What Is a lease-up?
A lease-up is the process of launching a new development (typically multifamily) that has no current tenants and releasing it for leasing to the public.
Typically, the lease-up period is from the date of the launch announcement to 6-12 months after its official launch.
When it comes to lease-up strategy, your main objective is clear - you want to lease as many apartment units as possible, as quickly as possible, to gain occupancy and turn a positive NOI.
When construction ends and the dust settles, it’s time for an experienced property manager or property management team to lease the new property.
Lease-ups are often best handled by property managers with a decent amount of experience in residential law and leasing.
When done right, a lease-up can be a fun and lucrative endeavor.
Below, you'll find key steps to take to ensure you have a successful lease-up that thrives from the moment it opens its doors.
How do you market a lease-up property?
Given that lease-ups are brand-new buildings, with no recognition in the local setting, marketing should be top of mind.
Want to learn more about running a lease up? Give this article a read: Running a Lease-Up
Not only to amplify your local area's knowledge of the new building during the lease-up period but, specifically, to advertise what your building brings to the neighborhood.
Here's how to market a lease-up property:
1. Identify what sets your property apart
Before using any marketing tools, it’s important to identify what makes your building special.
Identifying the features that set your apartment community (or another property type) apart from others nearby will help you create a stellar marketing plan for your lease up which is integral to leasing more effectively.
You should do competitor tours of any comparable buildings in your area and get information on recent lease-ups.
Look at their:
- Amenity spaces. Amenity spaces are important to renters, particularly for an apartment lease-up. A gym, coworking area, pet spa, or gaming room can all be great spaces to highlight while advertising.
- Apartments. Look at what they offer as far as floorplan options. You should compare and contrast your building to see what stands out about your property.
- Square footage and fixtures. Think about how your square footage and apartment features differ. Do they offer less or more space? Also, compare the appliance packages in the kitchen and bathroom. Higher-tech appliances like smart thermostats can be attractive when marketed correctly.
- General location and accessibility. Compare other buildings to your own in how accessible they are. This means accessing how close each building is to public transport, major highways, or parking.
- And pricing. Assess the price per square foot of other nearby comparable buildings to be sure you’re aligned in the market.
Identify what unique features your property has as well that most nearby do not, and use that as a central advertising strategy.
There are so many apartment buildings these days, and with new construction booming, you have to take extra care to identify what makes your building unique early on.
For example, if you are the only apartment building in the area with an on-site dog park, you should advertise your dog park and its great features.
You could also build your apartment community brand around that dog-friendly culture. Perhaps you offer puppy pool parties or dog parent meet-ups for residents.
2. Utilize online tools
Today, renters do most of their browsing online. Especially after the cultural shift caused by the 2020 pandemic, it seems unlikely that renters will ever return to browsing in person.
The good news is that your property can utilize online marketing to reach a wide audience of potential renters.
Always utilize your own website to showcase photos and videos of your lease-ups. It’s important to have professional photos and videos taken of your property as soon as it is complete.
In the meanwhile, professional renderings can work in your early marketing to showcase what the property will look like once complete.
You can use your webpage and online listings to post to other popular, third-party real estate websites. It will be wise to have your apartment building featured on Zillow, ApartmentList, Apartments.com, etc.
3. Make use of unique signage
In the final phase of construction, garner interest from local residents and daily commuters by choosing some eye-catching and unique signage outside of the property.
Signage should hint at when the building opens for leasing, or capture a unique feature of the property.
For example, signage that reads “Leasing in March of 2023!” or “34th Floor Roof Deck Coming Soon!” will catch the attention of those passing by.
4. Host events for your grand opening
By the time your building is ready to open its doors, you’ll likely have a handful of residents moving in, given you employed a pre-leasing strategy 3-6 months prior to the building's completion.
However, the process of getting full occupancy will take anywhere from 12-24 months after your doors open.
When your property finally opens, invite your new residents and the public to an event. Perhaps you have an outdoor amenity space perfect for hosting a fair or food truck. Or maybe you host a paint night in your amenity space with an instructor.
No matter what you choose, make sure your property looks great. Events are a great way to get residents engaged and get new potential tenants through the door.
5. Offer incentives for prospective renters
Everyone loves a freebie, and this is especially true for renters.
New buildings often come with top-notch amenities and high price points. The higher rents may turn off otherwise qualified prospects from renting.
It’s not uncommon for an apartment lease-up to offer concessions, such as free parking for a few months or 1-2 months of free rent when gaining occupancy.
