Leasing Velocity

by | Jul 31, 2020 | analytics

leasing velocity

What is Leasing Velocity?

The widely accepted definition of Leasing Velocity is “Length of time a unit is unoccupied between leases.”

The quicker you lease the unit, the higher your Leasing Velocity.

The longer a unit is vacant, the more money you lose. So, it is in your interest to have a high leasing velocity.

In this post we describe a proactive, data-driven approach for achieving high leasing velocity.

 

Reactive Method for High Leasing Velocity

One way to have high leasing velocity is to refurbish / turnover the unit as quickly as possible and rent it at below-market rates. This is reactive and leads to sub-optimal outcomes.

The better the supply-demand data, the better your leasing velocity

Taking Control of Leasing Velocity

Here is a more proactive, data-driven method for achieving high leasing velocities that matches demand and supply, and optimizes rents.

Steps for improving leasing velocity:

  • Forecast your supply by unit type over the next 12 weeks
  • Determine the demand by unit type over the next 12 weeks
  • If supply is greater than demand (at unit type level), invest more in lead generation
  • Determine the optimal rent by unit type and move-in date, by matching supply and demand as well as your vacancy loss for these units

Here are the steps in more detail …

Supply:

  • Calculate supply by looking at lease end dates, notices to vacate and other signals for upcoming vacancies.
  • Take into account refurbish / turnover time to determine unit availability date.
  • Count the number of units, by unit type by week.

Demand:

  • Estimate demand by looking at your leasing inquiries (phone calls, web leads, walk-ins etc.) and determine the demand (by unit type, desired move in date, desired rent range etc.)

Net Demand

  • Match the supply and demand (this can be done in an Excel table)
  • For the weeks where supply exceeds demand, determine the vacancy loss
  • Decide if any promotions or specials should be offered to limit the expected vacancy loss
  • By looking at your leads in more detail (by type of unit, location/property, move-in date and desired rent range), you will have the ability to make data-driven decisions.
  • Work with your leasing team to ensure that all of the inventory becoming online in the coming weeks is promoted and leased.

 

Learn More about Leasing Velocity

Here is a description of one of our projects for Leasing Velocity