According to Strong Towns, it's because the building can borrow money based on the projected value of rent. If they lower the rent, they can't borrow as much money.

https://www.strongtowns.org/journal/2017/11/27/the-paradox-o...

At an aggregate level it can make more sense to leave X% of units vacant than to lower prices (which could have effects on the rate you can charge with the rest of your units). I think it’s an example of our financial system not working as intended.

For example let’s say I have a 100 unit apartment building. If I maintain a 20% vacancy rate target I can charge an average of $1000/mo/unit. But to set a price at which my vacancies get filled very quickly, to hit a 5% vacancy rate, maybe I need to charge $700/mo/unit. In that case I’m making less money than before - $80k/mo vs $66.5k/mo.

why wouldn't you just price discriminate through short-term concessions to fill the remaining 20% and increase revenue? this seems to be what most apartment buildings around me actually do.

That is what people do sometimes (esp. in SF where you'll get "2 months free rent"). But I think in commercial real estate the math is a bit different because leases tend to be longer - so you really don't want to budge on the actual monthly rate and even 1-2 months free doesn't end up helping the prospective tenant that much