When Should an Apartment Community Offer a Concession?
Leasing slows.
A competitor starts offering six weeks free.
Exposure is building.
The immediate reaction?
We need a concession.
Maybe.
Concessions can be an incredibly effective revenue management tool.
They can create urgency, help overcome short-term exposure, support a lease-up, move difficult inventory and help a property compete when market conditions change.
But a concession should have a purpose.
Too often, concessions are introduced because leasing slowed, a competitor launched one, or the market simply seems to expect them.
Then weeks or months later, the concession is still there.
At The Revenue Method®, we believe the better question isn't:
Should we offer a concession?
It's:
What problem are we trying to solve, and is a concession the right tool to solve it?
Because giving away revenue is easy.
Knowing when, where and how much to give away requires strategy.
Start With the Problem, Not the Special
Before introducing a concession, diagnose what's actually happening.
Is traffic down?
Is traffic healthy but conversion weak?
Is exposure concentrated in one floor plan?
Are units sitting vacant too long?
Is the entire market using concessions?
Did a large amount of new supply enter the submarket?
Is the property in lease-up?
Are units not ready to show?
Is the leasing team struggling to convert?
Are cancellations increasing?
Those are very different problems.
And they don't all require the same solution.
If traffic is weak because prospects aren't finding the property, a concession may not solve the visibility problem.
If traffic is strong but conversion is weak because units aren't ready to show, six weeks free doesn't make the apartment ready.
If one floor plan has excessive exposure, putting a concession on the entire property may give away revenue on units that were already leasing perfectly well.
Diagnose first. Concede intentionally.
What Is a Multifamily Concession?
A concession is a financial incentive offered to encourage a prospect or resident to lease or renew.
Common examples include:
One month free
Six or eight weeks free
A fixed dollar amount off
Reduced or waived fees
A move-in credit
A limited-time rent credit
A targeted renewal concession
Concessions can be structured in many ways.
The structure matters.
So does the reason behind it.
Concessions Should Influence Behavior
A concession is most useful when it motivates someone to do something they might not otherwise do.
Lease sooner.
Choose a particular unit.
Select a certain floor plan.
Move in by a specific date.
Sign during a lease-up.
Renew rather than move.
Take inventory with higher exposure.
That's the strategic purpose.
If the renter would have leased the exact same apartment on the exact same date without the concession, then we may have simply given away revenue.
Of course, we can't know that with certainty for every renter.
But we can evaluate whether the concession is actually changing leasing behavior.
A concession should create an outcome, not just create a discount.
Don't Put a Property-Wide Concession on a Floor Plan Problem
This is one of the first things I would evaluate.
Suppose the property has strong demand for studios and one-bedrooms, but two-bedroom exposure is building.
Does the entire property need six weeks free?
Probably not.
A targeted concession on the struggling inventory may be more appropriate.
The same principle can apply even deeper.
Maybe one floor plan is the problem.
Maybe it's a specific building.
Maybe it's a group of units with less desirable locations.
Maybe it's inventory with near-term availability.
Revenue strategy should get as specific as the technology and operating environment reasonably allow.
Don't give away revenue on the inventory that doesn't need help.
Look at Traffic and Conversion Before You Add a Concession
Traffic and conversion are two of the most important clues.
If traffic is down significantly, the property may have a demand or promotion problem.
A concession might help generate interest.
But before assuming that, ask:
Are prospects seeing the offer?
Is marketing effective?
Are listings competitive?
Has search visibility changed?
Has the market slowed?
Did new supply enter the area?
Now consider the opposite.
Traffic is strong, but conversion is weak.
That's a different diagnosis.
Maybe price is the issue.
Maybe the product is.
Maybe the team isn't following up.
Maybe prospects aren't being quoted correctly.
Maybe units aren't ready.
Maybe reviews are hurting conversion.
Maybe there is an application or process issue.
This is where our Product, People, Promotion and Price, with Process woven throughout framework becomes useful.
Before giving away rent, determine which lever actually needs attention.
Competitive Concessions Matter, But Don't Automatically Copy Them
If every comparable property in the submarket begins offering concessions, you need to pay attention.
But that doesn't automatically mean you should match them.
A competitor offering eight weeks free may have:
More exposure
A different occupancy target
New construction inventory
A lease-up objective
Different ownership expectations
A particular floor plan problem
A different business plan
Their concession tells you something about the market.
It doesn't tell you what your strategy should be.
Don't let your competitor's problem become your pricing strategy.
The better question is:
How is their concession affecting our performance?
Are we losing prospects because of it?
Are our tours declining?
Are prospects specifically mentioning the offer?
Has our conversion changed?
Are we still leasing at an acceptable pace without matching it?
If your property continues outperforming while competitors are giving away eight weeks free, matching them simply because “everyone else is doing it” may be an expensive decision.
