Using Data To Optimize The Leasing Process
Data-driven technology has entered the commercial real estate sphere.
Several industries use data and predictive analytics to better understand what customers want. Political strategists collect and analyze data on voter demographics, and e-commerce platforms study consumer spending habits to market products to consumers based on individual interests.
Now, CRE is catching up. Landlords are leveraging leasing and tenant health data to drive more revenue within their portfolios.
Leasing and asset management platform VTS recently introduced the “revenue funnel,” a framework that guides a more data-driven process for landlords and brokers. The revenue funnel identifies three critical areas of the leasing process that can be optimized with data: tenant attraction, conversion and retention. Each of these stages is critical to the success of an asset, and landlords are optimizing their funnels to drive revenue.
Watch this 17-minute, on-demand webinar to learn how to optimize your revenue funnel.
1. Attract Potential Tenants
The first step for any landlord and leasing team is to attract potential tenants. Once landlords get an idea of how many people are interested in a space, they can focus on converting them into tenants and creating positive experiences that increase retention among those tenants.
“Commercial real estate is pivoting from a property-focused industry to a tenant-centric one,” VTS Chief Product Officer Brandon Weber said. “Tenants’ needs are changing rapidly, and businesses need more flexibility to accommodate those needs. Space is becoming more about the human experience. You need data to understand what your tenants want.”
To attract and generate qualified leads, landlords and brokers must first reach the right audience. By analyzing which marketing efforts are the most effective at driving leads that convert into deals, landlords and brokers can work together to fine-tune their marketing strategies and double down on tactics that produce the highest ROI.
Landlords and brokers can also gain insight from tenant inquiries. This data helps identify which factors are driving demand and the industries represented by the companies most actively looking for space. For example, a landlord might realize that a specific office space is attracting more tech companies than financial services or legal firms. This data can be used to make strategic decisions around how to position the space toward a specific industry and opportunity.
Once leads are generated, landlords and brokers can begin to understand the quality of those leads and evaluate further interest by seeing if potential tenants actually tour the property. By tracking tours per available space in a given property, a landlord can see which properties are not driving as many tours and where they may need to make improvements. For example, they might consider investing in redesigning common areas, hold low performing brokerage teams accountable and reward successful brokerage teams with more listings, VTS Product Strategist Mike Cochran said in a recent webinar.
2. Convert Deals
After a prospective tenant has toured a building, landlords and brokers can use data to accelerate the time it takes for these leads to convert to signed leases. Conversion metrics including the number of tours that become proposals, and the subsequent proposals that lead to deals and indicate the success of a landlord’s touring strategy, as well as the effectiveness of internal approval and legal processes.
Not all proposals turn into fully executed leases, and many landlords are familiar with the “dead deal.” Landlords can use data to determine at what point they are losing deals, and why. This might occur early on in the process, due to a space not showing well, or later due to delayed internal or legal processes. Landlords can then make necessary improvements by investing more in their properties to meet tenant demand or incorporating new technology that makes the tour experience more efficient.
“This insight gives landlords more time to have strategic and honest conversations with their teams about how to improve,” Cochran said.
3. Retain, Expand Tenants
Once tenants move into a space, landlords can use data to improve their buildings’ retention rates. Customer service is the largest determining factor in a tenant’s decision to leave a building, according to a Zillow report. While this study refers to residential tenants, the same concept of enhancing the tenant experience applies to commercial real estate.
Tenant retention is important because it saves landlords time and money. When a property is at 100% occupancy, a landlord does not need to spend time marketing it and paying for additional leasing resources.
To improve service and increase retention, landlords can discover the specific reasons why they are losing tenants by implementing tenant satisfaction surveys. They can also begin having conversations about lease renewals early on to get a sense of how likely tenants are to renew. If tenants are dissatisfied, this would also give landlords an opportunity to find out why.
“Landlords are successful when they determine metrics that align most to their investment strategy and commit to measuring the metrics that matter,” Weber said.
Watch this webinar and learn how to optimize your revenue funnel.
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