But you don't necessarily need to offer rent-based financial incentives.
Other options include partnering with local businesses, such as including a 1-year membership to a local gym, or another nearby organization.
For concessions to be effective, ensure they have a concrete end date, which will encourage prospects to rent sooner rather than later.
Also, make sure to include them prominently in your marketing strategy to leverage those unique incentives as much as possible.
What can you expect during the lease-up process?
From the management side, taking on lease-ups has several upsides.
Lease-up properties are known to generate tons of revenue once stable, and showing one is able to quickly lease a new building looks good on the resume of management professionals.
However, there are lots of moving pieces when it comes to managing a lease-up.
With a brand-new property, there are more variables and uncertainties than a stabilized property will have.
Although every lease-up is different, you can expect a few stages to occur, as listed below.
Construction and certificate of occupancy
While the building is under construction, you’ll likely have limited access.
Contractors and construction personnel have strict safety guidelines and need to ensure everyone on site is certified to be there. So, don’t expect to waltz up to a lease-up property that’s still in construction without a really good reason.
Once the certificate of occupancy is obtained, the public (including the staff) may enter the property legally and safely.
Sometimes, in the case of a large building, this will be done in phases. So you may obtain the certificate for floors 1-10, and be unable to visit any floors above that until a later date.
Whether you receive the certificate of occupancy all at once or in phases, this is when you can start touring prospective residents.
You may still need to follow different guidelines with tours, such as having them wear hard hats or shoe covers.
Expect lots of tours (and allocate staff accordingly)
If you’ve done a great job at marketing your property, you should expect an influx of interest once you begin offering tours of the property.
You can offer:
- In-person, and
- Virtual tours to cater to the widest audience.
Once people see a new building go up in their area, and perhaps see your signage and advertisements online, they will get curious and want to see the inside.
It’s important to take every tour at this stage, as every inquiry could be a potential new resident.
In order to accommodate a phenomenal touring experience and ensure you have a successful lease-up phase, you’ll want to make sure you have enough leasing staff each day.
You should be especially prepared on common touring days, including:
- Holidays, and
Expect the unexpected
Though a lease-up is a brand-new and sparkling building, it doesn’t mean everything will magically fall into place.
As with anything new, your new building will have unfamiliar technology, appliances, and systems that the staff will need to get used to.
Your maintenance team may need to be trained on new programs or appliances and your leasing team may need to get used to a new key fob system or software.
All in all, when it comes to a lease up, you need to budget in time for learning and honest mistakes as everyone adjusts to the new building.
Focus on the resident experience
When it comes to launching a successful lease-up, the first year after your property opens is crucial to its long-term success.
You’ll want to ensure your leasing at an acceptable rate, but also that your reputation is a good one.
As residents move in, and are able to publicly review the property online, or even just tell friends about it, you want to make sure a positive testimonial is being shared.
It can be easy to get caught up in the marketing and leasing and forget about the resident experience for those who have already rented.
If you don’t ensure residents are satisfied, you may be unpleasantly surprised when your occupancy suddenly plummets when the first residents do not renew their lease.
Renewed leases are better for business, as getting tenants to stay decreases the amount you will need to spend on marketing, staffing, and materials.
Even when you are just opening the building, the long game should be on your mind. Focus on ensuring the resident experience is exceptional to earn long-term relationships.
- Ensuring your staff is delivering great service
- Everything is in working order, and
- Your units are clean and comfortable for living.
Of course, with a lease-up sometimes things will go wrong. However, being transparent with residents about any issues in the building will go a long way.
People are a lot less likely to be enraged by a broken elevator if they are warned that the elevator will be under maintenance a day ahead of time.
Successful lease-ups are a team effort
In a lease-up, a property manager or management team will bring their best sales and marketing skills to the table, to lease as many apartments as efficiently and quickly as they can to interested renters.
There are several fun and exciting ways to market a lease-up. Fortunately, today, property managers have the advantage of online marketing and platforms that property managers can use with great success.
When it comes to what to expect with a lease-up, it’s wise to expect the unexpected. Lease-ups come with an array of new processes and procedures to get used to, and it’s OK to have a few hiccups.
As long as you are focused on ensuring an exceptional resident experience, and optimizing your marketing for maximum interest from new renters, the experience of leasing up a new property is sure to be a great one.
And once you're ready to take the next step and level up your entire leasing process, check out DoorLoop's suite of leasing tools: Property Management Leasing Tools & Software.