5 Reasons You Need Lease Transaction Benchmarking
How do you measure property performance? For years, owners, operators and investors have sought out this answer. Many will call up their local competitors (or pay someone to do it) with cleverly disguised voices and ask, “How much does a one-bedroom cost?” They do this week after week, assuming that they are not only getting legitimate real-time information, but that it’s not going to change because of a new promotion or sudden change in vacancy. We call this a market survey.
In all honesty, we all know that if you really want to compare yourself to your competitors, you need real data. But that’s just a multifamily pipe dream, right? Sure, those kinds of detail numbers are available in other industries, but they’re certainly not accessible in multifamily, are they?
Actually, they are.
Real-time lease transaction data is available for owners, operators and investors across the nation. You can actually get apartment benchmarking based on actual lease transactions, for your market, submarket and zip code. Though you probably wouldn’t know it. We, in real estate, are a tough lot to change. We have our ways and we like to stick to them. Even if something better comes along, we’re slow adopters.
But is it really a big deal?
Yes. And here are a few reasons why you should be jumping at the chance to get lease transaction benchmarking data.
1. You’ll get a REAL performance measurement
Comparing asset performance to internal budget expectations is something everyone does and is important. However, real performance measurement requires context of what’s happening in the market, not just a comparison to budget. We all know market conditions change and having insight as shifts occur allows you to stay ahead of your competitors.
2. Traditional market survey data is incomplete
Many owners and operators use traditional market surveys to compare themselves to their markets. The catch here is that traditional market survey data only asks a few questions, usually providing general information like asking rents and basic occupancy data. Unfortunately, that ignores half of the rent roll. Lease transaction benchmarking gives visibility into what’s happening with the entire rent roll, including executed lease and renewal rents, renewal conversion, lease over lease trade out, average vacant days and more.
3. Lease transaction benchmarking provides “same-store” comparisons
If you want to understand market patterns, especially on the seasonal level, you have to be able to evaluate the performance of a market (or any group of assets) over a specific period in time. Of course, the comparison has to compare the same property or properties over that same stretch of time each year (“same-store”), to ensure an apples to apples comparison.
4. Lease transaction benchmarking data is regular and reliable
For benchmarking (or any comparison for that matter) to be relevant and actionable, the metrics or properties being measured have to be stable and well-defined. It also must go through cleansing to ensure data integrity and remove outliers that could lead to inaccurate conclusions.
5. Lease transaction benchmarking can segment performance by bedroom type, asset class and other attributes
To have real confidence in your results, you have to compare multifamily properties by asset class, geography, age, stories and other attributes. Basically, the makeup of your comparison group has to be both configurable and clear.
If you really want to compete, you can’t just throw darts. You have to pinpoint where you are on the GPS map of success. Lease transaction benchmarking can provide the real data that so many of us in the real estate industry have been looking for.
And best of all, it’s actually here…
To know more about lease transaction benchmarking, Visit RealPage Business Intelligence.