market are leaning harder on price than many of their peers.

For stabilized assets, a 10% to 15% concession on a third of the rent roll can drag effective rent growth even in nominally full properties, particularly when those discounts recur rather than burn off. In practical terms, properties that appear to be holding rents steady on paper may be quietly eroding margins via richer upfront offers and extended free‑rent periods. That gap matters for buyers evaluating trailing income streams and for existing owners negotiating debt covenants tied to DSCR and in‑place NOI.

For investors, the report's core message is not that concessions exist—they always do in softer periods—but where they are concentrated and how stubborn they have become in high‑supply corridors. The South's 20.5% and the West's 16.2% concession usage shows that operators in these regions are still in defensive mode, trading short‑term revenue for occupancy stability as new stock competes aggressively for the same pool of renters.

The comparatively lower figures in the Northeast and Midwest reinforce the idea that capital seeking more predictable near‑term cash flows may find less concession risk in those regions, albeit often at the price of lower growth upside.

At the same time, markets like Austin and Denver illustrate the classic late‑cycle tension between negative near‑term optics and potential long‑term opportunity. Concession penetration near one‑third of stabilized units, coupled with average discounts approaching 15%, will pressure current yields but could set the stage for outsized effective rent gains once supply is absorbed and incentives roll back.

For investors and lenders reading the RealPage findings, the task now is to distinguish between markets where concessions are masking underlying softness and those where they reflect a tactical response to a temporary supply bulge.