Rent Concessions Surge Amid BTR Boom

The build-to-rent (BTR) market is gaining momentum in 2025, with modest rent growth and increased operating expenses. Despite regional variations, strong demand from diverse demographics is driving robust construction and high completions, particularly in Texas and Phoenix, while national apartment rents are showing signs of recovery amid high supply in certain markets.

John Burns Research and Consulting's first nationwide build-to-rent (BTR) survey reveals that BTR rents grew modestly by 1.3% year-over-year in Q1 2025, while operating expenses increased by 3.2%, with significant regional variations showing the Midwest leading in rent growth while the Southwest experienced declines. The survey indicates that BTR operators are offering increased concessions of up to 6 weeks free rent to attract tenants amid growing competition from new rental housing supply.

Single-family build-to-rent (BTR) construction maintained strong momentum in Q1 2025, with starts holding steady at 84,000 units annualized and BTR accounting for 8.4% of all single-family housing starts, as younger generations increasingly favor renting over purchasing starter homes.

The build-to-rent (BTR) market is experiencing positive momentum heading into 2025, with expected improvements in capital markets and increasing demand across multiple demographics. Key trends shaping the sector include a shift toward townhome and attached products for better density and affordability, along with growing adoption of technology and AI for property management, while the market is increasingly being dominated by sophisticated institutional operators rather than smaller players.

Build-to-rent construction remains robust through 2024-2025, making up 6-7% of total rental deliveries despite being at peak supply levels. Industry experts believe there is still significant room for growth in this sector, with investors gaining better understanding of BTR fundamentals while experimenting with different property features and amenities to appeal to various renter segments.

Build-to-rent (BTR) housing sector reached historic highs in 2024 with 39,000 completed rental homes, representing a 15.5% increase from the previous year, as developers responded to growing demand from various demographics including millennials, remote workers, and retirees. Texas led state completions with nearly 7,000 units, while Phoenix topped metro areas with 4,460 new units, as the BTR market continued expanding beyond its traditional Southwestern strongholds into regions like Georgia, the Carolinas, and Florida.

According to the latest Yardi Matrix National Multifamily Report, U.S. multifamily asking rents showed positive momentum in May 2025, increasing by $6 to reach $1,761, while year-over-year rent growth remained stable at 1% despite economic uncertainties. The national occupancy rate experienced a slight decline to 94.4% in April, though strong absorption was observed in some high-supply markets, with Northeast and Midwest markets leading rent growth while Sun Belt markets saw some declines.

Rent growth has been stagnant or declining in many markets due to a surge in multifamily housing supply, particularly in popular Sunbelt regions, though some Northeast and Midwest markets are still seeing modest increases. While forecasts suggest potential rent growth of 2.2-2.3% nationally in the coming year, market dynamics indicate continued softness through 2025 before possibly rebounding in 2026 as new construction slows and supply gets absorbed.

Apartment vacancies are decreasing while demand for rentals is increasing, driven in part by high home purchase costs, which is expected to lead to rising rental prices in the near future.

According to Redfin's latest report, only 49% of newly constructed apartments were rented within three months, while rental vacancy rates climbed to 8.2% in Q1 2025. This oversupply has shifted market dynamics in favor of renters, who can now negotiate better terms and lower rents, though the trend may reverse as multifamily construction permits have dropped to pre-pandemic levels.