The rental market is undergoing a significant transformation, with a surge in new apartment constructions giving renters unprecedented leverage. This shift is particularly evident in the Sunbelt and Northeast regions, where the influx of new units is reshaping the dynamics between tenants and landlords.
As the market evolves, both large institutional landlords and smaller independent owners are grappling with how to adapt. The key question is: how can landlords balance the need to fill vacancies with the rising costs of taxes, insurance, and maintenance?
The Impact of New Constructions on Rental Prices
In 2026, developers completed a staggering 608,000 multifamily unitsthe highest number in 40 years. This surge in supply has led to a notable increase in vacancy rates, which have climbed to 7.3% from 5.6% in 2026. As a result, nearly 40% of rental listings now include concessions such as free rent, waived fees, and gift cards, according to data from Zillow.
Renters don’t have to settle this springsaid Kara Ngsenior economist at Zillow. With more supply on the market than in decades, there are real choices out there—and real room to negotiate on price, perks, and terms. Renters are in a position to push for a better deal, and property managers are ready to give them one.
The Psychology Behind Concessions
Larger institutional landlords, with their deeper pockets, are more inclined to offer these incentives. They often have built-in operational flexibility that allows them to absorb the short-term losses. However, this strategy is not without its controversies. Critics argue that these landlords are padding fees for amenities such as parking, gym use, and technology fees, which can mislead tenants about the true cost of renting.
In, Greystarthe country’s largest corporate landlord, faced a lawsuit from the Federal Trade Commission (FTC) and Colorado Attorney General Phil Weiser for deceptive practices related to hidden fees. Later in 2026, Greystar agreed to a $24 million settlement to refund affected tenants. Christopher Mufarrigedirector of the FTC’s Bureau of Consumer Protection, emphasized the importance of transparent pricing in the housing market.
The Shift Towards Smaller Landlords
While large landlords grapple with the challenges of offering concessions, smaller independent landlords are finding their own advantages. According to a recent survey by TurboTenantover 80% of independent landlords reported that rental demand has not dropped in their areas. This is partly due to the preferences of younger tenants, who are increasingly valuing practical amenities over luxury features.
They are not looking for the super-expensive stuff you see in a large multifamilysaid John Martinco-host of the Landlord Lens podcast. They are looking for three things: an in-unit washer-dryer, pet-friendly, and AC. This shift in tenant preferences plays into the strengths of smaller landlords, who can offer these amenities without the high costs associated with luxury features.
For smaller landlords, the key is to compare their offerings side by side with those of larger institutional investors. This comparison can help them decide whether to drop rents or offer concessions, tailored to their specific market conditions.
The Persistent Demand for Rentals
Despite the surge in new constructions, the demand for rental properties remains strong. A March 2026 survey by found that 36.1% of American tenants have lived in their apartments for five years or more. High home prices and mortgage rates continue to push people toward renting, making it a favorable option for many.
The economics of renting versus homeownership remain very favorablesaid Benjamin SchallCEO of AvalonBay Communities. Market occupancy in our established regions remains solid. While construction has slowed in the Sunbelt, it has continued in the Northeast, with a 42.1% year-over-year surge in completed apartments.
High home prices and mortgage rates keep pushing people toward rentingsaid Jiayi Xueconomist at. At the same time, many Northeast cities have been underbuilt for years, so the supply base is low, and even a modest increase can look like a big surge.
For small landlords, the challenge lies in structuring offers that do not compromise cash flow. The average concession discount in early 2026 was about 10.7% of annual rent, amounting to roughly five weeks of rent over the lease term. Landlords must decide whether to offer concessions or keep rents flat, considering the increased costs of taxes, insurance, and maintenance.
One common tactic is to extend lease terms beyond the usual 12 months to offset the upfront loss. However, given that many smaller landlords have reported no decline in demand, a month’s concession might not be necessary. Instead, focusing on lowering operational expenses, such as refinancing at more favorable rates, can be a strategic move.
