Multifamily Market Pulse: Lease-Up Trends and NOI Pressure in 2026

TL;DR

• New supply in major US markets is keeping vacancy elevated, compressing rents in lease-up assets, and putting NOI targets under pressure across the sector
• Operators who maintain occupancy in this environment are doing so by expanding their approvable applicant pool, not by cutting rents
• Lease-up timelines are lengthening, concession packages are rising, and the average months-to-stabilization is up from pre-2022 norms
• Cosign gives operators a tool to approve more applicants safely, shortening lease-up timelines and protecting NOI without accepting additional default risk

What Is the State of the Multifamily Market in 2026?

The 2026 multifamily market is operating in the aftermath of a historic construction cycle. Units that were started during the low-interest-rate period of 2020 to 2022 have been delivering since 2023, adding significant supply to markets that were previously undersupplied.

The result: vacancy rates are elevated in most major metros, particularly in Sun Belt markets that saw the most construction activity. Effective rents are flat or declining in markets with heavy new supply. Lease-up assets are taking longer to stabilize than pro forma projections anticipated.

Which Markets Are Feeling the Most Pressure?

• Austin, TX: Among the highest new supply additions in the country. Effective rents declined year-over-year in 2024 and vacancy remains elevated
• Phoenix, AZ: Similar supply dynamics with ongoing lease-up pressure in suburban corridors
• Atlanta, GA: New deliveries concentrated in Midtown and suburban growth markets creating competitive lease-up environments
• Denver, CO: Supply-side pressure concentrated in specific submarkets with high new delivery activity
• Nashville, TN: Absorption slower than anticipated given the volume of new units delivered since 2023

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How Are Lease-Up Timelines Changing?

Pre-pandemic, a well-located Class A asset could typically achieve stabilization (93-95% occupancy) within 12 to 18 months of opening. In high-supply markets in 2024 and 2025, lease-up timelines have stretched to 18 to 30 months in many cases.

Every additional month of lease-up is a month of operating below stabilized NOI. On a 300-unit asset with $1,800/month average rent, an extra six months at 80% occupancy instead of 95% represents approximately $1.6 million in foregone revenue.

What Are Operators Doing to Protect NOI?

• Concession packages: One to two months free rent as lease-up incentives, which improves absorption but compresses effective rent
• Pricing adjustments: Short-term rent reductions to stay competitive with neighboring assets in lease-up
• Expanded approval criteria: Reviewing applicants who would previously have been declined, accepting larger deposits as compensating factors
• Guarantor programs: Adding institutional lease guarantors like Cosign to approve more applicants without accepting additional default risk

Why Is Expanding Approval Criteria Risky Without the Right Tools?

Expanding approval criteria without a backing guarantee means taking on more default risk. If an operator lowers their income threshold from 3x to 2.5x rent without a guarantor, they are approving applicants they previously declined for good reason, with no additional protection against the defaults that may follow.

This is why operators who maintain both occupancy and NOI performance in this environment are typically using guarantor programs rather than lowering standards. The approval expansion is backed. The risk is absorbed by someone other than the operator.

How Cosign Fits Into a 2025 Leasing Strategy

Cosign provides the tool that lets operators expand their approvable pool without expanding their risk exposure. Submit borderline applicants to Cosign. If Cosign's underwriting approves them, the lease is co-signed and the default risk transfers. If Cosign declines, the operator knows the applicant is genuinely high-risk.

In a lease-up context, Cosign shortens the time to stabilization by converting borderline applications into leases. In a stabilized portfolio, it reduces vacancy and improves revenue. The underlying mechanism is the same in both cases: more approvals, same or lower default exposure.

Industry Data

NMHC's quarterly market conditions survey tracks absorption, vacancy, and operator sentiment. CoStar Group publishes quarterly supply and demand data by metro and submarket. RealPage Analytics tracks lease-up performance and effective rent trends. These sources collectively paint a consistent picture of sustained supply-side pressure through at least the first half of 2025.

Prepare Your Portfolio for a Competitive Market

If your portfolio is in a high-supply market and you are watching your lease-up timeline extend, the question is not whether to expand your approvable pool but how to do it without adding default risk. Cosign is the answer to that question. Learn more at rentwithcosign.com.

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Frequently Asked Questions

What is driving high vacancy rates in multifamily markets in 2025?

The primary driver is new supply. Units started during the low-rate environment of 2020 to 2022 have been delivering since 2023, adding inventory to markets that were previously undersupplied. Demand has not kept pace with deliveries in the highest-supply markets, resulting in elevated vacancy and downward rent pressure.

How long are lease-up timelines taking in high-supply markets?

In markets with heavy new supply, lease-up timelines that previously ran 12 to 18 months are now extending to 18 to 30 months in many cases. This directly impacts NOI for new assets and increases the cost basis of stabilization.

How can operators shorten lease-up timelines without cutting rent?

The most effective approach is expanding the approvable applicant pool while keeping default risk flat. Operators using institutional lease guarantors like Cosign can approve a larger share of applications without accepting the default risk that typically comes with looser screening criteria. More approvals, same protection.

What is the NOI impact of extended lease-up timelines?

On a 300-unit asset at $1,800/month average rent, operating at 80% occupancy instead of 95% for six additional months costs approximately $1.6 million in foregone gross revenue. The NOI impact depends on the fixed cost base but is typically significant enough to affect returns and debt service coverage.

How does Cosign help in a lease-up environment?

Cosign underwrites and co-signs leases for borderline applicants, converting applications that would otherwise be declined into signed leases. In a lease-up context, this accelerates absorption and shortens the timeline to stabilization without increasing the operator's default exposure.

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