Top 5 Revenue Management Strategies For New Construction Lease-Ups

DALLAS, TX - Revenue management has become the apartment operator’s ally when gauging comp rates, analyzing market velocity, and pushing (or even decreasing) rents and occupancy to maximize a property’s rent stream revenue. As users of revenue management have sought to apply the technology to a growing list of multifamily applications, the use of rev man for new construction lease-ups hasn’t been without its share of fine-tuning.  Check out our exclusive video on revenue management and Lease ups with Joshua Tree Conference Group executive producer Steve Lefkovits, followed by a hot list of how progressive operators have leveraged their revenue management platforms to increase velocity and lock in rent premiums even when filling up a brand new (and completely vacant) community:

1. Prelease: Especially in today’s hot renter economy, lease-up agents are seeing great success in preleasing units, which can help to smooth the demand curve of revenue management systems and avert overly aggressive pricing as a reaction to huge exposures.
2. Clone Yourself: To help jumpstart revenue management algorithms on empty buildings, Simpson Property Group will “clone” rent histories from communities with similar comp sets and inputs, using the cloned data as a starting point to turn on revenue management earlier in the lease-up process.
3. Push Beyond Pro-Forma: Revenue management systems allow for more aggressive pricing against market as new lease-ups begin to stabilize. Leasing agents should allow for such pricing premiums and not fall victim to discounting in order to quickly meet pro forma occupancy and rent goals.
4. Check Expiration Dates: As revenue management allows for flexibility in lease terms to maximize revenue, so too can agents look forward to leasing up a building with a varied lease expiration matrix, preventing the first year loss traditionally associated with lease-ups built around a consistent 12-month lease cycle.
5. Never Concede Defeat: Since revenue management systems set effective market rents based on demand, concessions are eliminated, enabling properties to hit full stride on NOI sooner. Reset the mindset that lease-up is just an occupancy game, and rely on revenue management to resist giving away rents that will only need to be recouped at a later date, perhaps in a tougher market.

Interested in learning more about using revenue management for new construction? Attend the Apartment Revenue Management Conference and see Simpson Housing’s Bryan Hilton, Resource Residential’s Kevin Huss, Camden Property Trust’s James Flick speak on the “Out of the Box: Revenue Management & Lease Up” panel moderated by Revenue Edge founder Stacy Westbay at ARM. Click here to learn more information on attending this leading edge event.