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Rent Concessions Persist as New Supply Floods Key Markets

Rent Concessions Persist as New Supply Floods Key Markets

Nearly 17% of apartments are offering deals, with the deepest discounts concentrated in high-supply Sun Belt markets.

Nina Dale
May 01, 2026

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Good morning. Apartment operators are doubling down on concessions as elevated supply keeps pressure on rents. The result: more widespread discounts and fewer signs of a near-term pullback.

CRE Trivia 🧠

What skyscraper was so heavy it caused the bedrock beneath Midtown to visibly compress, and required engineers to redesign its foundation mid-construction?

(Answer at the bottom of the newsletter)

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Market Snapshot

S&P 500

GSPC

7,209.01

Pct Chg:
+1.02%

FTSE NAREIT

FNER

842.15

Pct Chg:
+1.61%

10Y Treasury

TNX

4.38%

Pct Chg:
-0.036

SOFR

30-DAY AVERAGE

3.65%

Pct Chg:
-0.00

*Data as of 4/30/2026 market close.

Discount Pressure

Rent Concessions Persist as New Supply Floods Key Markets

Rent discounts are sticking around, and in some markets, they’re becoming the norm rather than the exception.

Free rent returns: Concession usage across stabilized U.S. apartments rose to 16.9% in March 2026, up 0.2 percentage points MoM and 5.1 points YoY, marking the highest level since 2014. Average discounts held steady at 10.8%, equivalent to nearly six weeks of free rent on a 12-month lease.

Class divide in discounting: Workforce housing is feeling the most pressure. Class C properties led with 21.5% of units offering concessions, well above Class B (15.0%) and Class A (14.5%). Still, Class A saw the sharpest monthly uptick, suggesting even higher-end assets are leaning on incentives to maintain occupancy.

Regional pressure points: Supply-heavy regions continue to drive concession activity. The South (21.2%) and West (16.4%) posted the highest usage rates, while the Midwest (10.2%) and Northeast (12.6%) remained more restrained. The regional gap underscores how new deliveries are shaping landlord strategy.

Markets to watch: Austin, Denver, and San Antonio topped the list, with roughly one-third of units offering concessions. Texas metros dominated overall, joined by rising activity in Jacksonville and Tampa. Discount depth in leading markets ranged from 10% to 15%, with Austin and Denver hitting 14.8%.

➥ THE TAKEAWAY

Oversupply era: Concessions aren’t temporary. They’re a response to oversupply. Until construction slows, landlords will keep trading rent growth for occupancy.

✍️ Editor’s Picks

Free analysis: Maximize depreciation with the nation’s leading cost segregation firm, 25% less than competitors. Cost Segregation Guys completed 10,000 studies and $1B in depreciation last year. Get a free analysis today! (sponsored)
Compute crunch: Big Tech is doubling down on AI, committing a combined $680B to data centers and infrastructure as investors weigh strong growth against uncertain near-term returns.
Starwood freeze: Starwood halted redemptions for its $22B SREIT to preserve liquidity and avoid forced asset sales as rising interest rates fuel sustained investor withdrawal pressure.
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Wonder valley: Kevin O’Leary is backing a massive 40,000-acre Utah data center project that could rival global AI infrastructure, pending approvals, financing, and a hyperscale tenant.
Capital rebound: U.S. CRE investment rose 18% to $110.7B in Q1, signaling a continued recovery despite mixed pricing and higher cap rates.
Permits slump: U.S. CRE construction permits fell 16% in Q1 2026, dragged by a sharp multifamily decline while select markets like New York and North Carolina showed resilience.
Earnings resilience: Blackstone Mortgage Trust posted a Q1 loss but beat earnings expectations, signaling underlying strength despite loan impairments and market headwinds.

🏘️ MULTIFAMILY

Rent cooldown: U.S. apartment rents rose just 0.2% in April, extending modest gains but signaling a subdued spring leasing season as supply continues to weigh on pricing.
Rental squeeze: U.S. apartment competition eased slightly overall in early 2026, but cities like Chicago, Miami and San Francisco are tightening as supply shrinks and demand climbs.
Supply bet: Los Angeles developers are accelerating apartment construction, betting today’s projects will deliver into a future with tighter supply and less competition.

🏭 Industrial

Storage expansion: U.S. self-storage supply is set to grow by 55.4M square feet in 2026, led by Sun Belt markets as rising inventory begins to pressure rents in oversupplied areas.
Project blocked: Brookfield-backed Compass Datacenters abandoned a major Virginia project after court rulings, community opposition and tax incentive disputes halted development.
Pipeline power: DFW leads U.S. industrial real estate with the largest construction pipeline, strong deliveries and sales activity, and steady rent growth while vacancy stays near the national average.

🏬 RETAIL

Grocery grab: CBRE Investment Management and MCB Real Estate acquired a 1.1 MSF, seven-property grocery-anchored retail portfolio across five states, expanding their U.S. retail footprint.
Growth recipe: Brinker International is driving Chili’s U.S. expansion through restaurant redesigns and new locations fueled by strong sales momentum.
Split footing: U.S. retail fundamentals softened with negative absorption and slightly higher vacancy, but rent growth persists amid limited supply and uneven market performance.

🏢 OFFICE

Vacancy pause: U.S. office vacancy is expected to hold around 14% through 2026 before gradually declining, supported by stronger leasing activity and limited new supply.
AI boost: AI-driven leasing demand is lifting BXP’s office portfolio, boosting occupancy and activity in top-tier markets despite broader industry uncertainty.
Stake shift: Vornado Realty Trust is acquiring a 49% stake in Park Avenue Plaza from Zhang Xin, while Fisher Brothers retains majority ownership.
Space shed: Best Buy is marketing over 300,000 SF of its Minneapolis-area HQ as remote work keeps much of its campus underutilized.

🏨 HOSPITALITY

Casino debut: Resorts World has opened NYC’s first full-scale casino in Queens, drawing strong early crowds and positioning the site as a major mixed-use entertainment hub.
Strategic strain: Lodging Fund REIT III hired an adviser and is selling hotels as declining revenue, rising debt costs, and suspended distributions pressure its finances.
Booking blues: Airbnb hosts are seeing slower-than-expected World Cup bookings despite heavy investments, as travelers hold off and pricing expectations remain high.

📈 CHART OF THE DAY

Source: Ares

Fed rate moves are losing their grip on CRE, as pricing has largely reset and transaction activity is now driven more by long-term rate stability, lender activity, and buyer-seller alignment than by incremental changes in short-term interest rates.

CRE Trivia (Answer)🧠

The Citigroup Center (now 601 Lexington), which also famously had a structural flaw discovered after completion that could have caused it to collapse in high winds.

Rent Concessions Persist as New Supply Floods Key Markets

Nearly 17% of apartments are offering deals, with the deepest discounts concentrated in high-supply Sun Belt markets.

CRE Trivia 🧠