Pre-stabilized Properties Slow Multifamily Rent Growth

Pre-stabilized properties are holding back rent growth as new multifamily supply surges across high-construction markets.

June 27, 2025

Nina Dale

A surge of new but unleased multifamily units is slowing rent growth, despite steady vacancy rates among stabilized properties.
Year-over-year rent growth was only 0.9% in Q1 2025, well below pre-pandemic levels, due to high volumes of pre-stabilized units.
Regions with the most new supply—South Central, Mountain, and Southwest—are seeing negative rent growth. Other areas are faring better.

Key Takeaways

Two Vacancy Rates Tell Different Stories

CBRE reports that vacancy rates looked stable in 2024, but rent growth remained weak. One major reason is the flood of pre-stabilized properties—new apartments that are still leasing up.

Market data usually excludes these “pre-stabilized” buildings—those below 85% occupancy—from vacancy reports. In normal cycles, this omission doesn’t matter much. But today’s high volume of new construction is changing that.

Vacancy Rates With & Without Pre-Stabilized Properties, 2015-2019 vs. Q1 2025

Rent Growth Slows as Vacancy Rises

From 2015 to 2019, adding pre-stabilized units to vacancy data would have increased the rate by just 60 basis points. In Q1 2025, the difference jumps to 1.5 percentage points.

This increase puts pressure on rents. While demand remains strong, the extra supply keeps average rent growth low.

CBRE reports net absorption for 2024 at 545,000 units. If leasing activity in pre-stabilized properties were counted, the figure would climb to 655,000.

Rent Growth Varies by Region

Rent trends depend heavily on how much new supply each region has.

Negative Rent Growth: South Central, Mountain, and Southwest markets have the most new units still leasing. These areas also report the highest total vacancy.
Positive Rent Growth: Midwest, Northeast, and Pacific regions show more balance. With fewer unleased new units, these markets post modest rent increases.

Absorption With & Without Pre-Stabilized Properties

Oakland’s Recovery Offers a Preview

Oakland provides a real-world example of how lease-ups affect rent growth.

In 2021, many new buildings in the city sat empty. When pre-stabilized properties were included, Oakland’s total vacancy rate nearly doubled. Rents fell by 7.7% year-over-year.

As those units leased up, vacancy dropped and rent growth returned. By Q1 2025, rents rose 0.3%, even though stabilized vacancy held steady at 4.8%.

Oakland Total Vacancy Rate With & Without Pre-Stabilized Properties

What to Expect Moving Forward

Markets with heavy new construction may take time to recover. But as fewer buildings open and more units lease up, the vacancy gap will shrink.

Most oversupplied markets should see rent growth turn positive by late 2025.

To gauge performance accurately, investors and developers must account for pre-stabilized supply. It plays a major role in rent trends and market health.