MARKETING
• Require longer lease terms( 15 – 18 months) to improve net effective rent and reduce short-term exposure.
• Tier specials based on move-in timelines, look-and-lease incentives, or limited-time offers to encourage quicker decisions.
• Train leasing teams to confidently sell net effective rent, not just“ free rent,” helping prospects understand the true value of the offer.
PRICE WITH INTENTION
Before increasing concessions, it’ s critical to ensure base rents are priced accurately. In many cases, a one-month concession can be more costly than a modest rent adjustment.
For example, offering one month free on a $ 2,000 unit over a 12-month lease equates to about a $ 167 monthly reduction. By contrast, dropping rent by $ 50 results in significantly less revenue loss over the lease term— saving more than approximately $ 1,400 per lease. Understanding and managing net effective rent allows operators to make smarter decisions that balance competitiveness with financial discipline.
Lease structure matters here. The longer the lease term, the smaller the month-over-month impact of concessions, making longer terms a powerful tool in protecting revenue.
BALANCE NEW LEASE AND RENEWAL CONCESSIONS
As new lease concessions continue to escalate, shifting a portion of that budget toward renewals can be a highly effective strategy. Renewal concessions are typically far less expensive— often $ 250 up to one month free— compared to new lease incentives that can reach one to two months free or more.
Effective strategies include:
• Early-bird renewal incentives
• Tiered renewal offers
• Targeted renewal concessions for high-exposure unit types or residents at higher market rents
• Retention is often the most costeffective concession strategy available. Keeping a resident almost always costs less than replacing one.
GET CREATIVE WITH INCENTIVES
Not all incentives need to be rentbased. In many cases, creative, tangible incentives can drive leasing velocity while costing significantly less than traditional rent concessions. Consider reducing pricing on rentable items or offering a small monthly credit paired with a rent concession.
Think beyond“ one month free.” Tangible giveaways, services, or experiences are often less expensive and create stronger perceived value— resulting in more impact for less cost.
FOCUS ON WHAT REALLY MATTERS: ECONOMIC OCCUPANCY
Physical occupancy alone doesn’ t tell the full story. A property can appear“ full” while still underperforming if concessions are eroding revenue. Economic occupancy provides a clearer picture of what the asset is truly earning and should be a key metric when evaluating both concession strategy and overall performance.
CONTROL EXPENSES TO PROTECT NOI
When revenue is under pressure, disciplined expense management becomes essential. A detailed budget scrub can uncover meaningful opportunities to protect NOI without compromising the resident experience.
Income opportunities may include revisiting pricing for garages, carports, storage units, reserved parking, and other add-ons. Exceeding budgeted occupancy can also reduce reliance on concessions and lower turn costs. Additional opportunities may exist by reviewing employee concessions and ensuring teams are properly trained to charge allowable damages versus normal wear and tear.
On the expense side, regularly rebidding vendor contracts, managing turn costs, reviewing paint and material usage, evaluating payroll structure, and reassessing marketing spend can yield significant savings. Software and AI tools should be evaluated for true return on investment, and insurance policies should be bid annually to ensure competitive pricing.
THE BOTTOM LINE
In today’ s market, profitability doesn’ t happen by accident. Sustainable success comes from pricing with intention, retaining residents, exceeding budgeted occupancy, and using concessions strategically— not reactively. When disciplined budget management is paired with a strong resident experience, concessions become a tool— not a liability— for maintaining competitiveness and longterm profitability.
Nicole Stemo a Regional Manager at Thompson Thrift. www. aamdhq. org TRENDS FEBRUARY 2026 | 29