How To Speed Up Your Leasing Velocity During An Apartment Lease-Up

When opening a new apartment community, it's fair to assume that units will occupy quickly during its lease-up. 

After all, there's usually enough pent-up demand from prospective residents who are enticed by the opportunity to live in them simply because they'd be the first to do so. It's also likely that a steady stream of leads are being generated for the leasing office because of the significant marketing spend needed to successfully execute lease-ups.

That isn't to say that lease-ups are easy, however. You can't just sit back and hope that leads and leases continue to pour in at consistent levels.

In order to complete your lease-up within a healthy time frame, you must actively maintain your leasing velocity. A healthy time frame is one that’s achievable for your team and relative to your community’s size.

Thankfully, your leasing velocity in a lease-up is dependent on two factors which you have complete control over: pricing and marketing. In this blog, we'll explain how to make smart adjustments in both those areas to accelerate leasing velocity during the lease-up to ensure you'll have met your desired occupancy on schedule.

Video: How To Speed Up Your Leasing Velocity During An Apartment Lease-Up

When Do You Want Your Lease-Up To End?

This is the first question you must ask yourself in order to be able to diagnose and respond to any issues within your pricing or marketing that may be slowing down your leasing velocity.

An exceptional goal is for the lease-up to be completed in less than a year, but that's not a recommendation. Some newer apartment communities may have multiple buildings being constructed on the property, and only one of those buildings may actually be rentable on opening day. If this is the case for you, we'd suggest making sure that one building is at least 75% occupied before you start leasing units in the next available building. 

Being wildly unrealistic with this decision can have negative consequences. There are obviously different expectations for how fast you can complete the lease-up of a 30-unit building compared to a 200-unit one. Again, it's more beneficial for you to establish a healthy target that's relative to your community's size and is achievable for your team.

Set Monthly Lease Targets To Measure Leasing Velocity

Let's say the first building of a new apartment community is opening on January 1st, 2022. It has 100 units, including 50 1-bedrooms and 50 2-bedrooms. Of the 1-bedrooms, there are 30 units in Floorplan A and 20 units in Floorplan B. The 2-bedrooms consist of 10 units in Floorplan C and 40 units in Floorplan D. 

Here's a breakdown of this example:

This is the moment when you should ask yourself how fast you think your team could lease-up this building. For this example, the team at this community decided to set a goal of 6 months.

Once you choose your number, you can now set corresponding targets for how many leases you need signed in each floorplan every month to complete the lease-up of this building in 6 months or less, like this:

Though not a perfect example (it doesn't take into account the challenges of seasonality or the fact that most residents may not be too excited about signing a lease in the middle of winter), this, at least, gives you an applicable method for measuring your leasing velocity during the lease-up.

Looking at Floorplan A, specifically, you can now see that this community must maintain a leasing velocity of 5 signed leases per month to meet its completion goal of 6 months.

By tracking the amount of leases signed per month and comparing that number with your lease targets (like in the table below), you too can identify when you need to make adjustments with your pricing or marketing to speed up your leasing velocity if it gets off track along the way.

Adjustments With Pricing

Let's take a closer look at what occurred in Floorplan A during our example lease-up, and how it relates to pricing.

In the first month, the community earns 7 signed leases for this floorplan. This, in some ways, is to be expected simply due to the excitement resulting from the opening of a new apartment community.

From a pricing perspective, this is great because in the first few months of a lease-up you're allowed to be flexible with your pricing, and increase or decrease rent anywhere between 0-5% depending on performance.

By surpassing their monthly lease target in January, this community raises its base rent from $950/month for Floorplan A by 4%, to $988/month.

In February, the community signed 4 more leases. While that's technically below the amount they were hoping to achieve monthly, they are still on track with 11 leases when they were aiming for 10 by the end of the second month. They decide to make just a small adjustment, lowering base rent only 1% to $979/month.

Then in March, the community only signed 2 leases. Now, clearly, there's an identifiable issue with Floorplan A as they've failed to meet their monthly lease target for the second consecutive month. Perhaps their pricing adjustment after February wasn't enough. Nonetheless, the team at this community knows that it needs to settle on a price that's more attractive and gets more prospective residents to sign a lease there.

They decide to drop down to their original base rent of $950/month after a tough two-month stretch. That adjustment produces a positive rebound, as the community earned 6 leases in April. Due to this,  they again raise rent but instead of a dramatic increase like they did at the end of January, this time they only increase it 1% to $960/month. Then it earned 5 more leases in May.

This scenario goes to explain the kind of work it takes during a lease-up to find your community's pricing 'sweet spot'. Their pricing issue was only identifiable because it had a method of measuring leasing velocity, and was proactive in making necessary adjustments with rent to speed up and maintain it.

Once you've discovered the right price in your lease-up, from there we'd recommend only adjusting 0-2% based on performance.

Adjustments With Marketing

In a lease-up, you also need to be just as dynamic with your marketing spend as you would be with your pricing. 

To do this, you need to constantly monitor the amount of paid and organic traffic that's coming to your apartment community's website using Google Analytics. When you're consistently meeting or exceeding your monthly lease targets, you could safely lower your spend on digital advertising campaigns in Google and Facebook for those floorplans and save money because you have the right amount of traffic you need. 

If the inverse occurs, you could raise your ad spend for those floorplans to regain traffic and  generate more leases faster. Your marketing spend directly influences your leasing velocity.

Beyond spend, you could try other tactics such as rearranging your featured floorplans to highlight the ones that are struggling to meet lease targets, or displaying an image highlighting your current rent specials on your homepage. 

Conclusion

To recap, in order to speed up your leasing velocity in a lease-up you first need to have a method of measuring it. By establishing a healthy time frame for how fast you want your lease-up to go, you can set monthly lease targets toward that completion goal to help you know whether or not you're on track to achieve it. This will enable you to diagnose and respond to issues slowing down your leasing velocity by making smart adjustments to pricing or marketing.

For more helpful lease-up tips, be sure to download our ebook How To Execute A Successful Apartment Lease-Up by filling out the form below.