That seems like a super obvious conclusion, the fact that it isn't what is actually happening is a good indication that it isn't as straightforward as you'd think.
This might be true for an individual that only owns one or two properties, but for a company that owns tens or hundreds of properties they can let stuff set empty to drive up prices on all of their other properties.
My understanding is the issue is a different one - these big corporate places can't reduce their rents because if they do, their 'stats' (claimed value due to stated rental prices x units) get bad, and they're all so highly leveraged they potentially lose their financing and their house of cards will implode.
In some cases, they'll literally default if the number goes below a certain value. They already are in deep trouble with the cost of financing going up (3x in many cases) due to fed rate increases, as commercial loans aren't 30 year fixed like typical residential ones are. Think 5-7 year variable rate, or weirder, and often 3-5% higher than the nominal mortgage rate as commercial loans are riskier (not gov't backed).
Nobody (except individuals, maybe) wants the system to implode right now, including lenders, as everyone is hoping for a post-covid boom that will get everyone out of trouble.
It's also why they give so many 'incentives' in the form of free months rent on signing. They still get to claim the higher rent on their stats (keeping the overall nominal value of the complex high), put the incentive under a marketing cost, and voila.
Normally, these financing deals do 'gimmes' for high vacancy rates/ignore them because typically that is temporary - it impacts cash flow, but not 'value'. Everyone has gotten used to ignoring cash flow (to their detriment IMO) over the the last many years, and has been basing their portfolio on 'value'.
The units sitting empty thing 'works' until the cashflow becomes an actual problem, at which point they are bankrupt and the whole house of cards implodes anyway. But wil-e-coyote wise, that may never actually happen, which is why they keep doing it.
Personally, I'd be shorting all these ETFs if I was bored and had enough cash sitting around.
This might be true for an individual that only owns one or two properties, but for a company that owns tens or hundreds of properties they can let stuff set empty to drive up prices on all of their other properties.