Concessions

Glossary

Incentives like free rent or reduced deposits that help secure leases but lower effective rent and economic occupancy.

Definition

Concessions are incentives offered to prospective or current residents to encourage a lease signing or renewal. Common concessions include free rent periods, reduced deposits, rent discounts, credits, or similar incentives. They may help lease apartments faster, but they reduce the actual rent collected and can lower effective rent even when the advertised rent stays the same.

Example

A community with several vacant one-bedroom units offers one month free on a 12-month lease instead of lowering the listed monthly rent. Operations should track the concession so the team understands the unit’s true effective rent and its impact on revenue.

Why It Matters?

Concessions matter because they can improve leasing velocity and occupancy, especially during lease-up or softer demand periods. However, they also affect revenue performance, economic occupancy, budgeting, and pricing decisions, so leaders need clear reporting on when concessions are used and what they cost.

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