Effective Leasing During the Concession War

Lets be honest, we are all leasing in a concession war. And it’s a war that nobody can win. While rent concessions used to be implemented to boost occupancy, it is now a necessity in order to maintain occupancy. So the question we need to ask ourselves is, how can we use our concessions more effectively?

The answer to this question lies in the mathematics of your conversion and closing ratio. By conversion and closing ratio I mean…

“How many phone calls are you converting into tours, and how many tours are you closing?”

The reason that these two ratios are so important is because this will tell you the optimal place to offer the concession.

Let’s look at it this way. Your concession can only do 1 of 2 things. It can either help get a prospect in the door, or help a prospect who has already toured make a decision. But once the prospect knows about the concession, our best card has been played. Basically, when it comes to using concessions, we only get 1 shot at making them work.

By analyzing our conversion and closing ratio we can decide whether to offer the concession over phone, or at the closing table.

It is best to offer the concession over the phone during the following situations

1. We are having trouble converting our phone calls into tours

2. We have a product that garners very few objections from a prospect

3. Our closing ratio is strong (above 50%)

4. Your property is not along a main road, or near other competitors



It is best to offer the concession at the closing table in these situations

1. We have a strong conversion ratio (above 50%)

2. We have frequent objections to the product

3. We have competitors in the area with similar product.

4. We are struggling with our closing on tours

5. Your property is in close proximity to its competitors

By offering the concession over the phone, we can predict a higher conversion ratio. However, we are then left without any incentive to produce at the closing table. If you are going to play the concession card on the phone, then you need to have a product that will sell itself.

If your product is part of a red ocean (it doesn’t stand out from its competition), then most prospects are likely to visit multiple properties, especially if they are in close proximity to each other. We can then deduct that it is more effective to use the concession as a closing tool rather then a conversion tool. The concession becomes infinitely more effective if we can value sell the property prior to offering the special.

Or try looking at it this way. If I can get a prospect on the fence at market rent, the reduced rent incentive will surely pull them onto our side of the fence.

No matter how you use the concession, make sure you have analyzed your conversion and closing ratios, and made an honest assessment of your product. Based on these factors, we can determine whether to give out the special over the phone, or in person.