Product Updates

Introducing: Concession Comps

December 12, 2023
Rowland Hobbs
CEO, Co-founder

30% of all listings on Zillow now show a concession. That’s why today Stake is proud to announce Concession Comps.

Concession Comps, included free in Stake’s Loyalty Cloud, is the only revenue management tool to not only track where the concession market is trending, but also empower properties to outperform the market by changing resident behavior.

Specifically, Concession Comps empowers properties to:

Benchmark concessions of over 5 million units

Compare concessions by price, asset class, and zip code

See specific comparisons by unit type

Track concession costs over time and understand market trends

Compare loyalty and Cash Back strategies to better price concessions

Concession Comps are available for free in Loyalty Cloud for every Stake Network property. It's incredibly fast and easy to use, and Concession Comps empowers on-site, revenue, and asset management teams to better price their concessions and outperform the market.

Here is how quick, easy, and powerful Concession Comps are inside Loyalty Cloud:

Concession Comps is the latest addition to Loyalty Cloud. Loyalty Cloud's existing suite of tools empowers 70,000 units across the United States with over $1.5 billion in annual leases to:

Understand resident payment behavior, including delinquency
Manage incentive campaigns: offers, lease-terms, seasonality, property and unit type.
Set incentive actions: lease signing, lease renewals, and rent payments
Track resident sentiment with StakeSay
Improve resident data integrity by increasing accuracy of contact info
Gain insights into anonymized and aggregated resident spending behavior

Why is Concession Comps so important right now?

Concessions are more expensive than many realize

A typical one-month free offer is 8.3% of the cost of a 12-month lease.

That’s a good chunk of NOI to give up, and the net effective rent drags on returns during refinance (as if this high-interest rate environment wasn’t hard enough).

But concessions don’t just drag on top-line revenue. Concessions also lead to higher skips, more delinquency, and lower retention. Of course, concessions can help sign leases in this environment, but concessions also increase economic vacancy. In current market conditions, it's a double whammy many properties struggle to manage, but can’t afford to avoid. For these reasons, pricing a concession correctly is crucial.

However, a concession is more than just “getting heads in beds” - it's also important to attract residents who can pay and stay. Otherwise, the double whammy of concessions costs (and then losses) become a short-term solution with real long-term consequences.

This is why Stake’s Loyalty Cloud shows how Cash Back is more efficient (read: cheaper!) than a concession, but also how Cash Back reduces economic vacancy better than a concession by reducing days on the market, skips, and delinquency, and increasing renewals.

Concessions don’t work hard enough for renter or owner

Yes, the market is offering concessions. That doesn’t mean renters love, or even remember, the costly concession the property offered. It is highly unlikely that a renter says “thank you” a year later for the free rent they received. Moreover, price increases at renewal are magnified when renters feel the extra burden of the “One month free” that they aren't receiving on their renewal lease.

In addition, when every property in the market is making the same offer, all differentiation is lost - that’s just the price. What’s worse is renters don’t save the “free” they received, so they don’t see how much they were given, making it harder for them to see or feel the benefit after they sign the lease. As we say here at Stake: “You can't spend one month free!”

So, despite the fact that owners lose money on concessions at exceedingly high costs, renters benefit less. It starts to feel like a lose-lose.

There is a better approach. Stake’s Loyalty Cloud not only tracks exactly how much more renters save, boost credit scores, and engage with Cash Back over a traditional concession, but also how much a property outperforms with a Cash Back offer over a concession.

The market needs smarter, better data and properties need to optimize incentives

Often, concessions are picked by a property by just seeing the sign at a competitive property offering a concession. This race to the bottom is dangerous. Without using data to better understand the market, and what renters actually want and will respond to, properties are leaving a large amount of revenue on the table unnecessarily.

Incentive optimization changes this approach. By using market, resident, and property level data, Stake optimizes incentives to make concessions effective, efficient, and, most importantly - outperforming.  Read more on the power of incentive optimization in the Rental Housing Journal here.

Why are Stake’s Concession Comps Free? And what else is free with Stake?

Stake only makes money when properties successfully offer Cash Back to residents. It is in Stake’s interest to offer as many tools as possible to help properties better price concessions, attract residents, and reduce delinquencies. In fact, Stake's customers only pay for success.

But Stake doesn’t just offer all the tools in Loyalty Cloud for free, Stake offers free financial amenities to all residents in the Stake Network. It's simple to start, see the impact Stake can bring, and be prepared for the uncertain concessions market ahead.

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