I was recently reviewing detailed lease data for a large metropolitan market for one of my clients and saw something that absolutely fascinated me. Fully one-third of the leases had synchronized expirations at the end of the month rather than exactly one-year leases.

This harkened back to the days of 1999 when, at Talus Solutions (the company I worked for back then), we were doing analysis and simulation for Archstone in the work that would eventually lead to the creation of LRO, the industry’s first automated pricing and revenue management system.

One of the things we noticed was that occupancy over time had a “saw tooth” nature to it. Back then, Archstone synchronized leases to end at the end of a month so there was always a large drop in occupancy the first week of the month followed by a steady climb, followed by another drop at the start of the next month, etc. Through interviewing associates in the field, we also learned that this practice stressed make ready teams as they couldn’t possibly process units quickly enough to fill them all in the first week of the month, even if there was enough demand to move in then. The result was essentially locking in up to 75bps of vacancy loss compared to what could be achieved if expirations were spread more smoothly throughout the month.

To be honest, I was stunned to see the numbers I recently saw, particularly given that this data was for a primary market and across multiple operating companies. I just assumed that almost all operators have figured out that while synchronizing expirations may feel good, they really end up stressing service teams and driving higher vacancy loss.

There you have it. If you’re currently synchronizing lease expirations to the last day of the month, simply stop doing that and watch occupancy go up as much as 75bps once you work through the current rent roll.

One other note: If you are a more senior operator and think your company doesn’t synchronize leases, check your rent rolls. You may be surprised to find one or more communities doing this when you didn’t realize it was happening.