Effective Rent Matters More Than the Headline Concession
A concession should always be translated into its economic impact.
Suppose an apartment rents for $2,000 per month.
Six weeks free sounds like a marketing offer.
But economically, it represents a meaningful reduction in revenue.
That's why Revenue Managers and Revenue Advisors should evaluate effective rent, not simply face rent.
Two properties may both advertise $2,000.
One offers no concession.
The other offers eight weeks free.
Those aren't economically equivalent offers.
And if we're comparing our pricing with competitors without accounting for concessions, we may think we're positioned similarly when we're not.
Concession and Base Rent Are Different Levers
There can be strategic reasons to use a concession rather than permanently lowering the asking rent.
A temporary concession can address a specific period of exposure while preserving the underlying rent level.
That can be particularly useful when the issue is expected to be temporary.
But that doesn't automatically make a concession the better option.
The team should evaluate:
How long the concession is likely to be needed
The effective rent
Market conditions
Future renewal implications
How the concession is recognized financially
How prospects perceive the offer
Whether the base rent is actually sustainable
If the property has been offering a large concession for months with no sign of removing it, it may be time to ask whether we're still dealing with a temporary incentive or whether the market is telling us something about the underlying rent.
Concessions Should Have an Exit Strategy
This is one of the most important parts of concession strategy.
When you introduce a concession, decide what would cause you to reduce or remove it.
Maybe the trigger is:
Exposure falls below a certain level
Leasing velocity improves
A particular group of units leases
The property reaches an occupancy or leased target
A lease-up reaches a milestone
Competitive conditions change
A specific timeframe expires
Without an exit strategy, temporary concessions have a tendency to become permanent.
And once the market becomes accustomed to a concession, removing it can become more difficult.
If you know why you introduced it, you should also know what would make you take it away.
Don't Set It and Forget It
Concessions should be reviewed just like pricing.
Did the concession increase traffic?
Did conversion improve?
Did leasing velocity change?
Which floor plans benefited?
Are prospects responding to it?
Are we giving it away on units that would have leased anyway?
Has exposure improved enough to reduce it?
Did competitors change their offers?
A concession isn't successful because it generated leases.
The question is whether it generated enough incremental performance to justify the revenue we gave away.
Watch the Fine Print
A six-week concession can behave very differently depending on how it is structured.
Is it available on every unit?
Only certain floor plans?
Only vacant units?
Only immediate move-ins?
Does the resident need to apply or move in by a specific date?
Is it applied upfront? Off first month? Or second month?
Prorated?
Spread across the lease?
Does the resident lose the concession if they don't fulfill the lease?
Those details matter financially and operationally.
They also matter to the leasing team.
If the onsite team doesn't clearly understand the offer, prospects may receive inconsistent information.
Make Sure the Leasing Team Can Explain the Offer
A complicated concession that nobody can explain isn't much of a sales tool.
Leasing teams should understand:
Which units qualify
Which lease terms qualify
Move-in requirements
Expiration dates
How the concession is applied
What the effective value is
How to communicate it accurately
Marketing, revenue management and operations should all be working from the same rules.
Otherwise, a strategy designed to increase conversion can create confusion instead.
Be Careful About Stacking Concessions
This is another area where revenue can quietly leak.
A property may have an advertised concession.
Then the onsite team adds another incentive.
Then an application fee is waived.
Then another exception is approved to close the deal.
Individually, each decision may seem small.
Together, the effective discount can become much larger than anyone intended.
Revenue strategy should consider the total value being given away, not just the headline special.
If multiple incentives are allowed, there should be clear rules around whether they can be combined.
Concession Guardrails Matter
Just like renewal negotiations, concession flexibility should have structure.
Who can approve a concession?
Can onsite teams modify it?
Can additional incentives be added?
Under what circumstances?
How are exceptions documented?
Are similar situations being treated consistently?
Without guardrails, one prospect may receive a very different economic offer from another simply because they negotiated harder or happened to speak with a different person.
That creates revenue inconsistency and can also create compliance risk.
Concession policies and exceptions should be based on objective, consistently applied business criteria and reviewed with the organization's legal or compliance team as appropriate.
Structure protects both the revenue strategy and consistency of execution.
Fair Housing Matters
Any concession program should be structured and administered consistently.
Eligibility requirements should be clearly defined.
Teams should understand who qualifies and under what circumstances.
Exceptions should follow established approval processes and be documented.
This is not an area where “make the deal however you need to” is a good operating strategy.
Organizations should work with their legal and compliance teams to ensure concession policies and practices comply with applicable Fair Housing and other federal, state and local requirements.
Lease-Ups Are Different
Concessions can play a particularly important role during lease-up.
The objective may be to generate velocity, establish occupancy and compete against other new supply.
In that environment, the question may not be whether to offer a concession at all.
It may be:
How much concession is necessary to achieve the absorption objective without giving away more than we need to?
