Value is truly in the eye of the beholder. I have seen many lease-ups where a certain floor plan was to drive rent collected because of how amazing it was. Or, acquisition properties where the internal underwriting team was convinced their projected rents were accurate. Even suggesting a 2 bed 1 bath could be priced with only a minor discount to a similar 2 bed 2 bath competitor.
The reality is that leasing talks, and prospects walk, when it comes to the value created by our offerings. For simplicity, we’ll focus on the impacts of your price decisions on value perception. We will save unit amenities for next week.
The Base Rent Challenge
Apartment Unit Rent is fundamentally derived from two components:
- Base Rent – 85-97% of rent
- Amenities – 3-15% of rent
A common practice for Revenue Management systems in Multifamily is to allow the operator to assign a dollar value. They do so to each property unit type grouped together to create a collective pricing group.
The Static Spread Trap
Their is a downside to this common approach. It is that while the rent fluctuates for the pricing group, the spreads all stay static.
Consider a market like Austin, TX, where rents have seen significant declines in 2025. If your flat dollar spreads stayed the same during this decline, you have a problem. The value for each square foot in 2023 has changed with a heavily supplied market in 2025. If you don’t maintain the balance of value, you end up with under-market occupancy in the larger price-gapped floor plans.
Deepen Your Analysis: Measuring Days on Market (DOM)
The best way to measure and monitor this value balance is by using Days on Market (DOM), a metric borrowed from the Single-Family Home Purchase Industry.
- DOM Calculation: The day you receive an application (new resident) minus the day you received the notice (old resident) is the days on market.
- Why DOM over ADVs? Some have suggested you can use Average Days Vacant (ADV) as a substitute, but this is less effective.
Start comparing your Days on Market over a long enough lookback period to see where gaps are occurring in the leasing velocity of your units. Make adjustments, monitor, and repeat the process often.
Revenue. Accelerated.
Don’t let static pricing spreads cost you revenue. Be confident, be strategic.
Contact Bryan Pierce today at [email protected] to schedule your personalized strategy consultation and put Revenue Intelligence with Velocity to work for your portfolio. Curated by Bryan Pierce, Founder of IgniteRevs.
