Glossary

Loss to Lease

Also known as: LTL

The gap between the gross potential rent a unit or suite could achieve at current market rates and the actual in-place contract rent it is generating, reflecting rent embedded below market due to lease timing rather than concessions or vacancy.

Loss to lease is distinct from vacancy loss, which reflects space generating no rent at all, and from concessions, which are temporary rent abatement; the gap exists because leases are signed at different points in the rent-growth cycle and typically run multiple years, so even a fully leased, well-run asset in a rising-rent market shows meaningful loss to lease simply from leases signed one, two, or three years earlier at lower rates. Asset managers track loss-to-lease trends to project embedded revenue upside as leases roll to market, a key input into both forward NOI and renewal-spread expectations, and to distinguish organic future NOI growth already baked into the existing rent roll from growth that still depends on speculative future market rent increases. Loss to lease is not automatically recoverable — it converts to actual income only when the lease actually rolls at the higher rate — so a large figure paired with weak tenant retention or long remaining lease terms overstates the near-term upside actually achievable.