Lease-up concessions should still be evaluated by:
Floor plan
Exposure
Leasing velocity
Move-in timing
Competitive supply
Pro forma
Absorption goals
And they should still have an exit strategy.
The fact that a property is in lease-up doesn't mean every unit needs the same deal for the entire stabilization period.
Concessions Can Be Used to Influence Move-In Timing
Sometimes the problem isn't simply whether the unit leases.
It's when it leases.
A property may have significant immediate availability but a stronger future leased position.
In that situation, a concession tied to an earlier move-in date may be more valuable than a broad concession available regardless of timing.
Now the incentive is solving a specific problem:
Near-term exposure.
That's very different from simply putting “six weeks free” on the website.
Renewal Concessions Can Be Strategic Too
Concessions aren't only a new lease tool.
As we discussed in renewal strategy, a targeted renewal concession may sometimes help close the gap between a resident's current rent and new lease pricing while reducing turnover risk.
This can be particularly relevant when the property or nearby competitors are offering aggressive incentives to new residents.
If we're asking an existing resident to accept a significant increase while someone moving in down the street receives eight weeks free, that competitive incentive may influence the resident's decision.
The economics of retention should be compared with the economics of replacement.
Again:
The concession should have a purpose.
How The Revenue Method® Approaches Concessions
At The Revenue Method®, we don't look at concessions separately from the rest of the revenue strategy.
Our Revenue Advisors evaluate concessions alongside:
Pricing
Effective rent
Traffic
Conversion
Exposure
Leasing velocity
Floor plan performance
Competitive conditions
Renewals
Lease expirations
Operational performance
Business plan objectives
The question isn't simply:
What concession should we offer?
It's:
What are we trying to accomplish, and what is the least amount of revenue we need to give away to accomplish it?
Sometimes the answer is a concession.
Sometimes it's a targeted concession.
Sometimes it's a pricing adjustment.
Sometimes it's an operational change.
And sometimes the right answer is:
We don't need to offer anything.
The Bottom Line
Concessions are a tool.
They're not a strategy by themselves.
Before adding one, understand the problem.
Is it traffic?
Conversion?
Exposure?
A particular floor plan?
Move-in timing?
Competitive pressure?
Lease-up velocity?
Retention?
Then decide whether a concession is the right lever.
If it is:
Make it intentional.
Target it where possible.
Understand the effective rent.
Give the leasing team clear rules.
Measure whether it's working.
And know what will cause you to remove it.
Because the goal isn't to offer the biggest special in the market.
It's to achieve the desired result while protecting as much revenue as possible.
Before you add a concession, know what problem you're trying to solve.
Frequently Asked Questions
When should an apartment community offer a concession?
A concession may be appropriate when it helps address a specific revenue or leasing objective, such as excess exposure, slower leasing velocity, competitive pressure, lease-up absorption, move-in timing or a particular floor plan challenge. The reason for the concession should be clearly identified before it is introduced.
Should an apartment community match a competitor's concession?
Not automatically. Competitors may have different exposure, occupancy goals, business plans or lease-up objectives. Operators should evaluate whether competitive concessions are actually affecting their own traffic, conversion and leasing velocity before responding.
What is effective rent?
Effective rent reflects the economic value of rent after applicable concessions or incentives are considered. It can provide a more accurate comparison between competing offers than asking rent alone.
Is it better to lower rent or offer a concession?
It depends on the property's objectives, market conditions and expected duration of the pricing pressure. A temporary concession may help address short-term exposure while maintaining the underlying rent level, but persistent concessions may indicate that the base rent or broader strategy needs reevaluation.
Should concessions be offered on every apartment?
Not necessarily. If exposure is concentrated in particular floor plans, units or move-in periods, targeted concessions may protect revenue on inventory that is already performing well.
How do you know whether a concession is working?
Evaluate changes in traffic, conversion, leasing velocity, exposure and effective rent after the concession is introduced. The goal is to determine whether the incremental leasing performance justifies the revenue being given away.
Should apartment concessions have an end date?
Concessions should have clearly defined eligibility requirements and an exit strategy. Operators should know what performance change, leasing milestone, exposure level or timeframe would cause the incentive to be reduced or removed.
Can apartment concessions create Fair Housing risk?
Inconsistent concession practices can create compliance concerns. Eligibility, exceptions and approval processes should be based on objective, consistently applied criteria. Organizations should consult their legal or compliance professionals regarding applicable Fair Housing and other requirements.
Can concessions be used for lease renewals?
Yes. Targeted renewal concessions may sometimes help retain residents, particularly when closing a gap between existing rent and current new lease pricing or when competing properties are offering significant move-in incentives.
Should multiple apartment concessions be stacked?
Organizations should establish clear rules about whether incentives can be combined. Stacking multiple concessions without evaluating their total economic value can result in a much larger discount than intended.
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