Apartment demand is losing steam in some of the country’s biggest cities as the job market cools.
Executives at Essex Property Trust and Equity Residential — two publicly traded landlords with significant exposure to apartments in coastal cities — warned that demand flattened in the second half of 2025 as slower hiring and layoffs weighed on markets from Seattle to Washington, D.C.
Apartment owners reported that slower hiring is colliding with elevated new supply and heavier use of concessions to pressure rent growth, particularly in job-sensitive markets. According to CoStar's Apartments.com, rent growth turned positive on a monthly basis in January, but annual growth remains subdued in the West and South, where elevated supply continues to weigh on pricing.
"Heightened policy and geopolitical uncertainty took a toll on consumer and employer confidence causing an abrupt slowdown in job and rent growth in the second and third quarters,” Mark Parrell, chief executive officer of Equity Residential, told investors on a call this past week to discuss its fourth-quarter earnings.
That uncertainty has begun to show up in the labor data, particularly visible in markets where the federal government is a major employer. Federal government employment declined by 34,000 in January and is down 327,000, or 10.9%, from its October 2024 peak, according to the Bureau of Labor Statistics, as workers who accepted deferred resignation offers rolled off payrolls.
Landlords responded by leaning more heavily on concessions, such as free-rent incentives and other rent discounts, in weaker markets, though some have started pulling them back as occupancy improves.
"The impact seems to be fairly isolated," said Jay Parsons, a rental housing economist at Jay Parsons Research, pointing to pronounced slowing in job‑sensitive markets.
“A lot of the rent growth weakness has been traced not to the job market, but really to high supply in most of the country.”
Camden Property Trust said rents on new leases turned negative late last year even as renewal rent continued to post gains, a dynamic executives attributed to heavier use of concessions in high-supply Sun Belt markets rather than a deterioration in underlying demand.
West Coast apartment demand slides
Job-sensitive markets like Seattle have begun to show cracks, with landlords reporting weaker rent growth and leasing activity late last year.
"In Seattle, I have to acknowledge that in the fourth quarter, it was soft,” Angela Kleiman, president and chief executive officer of Essex Property Trust, told investors this past week on the company's fourth quarter earnings call. “It did not achieve the expectations that we had planned in terms of the rent growth and the lease numbers. We had several corporate announcements in terms of layoffs.”
The shortfall highlights how even modest job losses can weigh on rent growth in a market closely tied to the tech sector. An influx of new apartment supply completed over the past few years has further limited the pricing power.
“Seattle … has had a pretty good amount of supply in this cycle, and that’s contributed to the challenges there for operators,” Parsons said.
Data from Apartments.com found that apartment construction in the Seattle region peaked in 2024 and is set to fall sharply through 2026. A slowdown is expected to bring vacancies below 7% by the end of that time.
Landlords pointed to other job‑sensitive markets, including Los Angeles, as also struggling to gain pricing traction.
“The issues in L.A. … include just challenging job growth. The entertainment industry … has just created a little bit of malaise in Los Angeles on the employment side,” said Parrell.
That weakness has been compounded by an entertainment industry that has yet to fully recover, with many production jobs shifting to low-cost markets, according to Parsons.
The comments underscore Los Angeles’ uneven economic recovery since the pandemic, leaving the rental market more exposed to employment slowdowns. Data from Apartments.com shows rent growth in the West is down roughly 1.5% year over year.
San Francisco bucks the trend
Landlords say San Francisco has benefited from stronger job growth tied to artificial intelligence and venture-backed firms as well as a lack of new supply.
“In many of our coastal markets, we saw stronger‑than‑expected rental growth through the first half of the year, followed by a deceleration in revenue momentum through the latter part of the year across all of our markets, except San Francisco and New York — notable bright spots that we expect to continue to deliver strong results in 2026,” Parrell said.
Data from Apartments.com shows that San Francisco led the nation with a 1.07% monthly increase, followed by San Jose, California, at 0.71%.
That performance contrasts to other West Coast cities, where weaker job growth and new supply have more heavily put a damper on rent momentum.
“Northern California outperformed expectations as a result of expansion in the technology sector, favorable migration trends and limited housing supply,” Kleiman said.