Loss-to-Lease
Loss-to-lease is the difference between in-place and market rents, showing unrealized revenue potential or over-market exposure.
September 30, 2025
What is Loss-to-Lease?
Loss-to-lease measures the difference between current in-place rents and prevailing market rents. It shows unrealized revenue potential when rents are below market or over-market risk when rents exceed current rates. This metric is often used in multifamily and commercial property analysis.
Why Loss-to-Lease Matters in Real Estate
Loss-to-lease matters in real estate because it directly impacts property valuation, investment strategy, and renewal planning. High loss-to-lease indicates potential for rent growth but also exposes owners to tenant turnover risk. Asset managers use loss-to-lease data to create phased renewal plans that balance growth and retention.
Example of Loss-to-Lease in Action
A multifamily portfolio shows average rents $200 below market. The owner implements a phased renewal strategy to capture higher rents gradually while minimizing turnover.
Key Takeaways
- Loss-to-lease highlights gaps between actual and market rents.
- Indicates revenue growth potential.
- Excessive gaps may increase turnover risk.
- Used in valuations and acquisition underwriting.
- Guides phased rent increase strategies.
Related Terms
- Mark-to-Market
- Rent Roll
- Renewal Strategy
- NOI
- Valuation
The Agency’s Mauricio Umansky (left) and Rennie’s Greg Zayadi (right).
An overview of the 23 properties. (Chartwell Retirement Residences)
10355 King Boulevard in Surrey. (Arcadis, Wesgroup Properties)
Renderings from the NE and SE corners of Civic District. (Arcadis, Wesgroup Properties)
Renderings from the SW and NW corners of Civic District. (Arcadis, Wesgroup Properties)
