1

Multifamily Economic and Market Commentary

OCTOBER 2023

Rising Number of Multifamily Properties Offering Concessions

Multifamily market fundamentals have softened in 2023 compared to the prior year, the result of mixed economic 

trends including slowing-but-still-positive job growth, elevated single-family housing prices keeping many renters in 

place, and continued favorable demographics. Rent growth was exceptional over the past two years, and, of course, 

unsustainable, thus 2023 has seen a substantial slowing of rent growth rates. There remains a robust pipeline of new 

apartment rental projects that are underway in the nation’s largest metros, and with recessionary concerns there has 

been a rise in the number of properties across the country offering concessions.

In the multifamily apartment rental market, concessions are incentives with an economic value for renters, such as 

periods of free rent, free utilities, or other amenities. And in a competitive market when property owners need to fill 

vacant units, concessions are one of the ways they attract tenants. As seen in the charts below, recent concessions data 

from RealPage show that the multifamily market has seen softening trends over the past year: There is a notably higher 

percentage of units offering concessions than a year ago – up from 5.2% of all units in August 2022 to 9.0% of all units 

in August 2023. However, the value of the concession being offered has slightly declined, from 7.7% of asking rent in 

August 2022 to 7.2% in August 2023, which is slightly less than one month’s free rent. It’s important to note that the 

overall level of concessions continues to be well above the low levels observed just before the pandemic. 

Source: RealPage

Supply of New Units Remains High

According to the Dodge Data & Analytics Supply Track construction pipeline data, the number of apartment units 

completed across the country may reach a record in 2023. According to Dodge, as of the middle of 2023, nearly 730,000 

units were underway with completion dates expected in 2023, though only 164,000 were completed year to date through 

April. That’s compared to full-year totals of 479,000 units in 2022 and 395,000 units in 2021. The overall pipeline 

underway is slightly lower than it was in the prior year: As of July 2023, 1,116,000 units were underway, compared to 

1,141,000 in July 2022. With supply chains operating more efficiently in 2023 than in 2022, substantially more units may 

be completed this year than last, which we believe might lead to about 500,000 units delivering this year. 

National % of multifamily units offering concessions Multifamily concession rate 

3%

5%

7%

9%

11%

13%

15%

17%

5.5%

6.0%

6.5%

7.0%

7.5%

8.0%

8.5%

9.0%
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Multifamily Economic and Market Commentary

Concessions Declining in Most Major Markets 

Source: RealPage

Multifamily monthly concession rate by market – select metros

As has been the case for several years, new apartment supply has been concentrated in the nation’s largest and rapidly 

growing metropolitan areas. New York City continues to be the most active metro in the country, with nearly 150,000 units 

either recently completed or underway, with Dallas next at 74,000 units. Houston and Atlanta are also each expecting at 

least 50,000 units will be completed this year. 

The robust supply in many of these markets, along with consumer skittishness over economic trends, appears to have 

impacted demand. As seen below, with the exceptions of New York and Chicago, all have seen the percentage of units 

offering concessions rise compared to the prior year. Atlanta, Dallas, and Phoenix have each seen increases of more than 

5%. It is noteworthy, however, that eight of the 12 markets shown below have seen concession values decline over the prior 

year, and that the largest increase, in Phoenix, was just 2.8%. We believe that these mixed trends suggest that demand for 

rental apartments has declined so quickly, especially over the past few months, that combined with competition from new 

units coming online, Class A unit property owners are instead dropping asking rents to lure in new tenants. 

Concession % of Asking Rent 

(Left Axis)

% of Units Offering Concessions 

(Right Axis)
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Multifamily Economic and Market Commentary

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

11.0%

A B C

Higher Class A Concessions Continue, More B and C Offering Concessions

During the current multi-year development cycle, multifamily builders have primarily been constructing more 

expensive, amenity-offering apartments, usually referred to as Class A units. As seen in the charts below, with 

increased competition among this class, property owners have had to offer a generally higher level of concession, as 

well as more properties having to offer them. The value of Class A concessions increased significantly at the beginning 

of the pandemic and has remained comparatively high, well above Class B and C units during this period. And over the 

past year, as demand has softened compared to the prior year, the value of concessions for Class A units has declined 

slightly, from 8.6% in August 2022 to 8.1% in August 2023, most likely due to the decrease in asking rents. But the 

percent of Class A units offering these concessions has risen more notably, from 6.7% a year ago to 9.5% as of August 

2023.

The softening demand for apartments over the past year is also observed in the rising percentage of units offering 

concessions in Class B and C units. As of August 2022, 4.8% of Class B units were offering concessions, while just 3.7% 

of Class C were. But both classes have seen noteworthy increases: As of August 2023, 8.4% Class B units were offering 

concessions, up 3.6% from the prior year, and 9.2% of Class C units were, up 5.5% from the prior year.

National monthly concession rates by class

Source: RealPage, Inc. 

Its is noteworthy, however, that the value of the concession being offered has not changed significantly among Class 

B and C units over the past year. Class B units have slightly decreased the value of the concessions being offered, 

from 6.8% a year ago to 6.5% in August 2023. However, the value of Class C concessions has risen slightly, increasing 

from 6.5% a year ago to 6.7% in August 2023.

The mixed signals across all three classes of properties indicate that overall demand has softened and that many 

property owners have decided to move quickly by dropping asking rents combined with offering a slightly lower 

concession as an offset in an attempt to bring in new tenants. 

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

A B C

Percent of units offering concessions by class
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Multifamily Economic and Market Commentary

Further Softening Expected to Lead to More Concessions and Stagnant Rent Growth

After exceptional rent growth rates in 2021 and 2022, it was generally expected that 2023 would see easing of 

multifamily rent growth and overall fundamentals, including vacancy rates. In general, that has been the case. 

Softening in demand during the first half of this year resulted in a below-average rent growth of just 1.0% for 

the nation, and a modest rise in vacancies. But some metros had notably weaker results, experiencing modest 

rent contractions, including Austin, Las Vegas, San Francisco, and Phoenix. 

Because of this fundamental demand softness, and our current expectation of a mild recession in the first half 

of 2024, a further rise in the number of units offering concessions may be on the horizon. It is noteworthy that 

amid significantly weaker conditions in 2023 compared to 2022 the value of concessions offered by property 

owners has been generally stable; instead, property owners have moved to offering lower asking rent levels. 

However, with a robust pipeline of supply expected over the next 18 months, we believe there will continue to 

be pressure on owners to offer more generous concessions along with lower rents. Combining that new 

competition with likely unemployment increases and a rental household formation slowdown would likely 

result in owners using a combination of both options to not only retain their current tenants but to also gain 

new ones. And that would still include all classes of units, including the more affordable Class B and C.

We believe the forecasted economic slowdown, combined with the robust supply of new apartment units that 

are underway, will likely add stress to the multifamily sector over the next 12 to 18 months. But we continue to 

believe that demand for multifamily rental housing will remain stable over the longer term due to home 

purchase affordability constraints and higher interest rates keeping many tenants from moving to 

homeownership. As a result, we believe that many renters-by-choice will stay in their units for slightly longer, 

especially if they are able to take advantage of lower rent levels and more generous concessions.
Multifamily Economic and Market Commentary

5

Tim Komosa

Economist - Senior Manager

Multifamily Economics and Research

October 2023

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