Glossary term
Loss to Lease
Loss to lease is the gap between a unit's market rent and the rent in its current lease. It measures rent left on the table.
If market rent for a unit is $1,600 and the resident's lease says $1,500, the loss to lease is $100 a month for that unit. Add it up across the building for the total.
It builds when market rents rise faster than leases renew, or when units are leased below market. Some loss to lease is normal, because moderate renewals help keep good residents.
Owners and buyers look at loss to lease as upside. Closing the gap takes time, since rents can reset only as leases turn or renew, and large increases can raise turnover.
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