Why vacancy matters

Vacancy is one of the most visible profit leaks in commercial real estate and one of the most misunderstood. Every empty month compounds lost rent, CAM recovery gaps depending on lease structure, and ongoing carrying costs like taxes, insurance, and utilities. Vacancy also weakens your leverage. The longer a space sits, the more likely you are to pay for it later through concessions, TI, or lower net effective rent.

10-minute diagnosis - Traffic vs conversion vs process

Before you change brokers, cut rent, or remodel the space, identify where the leasing system is failing. Vacancy is a funnel. If you cannot point to the stage where deals are dying, you are guessing.

The real tradeoffs owners face

Option A. Assume it is just the market

Upside - Low short-term effort. No uncomfortable pricing or terms discussions.

Downside - No diagnostic signal. Leasing urgency fades. You react late and vacancy costs accumulate quietly.

Option B. Treat vacancy as a systems failure

Upside -  Faster diagnosis. Clear accountability. Corrective action within weeks, not quarters.

Downside - Requires a weekly cadence, owner decision guardrails, and a manager willing to enforce accountability with the leasing agent.

What most owners get wrong

• They compare asking rent, not net effective rent.
• They accept “we are marketing it” instead of reviewing a pipeline.
• They do not measure response time to inquiries.
• They hold pricing steady after 30 to 45 days of no traction.
• They treat every vacancy the same instead of segmenting by use, size, and demand depth.

How a systems-driven owner thinks about vacancy

• Vacancy is a conversion funnel, not a binary outcome.
• Time on market is a KPI.
• Leasing velocity matters more than anecdotes.
• Every vacant space needs a plan with owners, dates, and decision triggers.

14-day vacancy diagnosis framework

This framework is designed to create clarity fast. It tells you whether you have a traffic issue, a conversion issue, or a process issue. It also forces the core question owners avoid.

Who owns the leasing system end-to-end.

Step 1. Traffic check

• Inquiries per week
• Source mix. Platform, signage, broker outreach, direct
• Tour requests per week

If traffic is low, the problem is visibility, pricing, positioning, or access.

Step 2. Conversion check

• Inquiries to tours
• Tours to LOIs
• Top objections heard after tours

If tours happen but LOIs do not, the problem is positioning, condition, deal structure, or follow-up.

Step 3. Pricing reality check

• Compare net effective rent, not just asking rent
• Review concessions, TI expectations, and delivery conditions
• Confirm your pricing is consistent with your micro-market, not a broader city average
  
  

Step 4. Speed audit

• Response time to inquiries
• Time from tour to proposal in writing
• Time from LOI to lease draft

Momentum matters. If the process drifts, deals die quietly, and the broker will blame “the market.”

Step 5. Decision guardrails

If approvals are slow, vacancy extends. The fix is not more meetings. The fix is clear guardrails.

• Rent floor
• Maximum free rent
• TI posture and cap
• Minimum term
• Use boundaries
• Credit and financial requirements
• Timeline expectations for approvals and lease drafting

Step 6. Weekly cadence

Vacancy requires weekly cadence. Monthly updates are too slow for leasing.

Owner vs manager vs leasing agent - Who owns what?

In many commercial vacancies, the leasing agent markets, the manager operates, and the owner approves. Vacancy persists when nobody owns the full leasing system end-to-end.

This operating model is especially effective when you prefer to use an outside commercial leasing agent. You want the broker focused on leasing. You want your manager focused on execution, accountability, and momentum.

Next step - Vacancy diagnostic intake

FAQs

How long is too long for a commercial space to sit vacant?

It depends on size, use, and your micro-market. If the space has been actively marketed and is beyond the typical lease-up window with little traction, the issue is usually operational. Pricing, positioning, follow-up, decision speed, or space readiness.

Should I drop rent to fill the space?

Not automatically. First diagnose traffic and conversion. Cutting price without fixing follow-up and process often fails. In many cases the real fix is response time, deal packaging, and clearer concessions and TI guardrails.

Do I need to replace my leasing agent?

Not always. Many vacancies improve without changing brokers by enforcing weekly pipeline reporting, faster response times, clearer owner guardrails, and better tour readiness. Replace representation when activity is low, reporting is weak, and there is no accountability.

What can a third-party manager do if I already have a leasing agent?

A third-party manager can coordinate and manage the broker relationship so leasing is not a loose process. This includes weekly cadence, response standards, space readiness execution, and faster approvals within guardrails.

How often should I get leasing updates while the space is vacant?

Weekly. Vacancy is an active project. Monthly updates are too slow for leasing momentum.

Closing perspective

Vacancy is not a mystery. It is a signal that something in the leasing system is misaligned. When pricing, positioning, and execution are owned and reviewed weekly, vacancy shortens. When they are not, vacancy lingers and value leaks quietly.