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5 Unconventional Metrics Every Real Estate Operator Should Track

Whether it is residential, hospitality or commercial real estate, operators often rely on traditional metrics like occupancy rates and revenue per square foot. While these are undeniably important, there are several unconventional metrics that can provide deeper insights and drive better decision-making.

Here are 5 metrics that every real estate operator should be tracking:

This is a MUCH better way to track customer satisfaction vs using NPS or CSAT. Referrals are a powerful indicator of customer satisfaction and loyalty. In a world where D2C companies are throwing money at social media platforms and search engines, referrals are the cheapest way of acquiring new customers. 

Do you have a referral program already in place? Are less than 25% of your customers through referrals? Reply and let me know – I can suggest some ways you can do this better. 

While on the concept of reducing customer acquisition cost, do you know how much it’s currently costing you to acquire a ‘landlord’? You can choose to look at this as ‘Cost of supply acquisition/sqft’ or ‘Cost of supply acquisition/room’ or ‘cost of acquisition/seats’ etc, but they all boil down to the same thing. 

Just as acquiring new tenants incurs costs, so does acquiring new landlords or property owners. As much of landlord acquisition happens super offline (through networking, feet-on-street work, etc.), many operators don’t calculate and update this metric. 

IMO, a lot of management time (founders or senior executives) goes into supply acquisitions, so it would be prudent to put a value to that time and derive this metric and focus on making it better. 

80% of operators I speak to think of themselves as a ‘Premium’ brand (or aspire to be), but I’m surprised why they never notice that the rents they charge customers don’t reflect this. If you are a premium player, your customers will be willing to pay more for your brand + service. 

Some operators have a strategy of keeping their occupancy low but at much higher prices. I would not count this as a premium rent. 

At what rent would you be confident of keeping your units at more than 90% occupied throughout the year? How much more is this number compared to other operators in your zone of competition? 

Measuring the rent premium your properties command over comparable properties in the area is crucial. A consistent rent premium indicates a strong market positioning and tenant satisfaction. Conversely, if your properties are not commanding a premium, it may be time to reassess your value proposition and make necessary improvements.

Keeping a close eye on operating expenses per square foot is essential for maintaining profitability. This metric allows operators to benchmark their efficiency against industry standards and identify areas where costs can be reduced. Whether it’s energy management, maintenance, or staffing, optimizing these expenses can lead to significant savings.

Investing in building transformations can enhance property value and tenant satisfaction, but it’s crucial to track how quickly these investments pay off. The CapEx payback period measures the time it takes for capital expenditures to generate enough additional revenue to cover the initial investment. Shorter payback periods are preferable as they indicate more efficient use of capital and quicker returns on investment.

By incorporating these unconventional metrics into your regular reporting and analysis, you can gain a more comprehensive understanding of your operations and make more informed decisions. What unconventional metrics do you track? Hit ‘Reply’ and let me know your thoughts!