Measure commercial leasing by how signed agreements become delivered, cash-producing, supportable tenancies at a justified capital cost. Occupancy remains useful, but it does not show concessions, credit, unfunded improvements, delayed commencements, termination exposure, or the cost of keeping income in place. A useful owner dashboard connects leasing activity to investment cash flow.
Choose definitions before setting targets. Leased area, physical occupancy, rent-paying area, collected revenue, new leasing, renewals, retention, and net effective rent answer different questions. Report them together with the date, denominator, exclusions, and reconciliation needed to understand changes.
Separate the leasing funnel from the result
Tours, inquiries, proposals, letters of intent, and executed leases are different stages. Track them to diagnose demand and process, not as substitutes for signed income. A large inquiry count can reflect poor qualification; a small number of well-matched prospects may be more useful.
Define a qualified prospect according to the property’s actual needs, size, timing, use, financial capacity, and approval status. Avoid collecting unnecessary personal or confidential information. Preserve the reason a prospect progresses or drops out so the owner can distinguish pricing problems from physical or operational mismatch.
Do not add the same prospect multiple times because several brokers contact the building. Use a consistent record and distinguish new activity from follow-up. A funnel that counts duplicate conversations can create false confidence about likely lease-up.
Bridge leased area to cash-paying area
Assume a hypothetical 50,000-square-foot property has 40,000 square feet under signed lease, 35,000 delivered for occupancy, and 30,000 paying full base rent. These are 80%, 70%, and 60% of the same total area, respectively. The differences can be legitimate but need explanation.
Five thousand square feet may be awaiting landlord work and another 5,000 may be in base-rent abatement. Record the remaining capital and dates. Do not call all signed space fully stabilized or forecast full rent before the actual conditions are satisfied.
A tenant could pay some charges during base-rent abatement, so the cash-paying definition should be explicit. Consider showing collected base rent and recoveries separately rather than forcing every lease into a binary label. Reconcile the area measures to the rent roll and the cash measures to accounts.
Calculate lease economics consistently
Compare scheduled rent, abatement, improvements, commissions, legal and other owner costs, operating burdens, and timing. Preserve both undiscounted and discounted views where useful. Do not call a net base-rent average NOI if operating expenses remain outside it.
Cousins’ public office supplement presents leasing measures with definitions and separate capital information. It is an example of reporting discipline, not a local pricing benchmark. Review the leasing table.
For an original hypothetical example, a five-year 5,000-square-foot lease at $30 annually produces $750,000 scheduled base rent. Three free months reduce receipts by $37,500. Improvements of $150,000 and fees of $37,500 leave $525,000 after those listed costs, or $21 per square foot annually over five years. State what is omitted and keep timing in the detailed model.
Track commitments as well as paid costs
A lease signed today may require landlord payments next quarter. Maintain approved and signed commitments, cash paid, remaining exposure, payment conditions, and forecast dates. The owner needs to know whether the capital plan can deliver all signed leases.
Empire State Realty’s quarterly disclosures distinguish signed-period leasing-capital metrics from amounts actually paid in that period. That distinction is useful when reconciling activity to cash. Read the disclosure footnote.
A low paid-to-date number is not a saving if a large allowance remains due. Conversely, heavy current cash spending may serve leases signed earlier. Show the cohort of agreements and avoid evaluating a broker or manager on a capital number that belongs to a different period of work.
Define retention before comparing it
Retention can be measured by tenants, area, rent, or other bases. Expansions, contractions, relocations, early terminations, redevelopment, and direct leases with subtenants can affect the denominator. Publish the method and retain a bridge to all expirations.
Rexford’s industrial reporting defines retention with specific inclusions and exclusions. Its method illustrates why ratios require definitions; its industrial results are not a benchmark for Chicago office or retail. Review the retention footnote.
Suppose 20,000 square feet expires, 12,000 renews in place, and 3,000 relocates within the owner’s property. An area-based method counting relocations would produce 75%; an in-place-only method would produce 60%. Neither label should be used without explaining the method. Show what happened to the remaining space and resulting cash.
