In a crowded multifamily market, on- and off-campus university housing in Phoenix is competing with a surplus of market-rate apartment offerings that lure students with discounts and concessions.

Multifamily developers in the metro area are offering free months of rent and other deals as the market chips away at its surplus of deliveries. Those deals are increasingly prompting students to opt out of traditional university housing.

There are some “incredible concessions and vacancies in multifamily” across the city, forcing university housing to compete with deals such as “four months of free rent, plus a $2K gift card, plus a free ski lift to Snowbird,” Justin Earl, chief development officer at Redstone Residential, said last month during Bisnow’s Student Housing and Higher Ed Summit in Phoenix.

Phoenix experienced a multifamily construction wave that delivered more than 63,000 units over the last four years, with more than 40,000 of them in the last two years alone, according to AZBEX. In 2025, the multifamily vacancy rate peaked at 12.6%. 

“We have an oversupply problem in this market,” Brendan Morrow, founder of Drive Development Partners, said at the Sept. 29 event. “You have so much multifamily that needs to be absorbed.”

The market is showing early signs of recovery as construction slows and rising demand drives absorption. According to a June report by Yardi Matrix, the city is among the top five national markets for apartment demand. Vacancy dropped to approximately 10.7% in the third quarter, down from 11.4% in the previous quarter and 12.1% in Q3 2025, according to Kidder Mathews. 

Part of the recovery stems from multifamily operators offering a slew of lucrative discounts and concessions to draw in renters and fill up their units. In many cases, these deals lure area students away from university housing.

Some of the usual concessions available to renters include discounted or free months of rent, waived security deposits or administrative fees, and included utilities. Multifamily amenities — such as laundry machines, fitness centers, coworking spaces and parking garages — also help draw in student residents.

Many of the schools in the region, like Arizona State University’s campuses, are in larger metropolitan areas, so it is easier for students to choose apartment renting over student housing, Earl said. The submarkets that have the most oversupply are Downtown Phoenix, Tempe and the Southwest Valley, according to Get Multifamily.

But some panelists stressed the importance of universities retaining students in their own dormitories.

“Kids who live on campus tend to have higher retention rates and higher graduate satisfaction rates,” said Michael Baird, executive vice president of the Collegiate Housing Foundation, a national nonprofit that owns and operates student housing for universities across the country.

The University of Arizona, in partnership with the nonprofit and Mortenson Development, broke ground on a new on-campus dorm that is slated to house more than 1,300 students.

One way to attract students is to offer updated amenities, such as modernized communal areas and study spaces, as a way to retain student residents, panelists said.

“Give them somewhere to study, somewhere to stay safe, somewhere to pair up and group with other people,” said Orion Pientak, studio director at architecture firm Todd & Associates.

Still, panelists said they expect apartment concessions to continue as the market works through its supply.