Turnover rate
What is it?
The KPI aims to measure the degree of tenant turnover during a given period of time – expressed as a percentage of the total number of rental units. It can give an indication of tenant satisfaction, the property's attractiveness and the stability of the rental market.
Monitoring relocation rates can help real estate companies and management companies identify trends, improve tenant satisfaction, and strategically align leasing activities to minimize vacancy and maximize revenue from existing rental units.
Note that since the KPI is based on tenant changes, all rental objects that previously did not have a tenant are excluded from the number, such as new construction.
How is it calculated?
Sum of number of leases / number of rental objects
* Includes only those leases where the start date falls within the specified time period.
* Includes only the rental objects that previously had a lease (i.e. exclusion of e.g. new production).
Why is it important to follow?
The following are reasons why it is important to follow the KPI:
Tenant satisfaction and retention: By monitoring the turnover rate, one can evaluate how satisfied existing tenants are with their accommodation. A high turnover rate can indicate issues with tenant satisfaction or satisfaction, which can lead to higher turnover rates.
Attractiveness of the property: A low relocation rate may indicate that the property is attractive to tenants and offers a good living environment and service. This can help preserve and increase the property's value in the long term.
Leasing strategy: By analyzing the turnover rate, one can adapt leasing strategies to reduce the turnover rate and thereby reduce vacancies and loss of rental income. This may include offering improved amenities, service or leases to retain existing tenants.
Financial stability: A stable turnover rate can contribute to a more predictable rental income stream and thereby increase the property's financial stability. It can facilitate long-term planning and budgeting for property owners and managers.
Market analysis: By comparing the occupancy rate with market norms and competitor performance, a better understanding of the property's position in the market can be gained and any areas for improvement or differentiation identified.
In this context, occupancy rates provide valuable insights into tenant satisfaction, property attractiveness and rental performance, enabling effective strategies to improve tenant retention and maximize revenue from existing rental units.
Created by Homepal
9/21/2023
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