Silent stress is building in the multifamily market, and you'd be hard‑pressed to see it in the usual numbers. On paper, rents look solid and buildings are full. Yet a recent post from Colliers points to a different story playing out behind the scenes, where effective rents are slipping, refinancing is getting tougher and more assets are quietly making their way onto lender watchlists even as headline metrics suggest everything is fine.
The pressure is coming from a familiar combination: heavier concessions, thinner cash flows and capital stacks that were built on a much stronger post‑pandemic rent narrative than the market has actually delivered.
Colliers describes a market where the classic warning signals—sharp increases in vacancy, broad rent cuts—haven't materialized, at least not in the aggregate. Instead, landlords have leaned on concessions to keep occupancy levels up, particularly in supply‑heavy markets, thereby preserving asking rents while sacrificing real income growth.
Concessions Reach Record Level
According to the firm, concession dollars averaged $129 per unit in the first quarter of 2026, a record level, even though only about a quarter of units are offering incentives. That mix means the pain is concentrated in specific assets and submarkets rather than spread evenly across the sector.
That concentration is changing how stress shows up. Rather than empty units and obvious rent cuts, owners are dealing with a slow grind on margins as concessions and other giveaways erode net operating income.
Many of the deals now under pressure were underwritten during or just after the post‑pandemic surge, when double‑digit rent growth was fresh in everyone's mind and future growth assumptions reflected that momentum. In reality, effective rent growth has cooled, and those optimistic projections are running into higher debt costs and a leasing environment where incentives have become a regular part of the playbook.
Lagging Cash Flow
Colliers notes that more assets are missing the marks required to clear lender hurdles, not because the buildings emptied out, but because the cash flow never quite matched the story in the pro forma.
For lenders, this is forcing a closer look at the gap between what's advertised and what's collected. In the era of cheap capital, many loans were sized on aggressive rent and growth assumptions, with less scrutiny of how much of that rent might be given back through concessions.
Today, that gap matters. Incentives that once felt like a temporary marketing cost are now large enough in some markets to push coverage ratios below levels comfortable to loan documents and credit committees. Colliers reports that this dynamic is fueling a growing list of loans that, on the surface, are backed by full, seemingly healthy properties but fail to generate the income needed to support their capital structures.
Locking in Lower Rents
Owners are feeling that tension in day‑to‑day operations. Many are opting to defend occupancy first, accepting that concessions will linger longer than they originally expected while they try to lease through heavy supply. That choice can make sense in the short run—empty units don't pay the bills—but it locks in lower effective rents at the same time many assets are heading into a refinance.
When those loans come due, sponsors are meeting a different world: higher rates, tighter underwriting and lenders more attuned to the realities of net income. The outcome is often a smaller loan than anticipated, a bigger equity check or more restrictive structures, all of which can strain business plans that assumed smoother exits.
Colliers is careful to draw a distinction between today's environment and the broad‑based distress of the Global Financial Crisis. By its calculations, concessions now account for about 7.2 percent of asking rent, compared with 9.2 percent at the GFC peak, and incentives are less pervasive than they were in 2009.
The firm characterizes current conditions as "selective" stress, focused on markets still working through large delivery pipelines and on assets with thinner capital stacks or more aggressive underwriting. That selectivity helps explain why aggregate statistics still look relatively healthy: they smooth out pockets of real strain.
Other Landlord Constraints
Affordability is another part of the story. Colliers points to slower wage growth, resumed student loan payments and higher household debt service as reasons landlords can't simply pull back concessions and push rents without risking more resident turnover. Those constraints limit how quickly owners can rebuild effective rent levels, even as they feel pressure from lenders and investors to improve cash flow.
In effect, incentives initially framed as short‑term tools are becoming longer‑term features of the income statement, extending the period during which effective rent growth trails what many deals assumed.
Looking ahead, Colliers sees some relief on the horizon but not immediately. Construction starts have slowed, which should eventually thin the pipeline and set up tighter conditions as current lease‑ups stabilize. The firm points to 2027 as a likely inflection point, when landlords may finally gain the leverage needed to pull back on concessions and recapture more rent growth.
The catch is that a significant wave of existing loans will reset or mature between now and then, meaning many sponsors will have to navigate today's softer effective income environment before they can benefit from any tightening.
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