Evaluate quality, not only volume
A signed lease with weak credit, extensive termination rights, or highly specialized landlord work can have more risk than a lower-rent agreement with a stronger documented obligor and reusable space. Record the material differences rather than inventing a single score that hides them.
Review tenant concentration, guarantees, security, business dependency, rent collection history, and contractual flexibility. A leasing team should not be rewarded solely for filling area when the resulting obligations exceed the owner’s approved risk. Establish authority and approval requirements before negotiation.
Also evaluate term and expiry distribution. A long average term may conceal a major near-term event, while several short renewals may cluster future rollover. Include an exit rent roll and debt-maturity view where relevant to the investment plan.
Connect leasing to the operating burden
A new tenant can change service hours, utilities, cleaning, waste, parking, maintenance, insurance, or administrative complexity. Some costs may be recoverable and others retained. Model the actual lease and service scope rather than assuming every signed dollar has the same margin.
A hypothetical tenant paying $100,000 of annual base rent and $20,000 of recoveries may require $35,000 of incremental property cost under the stipulated scope. Its direct contribution before other costs is $85,000. Another with $95,000 of base rent and no recoveries but only $5,000 incremental cost contributes $90,000. These simplified figures do not allocate all shared expenses, but they show why rent alone is insufficient.
Do not use contribution analysis to ignore shared fixed costs or capital. It is one lens within the full property model. Explain which expenses change because of the lease and which remain regardless.
Use pace measures to improve decisions
Track time from qualified inquiry to proposal, proposal to execution, execution to delivery, and delivery to contractual cash rent. Investigate delays by cause. A slow legal negotiation, missing design information, owner approval, and long-lead equipment require different remedies.
Compare performance with the approved plan and current evidence. A lease signed at the modeled rent but six months late can materially change cash needs. Reforecast the property rather than reporting only a successful rent negotiation. Preserve the original target so timing performance remains visible.
Use lost-deal reasons to guide investment. If prospects consistently reject floor-plate constraints, a marketing campaign may not solve the problem. If price is the issue, expensive speculative improvements may not be the best response. Seek evidence before choosing a remedy.
Present a compact owner dashboard
A useful report can show area bridges, receipts, net lease economics, commitments, retention, expirations, prospects by stage, timing, and decisions required. Use consistent definitions and avoid so many metrics that the investment problem disappears. Include short explanations of material movement.
For Chicago-area property, compare relevant competing premises and executed evidence where available. National REIT tables can teach definitions but do not establish expected local performance. Label estimates, opinions, and unsupported assumptions clearly.
Review the dashboard after major leasing events and at regular owner meetings. Ask whether signed activity is turning into collected income at the expected capital cost. Leasing performance creates investor value when it produces tenancies the building can deliver, operate, and sustain within the approved plan.
Review cohorts rather than isolated averages
Group leases by signing period, new versus renewal, asset area, size, condition, and other relevant characteristics when the sample permits. A change in average rent can reflect a different mix of suites rather than improved negotiation. Explain small samples and avoid statistical claims that the available evidence cannot support.
For example, two hypothetical new leases averaging $40 per square foot do not establish that all vacant space can achieve $40 if they involve unusually small, improved suites. The remaining large unfinished floor may serve a different user. Keep its forecast tied to relevant evidence rather than applying the two-lease average across the property.
Compare the same cohort’s signed commitments, delivery, cash start, and first-year performance. This reveals whether attractive signed economics survive construction and collection. A lease that looked strong at execution can underperform if the allowance expands or commencement slips. Retain changes with causes instead of overwriting the original underwriting.
Use the findings to adjust leasing authority and capital assumptions. If a recurring issue is incomplete work-letter scope, improve the pre-signing review rather than simply increasing every allowance. If delays arise from owner approvals, address the decision process. Metrics are useful when they identify the action that improves the next agreement, not when they decorate a report.
An independent reviewer should be able to reproduce the principal ratios from the rent roll and commitment ledger. Reconcile unexplained differences before circulating a performance claim to investors.