Your Rent Roll Is Lying to You
The lease can preserve the headline rent long after the economics have softened. Free months and other incentives reduce actual collections, even when occupancy remains healthy, and the property appears to be leasing well.
In Columbus, this has become difficult to dismiss as a lease-up footnote. Recent Q3 2026 market reporting found that 70% of urban-core properties were offering discounts, up from 50% a year earlier. Roughly two months free has become common at new luxury properties. Across the market, average asking rent was $1,399 per unit while effective rent was $1,341.
Concessions help keep units filled, but they also lower effective rent. A model becomes too optimistic when it treats the advertised rate as current income and assumes the incentives will disappear within a year.
What the Lease Really Pays
Face rent is useful because it tells investors what sits in the lease. It does not always tell them what the tenant agreed to pay for the right to occupy the unit.
Consider a new lease at $2,000 per month with two months free over a 14-month term. The tenant pays $24,000 across the lease, which works out to about $1,714 per month. The unit may still appear at $2,000 on a rent roll even though the economic rent is roughly 14% lower.
Valuation starts with income, so any gap between face rent and effective rent can distort the model. If an investor capitalizes the face rent without adjusting for the concession needed to achieve it, the model can overstate both current NOI and the speed of future growth. Occupancy may look healthy at the same time, since the discount did exactly what it was supposed to do and filled the apartment.
A property can look stronger than it is. High face rents and healthy occupancy can coexist even as concessions quietly weaken actual pricing power.
Follow the Discount Through the Lease
A useful review begins by rebuilding revenue from the lease terms rather than taking scheduled rent at face value. The concession should be spread across the full lease term so the effective monthly rent reflects what the tenant is actually paying for the occupancy period.
Timing can otherwise distort the picture. A tenant who receives the first two months free may produce little cash at move-in and then appear to pay full rent for the rest of the lease. By month six, collections can look clean even though the economics were discounted when the lease was signed.
Recent leasing tells investors more than the building-wide average. If the newest leases require deeper incentives than older ones, the market may already be repricing the property faster than the rent roll shows. Renewals deserve the same attention. A resident who stays only after receiving another concession is giving the owner a very different signal from one who renews near the stated rent.
Repeated concessions reveal the market-clearing rent. If tenants need an incentive to sign or renew, the discount belongs in the property's current economics until leasing activity proves otherwise.
When Concessions Can Burn Off
Columbus also shows why investors should resist making the opposite mistake and treating today's discounts as permanent. Colliers' Q2 2026 report estimated that 7,803 units were still moving through lease-up, while construction starts were expected to fall nearly 49% from 2025. Supply pressure can ease as those units stabilize and fewer projects enter the pipeline.
The key is whether concession-supported occupancy can convert into full economic rent, and how quickly. Recent leases should provide the evidence. As new supply stabilizes and incentives begin to narrow, the model can start to reflect that improvement. Persistent concessions, however, make a year-one burn-off assumption look less like growth and more like wishful thinking.
Until leasing proves otherwise, effective rent is the safer starting point. Any recovery in concessions should appear as upside rather than revenue the deal already needs.
At Gilberti Group, we start with the income tenants are actually paying and let stronger leasing earn its way into the forecast. The investment case should still hold if concessions take longer to fade than expected.
To discuss how Gilberti Group evaluates multifamily revenue quality and lease economics, schedule a conversation with our team.
