July 19, 2024
The commercial real estate leasing landscape is undergoing a transformation. Cities nationwide are witnessing a surge in demand for premium office spaces, while the retail sector is experiencing a much-needed revival with 70% of new retail construction projects pre-leased.
Given the evolving commercial landscape, leasing professionals and decision-makers require a more sophisticated approach. This includes better data visualization, accurate information, and a centralized system to organize it all. Prophia's dynamic stacking plan is one of many tools available to accelerate leasing and impact portfolio growth.
Solving Today’s Greatest Leasing Challenges
Commercial leasing is a highly strategic task in commercial real estate and it’s only getting more challenging as tenants become more data-equipped and comfortable negotiating terms, supply and demand continue to ebb and flow across asset classes, and capital remains scarce. However, as leasing picks up once again or continues to burn brightly (as it is in retail), property owners are going to have to overcome a new set of challenges to achieve leasing success today and in the years to come.
Tracking Allowances and Concessions.
To stay competitive in an increasingly dynamic market, property owners and operators have begun offering incentives like allowances and concessions to attract high-quality tenants. While these strategies can help fill vacant spaces, they also create challenges. Offering too few incentives can lead to lost leasing opportunities, while excessive incentives can hurt the property's bottom line.
Effectively managing these incentives is crucial. Without a system to track tenant improvement allowances (TIAs) and other concessions, property owners risk violating lease agreements or missing important deadlines. Such errors can damage relationships with both tenants and investors.
Inaccurate or Outdated Lease Information.
Accurate and up-to-date tenant data is crucial for leasing success. Lease terms, whether beneficial to the tenant (like reduced rent or longer rent-free periods) or restrictive (such as ROFOs, signage limitations, or permitted use restrictions), must be carefully managed.
Consider a complex, multi-tenant building like a medical office property. In this instance, med office tenants will often have exclusive services rights blocking certain businesses from opening within the same property or campus.
Without precise tenant data, or using traditional methods such as spreadsheets and manual processes to manage the efficacy of that data, leasing teams risk signing a new tenant whose business conflicts with an existing tenant's rights. This can lead to costly disputes, concessions, or damaged tenant relationships.
Opaque Forecasting.
Successful leasing hinges on accurate forecasting. This is especially crucial for multi-tenant buildings, where predicting future occupancy can be challenging if that strategy is based on individual tenant leases and not the property’s full picture.
What’s more, many leasing teams create visual representations of current and future property layouts, including stacking plans and spreadsheets. However, errors or omissions in this planning process are common and disparate, handmade spreadsheets are notoriously challenging to manage and share with portfolio stakeholders.
Negotiating with Data-savvy Tenants.
Data-savvy tenants, armed with sophisticated analytics, are increasingly common in commercial real estate. Fortune 500 companies and large retailers now arrive at negotiations with a deep understanding of their lease portfolio and market benchmarks for rent, tenant improvement allowances, and concessions.
For the leasing team still referring to disparate, manually-updated spreadsheets to manage a property’s vacancy schedule, it can be very challenging to go toe-to-toe with these tenants and gain the kind of leverage needed to sign good tenants and negotiate terms that are beneficial to the ownership team.
While this is a relatively new phenomenon, leasing teams need to prepare themselves for a future where their prospective clients understand just as much if not more about the market than they do.
Achieving Better Leasing Forecasting, Visualization, and Accuracy With Prophia’s Stacking Plan
Prophia goes beyond just tracking encumbrances and managing operations. It offers a suite of AI features, including a dynamic stacking plan, designed to streamline data management and CRE workflow. This multifaceted tool is perfect for both strategic planning and day-to-day tasks.
For leasing professionals, Prophia's dynamic stacking plan provides a seamless experience for managing tenant mix and future planning. It empowers leasing teams to make informed decisions quickly and confidently, boosting competitive edge and negotiation power.
Easy Encumbrance Tracking.
Prophia’s AI scans your uploaded documents and automatically finds important dates, figures, and terms. This information is then used to create clear summaries for each tenant (lease abstracts) and is also reflected in your dynamic stacking plan, giving you a complete view of all encumbrances on a property.
As new documents are uploaded or leases roll-off, your stacking plan dynamically updates to reflect the latest changes and your level of exposure through the upcoming months and years. This makes it incredibly easy to plan your leasing strategy and ensure you make accurate, data-backed decisions as you prepare to sign new tenants.
Color-coded Data Visualization.
Prophia's dynamic stacking plan goes beyond simply visualizing the current layout of tenants in a property. It breathes life into every lease contract, transforming every tenant agreement into a powerful leasing tool.
Need to verify the number of encumbrances on a specific space? Or perhaps you're looking for the average in-place rent across the entire property? Prophia's stacking plan provides these crucial details in a digestible format.
Strategic leasing decisions hinge on a clear understanding of your property's availability. Prophia's color-coded vacancy representation within the stacking plan makes it easy for you and your team to identify upcoming lease expirations at a glance. This real-time visual cue empowers you to build a data-driven leasing strategy with confidence.
Future Dates Oversight.
Traditionally, property data offers a snapshot of the current occupancy landscape. Prophia's dynamic stacking plans, however, empower leasing professionals and operational teams to take a proactive approach by visualizing future property conditions.
Leveraging the date dropdown menu within the stacking plan, users can effortlessly shift their perspective to see key metrics like WALT, average in-place rent, and total occupied square footage for upcoming months. This forward-looking capability is instrumental in strategic forecasting and allows leasing teams to:
- Identify upcoming lease expirations to prioritize lease renewal discussions.
- Anticipate future vacancy levels to inform marketing and tenant targeting strategies.
- Make data-driven decisions about rent adjustments and concessions based on projected occupancy shifts.
By providing a clear picture of the future, Prophia's dynamic stacking plans equip leasing professionals to navigate market fluctuations and optimize portfolio performance.
Accurate and Current Property Data.
Traditionally, leasing strategies relied on a labyrinth of spreadsheets, each needing meticulous manual updates whenever a tenant's lease changed. A single incorrect entry, whether a date or a rent step, could trigger a domino effect, compromising the accuracy of data for a specific property and potentially the entire portfolio.
Prophia's dynamic stacking plan mitigates the risk of human error and inaccurate data. By automatically updating whenever a new amendment or lease is uploaded, Prophia takes the burden off leasing, asset management, and property management teams. This frees them from the time-consuming task of manually updating spreadsheets across impacted tenants, allowing them to focus on strategic initiatives. With Prophia, your team spends less time chasing down the most accurate figure and more time on activities that drive real value.
Prophia's dynamic stacking plan transforms leasing from a reactive scramble to a proactive, data-driven success story. Simplify your workflow, gain crystal-clear visibility, and make leasing decisions with unwavering certainty.