New Lease vs. Renewal Lease Pricing: Why Treating Them the Same Is Costing You
Most operators either ignore the gap between new lease and renewal pricing or manage it reactively — both approaches leave money on the table. Here's how to build a deliberate strategy that optimizes revenue across your entire lease portfolio, not just your vacant units.
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The Mistake Most Operators Are Still Making Walk into most regional VP meetings and you'll hear a version of the same conversation: new lease rents are up, occupancy looks fine, and renewals went out at CPI plus two percent. Box checked. But that approach treats new leases and renewals as separate problems to solve on different schedules — when in reality, they're two levers on the same revenue engine. Misalign them and you'll either hemorrhage residents who feel penalized for staying, or leave significant income on the table by underpricing the residents who were going to renew no matter what. Understand the Actual Cost of a Turn Before you set a single renewal offer, you need a hard number for what a vacancy costs your specific property. This isn't just lost rent. Factor in: Makeready costs (paint, carpet, appliances): typically $1,500–$4,000 depending on asset class Leasing concessions on the new lease: one month free on a $1,500 unit is $1,500 gone immediately Days vacant: even 15 days at $1,800/month is $900 in lost NOI Admin and leasing staff time For a midtier property in a secondary market, the fullyloaded cost of a turn often lands between $3,500 and $6,000. That number should be the floor beneath every renewal conversation.