New Supply Still Commands a Premium in Today’s Apartment Market

New apartments are still commanding a rent premium over stabilized assets.

As of September, lease-up rents among institutional assets averaged $1,982 per month across more than 433,000 units working toward stabilization. That was a 6% premium over rates of $1,871 for stabilized properties, which shows new supply continues to differentiate itself even in a cycle with heavy deliveries.

The fact that rent-to-income ratios remain healthy at 22% and on-time rent payments have surpassed 95% since 2022 reinforces that this premium is not being driven by overextension but by renter willingness to pay for quality.

In the primary markets the story is consistent. Washington DC, Chicago, Los Angeles, Dallas, Houston and Atlanta all show new deliveries leasing above stabilized stock, often in the 20% to 30% range. These markets benefit from deep renter pools, strong job bases and demand for modern product.

Even in markets like Memphis and Detroit, the premium stands out sharply. In Memphis, lease-up rents are more than 80% higher than prices in stabilized stock, driven by riverfront locations, mixed‑use town centers and lifestyle branding that stabilized assets cannot match. In Detroit, new supply tied to downtown revitalization is achieving sizable premiums by combining modern finishes, amenity packages and proximity to jobs and culture. Together, these examples show that well-positioned projects can achieve rent growth even outside the traditional coastal and Sun Belt hubs, so long as they are timed and located correctly.

For operators, the implication is that competing with new deliveries requires more than price. Strong service, a seamless resident experience and a clear sense of community identity are what help properties stand out when renters are willing to pay up for new supply. For investors, the spread between lease-up and stabilized rents is one of the clearest signals of where capital can find durable returns.

Submarket dynamics show how premiums can widen well beyond the national average. In places like East Nashville, new supply is leasing at a significant markup because the submarket itself has become a lifestyle destination. Walkable streets, entertainment corridors, and a strong cultural identity create demand for modern product that stabilized stock cannot match. In Houston’s Greenway and Upper Kirby, the story is similar: renters are drawn to high-end finishes, proximity to employment centers and a concentration of dining and retail that makes the area feel like a self-contained hub. Central Tampa illustrates another theme, where skyline views and high rise living differentiate new supply from the garden-style and mid-rise stock that dominates the broader market.

Across these submarkets, the common threads are clear. Premiums are highest where new supply combines location advantages with design and amenity upgrades that align with renter preferences. Waterfront and lakefront settings add another layer of scarcity value, as seen in coastal and riverfront submarkets where views and outdoor access elevate pricing power. These environments show that renters are not just paying for newness, but for a package of lifestyle, convenience and identity that stabilized assets cannot easily replicate.

Of course, not every submarket tells the same story. In Brooklyn and Downtown San Francisco, stabilized rents actually exceed lease-up levels, reflecting affordability ceilings and competitive concessions. The contrast underscores that premiums are earned, not automatic, and that timing, positioning, and neighborhood context matter as much as the product itself.

The national premium may only be $111 a month, roughly 6%, but across hundreds of thousands of units it is a meaningful signal. In the primary markets, the premium is steady and supported by deep renter pools and strong job bases. In select submarkets, it stretches much higher when location, lifestyle and design converge. And in a few cases, it disappears altogether when affordability ceilings and concessions weigh on new supply. For developers, that means execution and site selection are everything. For operators, it means competing on service and resident experience. For investors, it means tracking the lease-up premium is one of the clearest ways to identify where pricing power is durable rather than cyclical.