Our Backyard
The apartment recovery in our markets is real, but it is hiding in a line the headline rent number leaves out. Demand has come back. Rents, on paper, have not. Both are true at once, and the reason is the concession: the weeks of free rent or move-in credit a landlord uses to fill a unit, which quietly cuts the rent actually collected (the effective rent) below the number on the sign (the asking rent).
Start with Las Vegas. Metro apartment vacancy ran 9.4% in 2025, up 130 basis points on the year as the last of a three-year delivery wave leased up, and Northmarq expects it to ease only modestly to about 9.0% by the end of 2026. Asking rent sat near $1,465 a unit in the first quarter, per Colliers, and Northmarq forecasts it finishing the year around $1,500. Those numbers look flat. The concession says the market is tighter than flat rent implies: as of February, roughly 51.7% of valley listings carried an incentive per Zillow, and eight weeks free on a twelve-month lease works out to about a 15% discount on effective rent even though the advertised figure never moves. When landlords stop giving away two months, effective rent catches up to asking, and it does so without a single sign changing. That is the trade we are underwriting.
Phoenix shows the same shape with harder edges. Vacancy was 11.3% in the second quarter, down 40 basis points from 11.7% a year earlier, and asking rent of $1,536 a unit was still down 2.17% year over year, per Kidder Mathews. But the supply side has broken in the owner's favor: absorption ran 9,414 units in the first half against just 6,355 units delivered, and the pipeline under construction fell about 35% to 15,974 units, down from 24,746 a year earlier. Demand is outrunning new supply by roughly half again. The face rent is negative because the market is still clearing old lease-up through concessions, not because tenants stopped showing up.
The investment read is the same in both cities. The bottom in Southwest apartments arrived first as a shrinking concession, not as a rising rent print. Pricing has started to reflect it: Las Vegas apartments traded at a median $227,500 a unit in 2025, up 7% on the year, at cap rates in the low-5% range, per Northmarq. Underwrite the concession burn-off, not the asking-rent headline, because effective rent is where the next two years of net operating income actually live.
Asset Classes
Zoom out and the national apartment market is doing what ours are doing, a quarter or two ahead. Renters absorbed 187,000 units in the second quarter, an unusually strong result for the season, and national occupancy climbed to 95.5%, per RealPage data reported by CRE Daily. Demand is not the problem anymore.
Supply is finally cooperating. Deliveries over the year ending in the second quarter ran about 340,200 units, the first time in three years that annual completions fell below the decade average, and down sharply from the 2024 peak near 588,000 units. The wave that pushed vacancy up across the Sun Belt is draining.
And yet effective rent nationally was still down 0.2% from a year earlier. Full occupancy sitting next to a negative rent number is not a demand problem. It is a market still working off lease-up concessions in the high-supply Sun Belt, Phoenix and Las Vegas among them, where the last units delivered are the last to burn off their free rent. The demand recovery is finished. The rent recovery is a timing question, and the timer is the concession. For owners with stabilized rent rolls in these markets, the reset of below-market, concession-heavy leases is where the value sits, and it will show up on the operating statement before it shows up in any asking-rent headline.
Sources
- Northmarq, Las Vegas multifamily market insights, 2026
- Kidder Mathews, Phoenix multifamily market report, Q2 2026
- Colliers and Zillow data via IRES, Las Vegas rental concessions, 2026
- CRE Daily, US apartment market Q2 2026 occupancy gains (RealPage data)
Frequently Asked Questions
- What is a rent concession and why does it matter for apartment values?
- A concession is free rent or a move-in credit a landlord gives to fill a unit. It lowers effective rent (what is actually collected) below asking rent (the advertised number). When concessions shrink, effective rent and net operating income rise even if the sign on the building never changes.
- Are Las Vegas apartment rents rising in 2026?
- Asking rent is roughly flat, near $1,465 a unit in Q1 2026 and forecast around $1,500 by year-end per Northmarq and Colliers. The real recovery is in effective rent, because about half of valley listings still carried concessions in early 2026, and those are starting to shrink.
- Is Phoenix apartment demand recovering?
- Yes. Kidder Mathews reports first-half 2026 absorption of 9,414 units against 6,355 delivered, and vacancy fell to 11.3% from 11.7% a year earlier. Asking rent was still down 2.17% year over year because the market is clearing older lease-up through concessions.
- If demand is strong, why are apartment rents still negative?
- Nationally, occupancy is back to 95.5% but effective rent is down 0.2% year over year per RealPage. High-supply Sun Belt markets like Phoenix and Las Vegas are still burning off lease-up concessions, so face rents lag the demand recovery by a few quarters.
- What should investors underwrite in Southwest apartments now?
- Underwrite the concession burn-off rather than the asking-rent headline. As incentives fade, effective rent catches up to asking and NOI inflects. Las Vegas apartments traded at a median $227,500 a unit in 2025, up 7%, at low-5% cap rates per Northmarq.