Apartment Demand Cools In Job-Sensitive Markets

Apartment demand is slowing in several major cities as labor market conditions weaken.
High new supply and increased concessions are putting pressure on rent growth.
Markets like Seattle and Los Angeles face particular challenges, while San Francisco outperforms due to tech job growth and limited supply.
Federal government job cuts and sector-specific slowdowns are further impacting demand in certain areas.

Key Takeaways

Job Market Impacts Leasing

Apartment demand has softened in major cities, CoStar reports. Leading landlords Essex Property Trust and Equity Residential cite weaker leasing in job-sensitive markets. Slower hiring, layoffs, and federal job cuts have reduced renter demand. The impact is most visible from Seattle to Washington, D.C.

Meanwhile, job markets in the West and South face employment slowdowns and a wave of new deliveries. As a result, property owners rely more heavily on rent concessions to attract tenants.

Supply and Concessions Pressure Rents

Property owners nationwide are dealing with subdued annual rent growth, particularly in areas with both elevated supply and hiring weakness. In some markets, free-rent incentives and other concessions have increased to counteract the softening demand, though landlords are starting to reduce these as occupancies improve modestly. This dynamic mirrors a broader national pattern in which rising deliveries have pushed operators to lean more heavily on concessions to protect occupancy, even as effective rents come under pressure.

Camden Property Trust reports negative rent growth on new leases in high-supply Sun Belt markets, attributing the trend more to concessions than a collapse in underlying demand. According to Apartments.com, rent growth was slightly positive on a monthly basis in January but remains tepid annually.

West Coast Markets Feel the Strain

Seattle has long relied on the tech sector, while Los Angeles depends heavily on entertainment. Both cities now report slower rent growth and weaker leasing activity. In Seattle, corporate layoffs and a wave of new supply have pressured operators. However, developers are pulling back on construction starts. Analysts expect vacancies to fall below 7% by 2026.

Meanwhile, Los Angeles continues to struggle as the entertainment industry recovers slowly. Studios have cut production, and some jobs have shifted to other markets. As a result, renter demand has softened across the metro. At the same time, elevated supply has capped pricing power. Across the West region, rents have declined 1.5% year over year.

San Francisco and New York Defy the Trend

San Francisco stands out, benefiting from tech expansion and venture-backed job creation alongside limited new inventory. Both San Francisco and New York posted stronger-than-expected rent growth through 2025 and are expected to maintain momentum. In January, San Francisco led the nation with a 1.07% monthly rent increase.

With migration trends and tech sector hiring supporting demand in Northern California, these bright spots are outperforming other West Coast cities where supply and job softness continue to weigh on apartment fundamentals.