Common Pre-Leasing Mistakes & How To Avoid Them

By Tori Lewandowski
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This year, there will be more lease-ups than ever, with a whopping 670K new units anticipated to be delivered in 2024. For context, that's a 50% increase YoY, all while vacancies in new developments reach a decade-high. Sounds bad, right?

 Well, the good news is that developers and management companies who understand the importance of pre-leasing are doing just fine. The truth is this: pre-leasing sets the tone for the building, intrigue, and overall financial performance. However, many see this as a time to cut corners, conserve costs, rush hire, and fall into common pitfalls that can hinder the success of their property. That's why we took a good, honest look at the most common pre-leasing mistakes and offered support on how to avoid them. 

Overestimating Demand

Overestimating demand is a frequent error in luxury apartment pre-leasing. Many often assume that the high-end features and amenities will automatically attract residents, leading to overambitious leasing targets. This is usually influenced by construction and punch-walk scheduling, which we can safely say rarely happens on time. It’s easy to set your eyes on the prize, but it’s essential to be mindful of a realistic and attainable absorption schedule for your submarket.

Conduct thorough market research before setting your leasing goals. Understand your target demographic and their financial capabilities. Utilize market surveys, competitor analysis, and data analysis to gauge the demand for your specific community offerings. Adjust your marketing and leasing strategies based on these insights, ensuring you set realistic, achievable goals.  For example, check out Glassdoor for the top 3 companies in a 5-mile radius to see if the average salary meets your income requirements. The last thing you want is a frustrated leasing team in the early days of lease-up!  

 

Ineffective Showcasing of Amenities

“Luxury" lease-ups often boast all the right high-end amenities; however, failing to showcase these features effectively can deter potential tenants and blend your community with the rest of the competition. Simply listing "fitness center" with “rooftop pool” doesn't spark intrigue among today's modern renters. 

Create immersive brand amenity experiences from the very beginning. Recently, animated videos of amenity spaces are bringing communities to life while they're still putting up drywall. Utilize your brand's voice and tone in all collateral when describing the ambiance, and ensure your virtual tours, 3D renderings, and videos align with that standard of collateral. Once the amenities are punched and accepted, host exclusive pre-leasing events where potential residents can experience the amenities firsthand.  This approach not only showcases your property but also creates a sense of exclusivity and excitement.

Unmotivated Leasing Team 

 Your leasing team is the front line in the pre-leasing process. An untrained or unmotivated leasing team can lead to lost leads, poor prospect interactions, bad word of mouth, and a lower conversion rate. The team should be equal parts experienced, hungry, and knowledgeable about the entire neighborhood, not just the construction site. 

 You have to empower your leasing team, and that means giving them motivation and clear direction. Invest in comprehensive training programs and incentives for your leasing staff. Send them off for a morning of shopping neighboring lease-ups and talk with them about what they find. In leasing, the most important decision you'll make as a developer or management company is who is leading the first impression in the leasing office. A knowledgeable and confident leasing team that feels supported and valued will significantly enhance the resident acquisition process. 

Neglecting Online Presence

Digital presence can get very rinse-and-repeat in multifamily marketing, leading to a cyclical blend-in of communities online. This is why it's make or break to develop a stealth online go-to-market strategy. Prospects today almost always begin their search online, and if your digital footprint is weak or non-existent, you will lose leads before they even set foot on the property. In a world where a large sum of properties can pay to play for the highest ILS standing, you have to step it up beyond the standards of diamond packages and raise the bar for your brand.

Don't cheap out on this step; invest in a custom yet user-friendly website with high-quality photos, virtual tours, and up-to-date information about availability and pricing. Leverage social media platforms to reach a wider audience, follow local businesses, engage with potential tenants, and showcase your property attributes. Positive online reviews and testimonials can also build credibility and attract interest, especially during pre-leasing.

If this seems like a big undertaking, it is. Many developers with small marketing teams find big success when outsourcing an agency partner seasoned in multifamily lease-up strategy to drive this initiative.  

Mispricing Units

 Incorrect pricing or below-market specials are major pre-leasing mistakes that can deter potential tenants or leave money on the table. Pricing too high can lead to prolonged vacancies, while pricing too low can undermine the property's value. When it comes to specials, it can be tempting to give the farm away if the goals aren’t aren't, but as we mentioned before, it's to understand your competitors.

 Conduct a comprehensive competitive analysis to determine the appropriate pricing and concession strategy. Shop your top 3 competitors and note how they approach selling the neighborhood, community, and amenities. Then, consider the unique features of your property, amenities, and pricing, and keep an Excel sheet for every property you tour. Regularly review and adjust pricing and sales plays based on market conditions and feedback from prospects. Instead of marking lost leads as “price "too high” and l"letting them slip away, ask them what draws them explicitly to other properties. You can learn just as much from your lost leads as you will from your new residents.

Early Onsite Activation

Leveraging the physical and digital space around your new development early can generate buzz and attract potential residents even before the building is completed. We've seen firsthand how this works wonders on lease-up velocity.

Utilize creative and strategic signage around your site to build anticipation and brand awareness. This can include banners with renderings of the finished spaces, signs highlighting unique amenities, and countdowns to the opening date. Interactive elements such as QR codes that lead to virtual tours or informational videos can also engage passersby. 

Organize early on-site activities to bring a true sense of community to the property. Host early-bird hard hat tours, pop-up events, and garner a sense of exclusivity and prestige around being the first neighbors to view the project.

It’s a Jungle Out There

Pre-leasing boutique apartment communities is a nuanced process that requires strategic planning and thorough execution. By avoiding these common mistakes, developers and owner-operators can set the stage for a successful lease-up phase and a positive NOI. However, perhaps one of the biggest mistakes made in pre-leasing is thinking you can do it all in-house, rinse and repeating every project. Even the most profitable management companies opt for an outside agency perspective to stay competitive in today's market! 

Please don’t take our word for it; ask the team at Authentic, who has successfully built beautiful brands for the past 13 years in the hottest submarkets from New York to LA. As you navigate the complexities of pre-leasing, remember that the Transforming Cities team is here to help with all things GTM, lease-up, branding, and more.

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