Concessions are incentives landlords offer to attract tenants — free rent months, gift cards, waived fees. The gap between asking and effective rent reflects how much concession is in the market.
In softer markets, landlords offer concessions to maintain occupancy. The effective rent (what tenants actually pay averaged across the lease term) is lower than the asking rent (the stated monthly amount).
For a $2,500 asking rent with one month free on a 12-month lease, effective rent is approximately $2,292 — roughly 8% below asking.
LA multifamily in Q1 2026: asking rent $2,652 per Yardi Matrix, effective rent $2,279 per Colliers — roughly a 14% concession gap. This is above long-term average but below the 2020 peak. Concessions are highest on newer Class A lease-up projects, lowest on stabilized mid-range inventory.
From the Sterman LA Multifamily Glossary — defined the way a broker with $1.41 billion across 254 closed transactions actually uses these terms.
Michael Sterman, Senior Managing Director Investments, Marcus & Millichap.
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