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The Last Phase of the Supply Cycle?
Recent data paints an interesting picture of today’s apartment market: concessions are at their highest levels in more than a decade — yet rents may be nearing a cyclical bottom.
According to RealPage Market Analytics, 16.6% of stabilized apartment units nationwide offered concessions in January — the highest monthly level since 2014 and the deepest discounting environment since the post–Global Financial Crisis period. Average discounts hovered around 10.7%, with Class C properties showing the highest share of concessions. Efficiency units have been particularly soft, with nearly one in five offering incentives. This is what a supply-heavy market looks like after several years of aggressive new deliveries, particularly across the Sun Belt and Mountain West.
Operators are competing for qualified residents, and concessions remain the primary tool to maintain occupancy and traffic. At the same time, however, the pace of rent declines appears to be moderating. RealPage reported that January posted the first monthly rent increase in seven months, albeit modest at 0.2%. Zumper’s February national rent report also showed annual declines slowing, with one-bedroom rents down 1.7% year-over-year and two-bedroom rents down 1.4%. While still negative, the magnitude of the pullback is easing.
Importantly, this remains a highly bifurcated market. Supply-constrained metros such as San Francisco have already seen rent growth reaccelerate sharply, driven by job growth and limited new development. In contrast, markets like Nashville and Memphis — where thousands of units were delivered over the past year — continue to experience elevated vacancy and aggressive concessions. The common denominator remains supply.
The encouraging development is that new construction starts have slowed materially. As the pipeline tapers through 2026, excess inventory should gradually be absorbed. Historically, concessions tend to peak late in a supply cycle. They rise as operators fight for occupancy, then slowly burn off as deliveries decline and demand catches up. That process rarely happens quickly, but it does happen.
We are not forecasting a sudden surge in rent growth. However, the data increasingly suggests the market is shifting from contraction toward stabilization. In cycles like this, improvement is gradual and uneven. Concessions fade before rents meaningfully accelerate, and fundamentals strengthen before headlines turn positive.
For disciplined operators and long-term investors, these transition periods often matter most. Stabilization is the first step toward recovery, and the groundwork for the next phase of the cycle is typically laid while conditions still feel uncertain.
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