The Real Cost of Vacancy Part II: Lease Up Assumptions That Make or Break Your Deal

Overview

In this episode of the Ironclad Underwriting Podcast, Jason Williams and Frank Patalano continue their deep dive into the real cost of vacancy by unpacking lease up assumptions. They explore what lease up really means in acquisitions and ground up development, why many investors get it wrong, and how competition, concessions, seasonality, and management execution directly impact underwriting accuracy and returns.

Topics Covered

• What lease up means in real world underwriting scenarios
• The difference between physical occupancy and economic occupancy
• Why 90% occupancy is not the same as being stabilized
• How agency lenders define stabilization with the 90 for 90 rule
• Lease up challenges in acquisitions versus ground up development
• The impact of competition, concessions, and nearby properties
• Absorption rates and how to interpret them without overcomplicating models
• Seasonality and why lease expirations matter more than timelines
• The hidden cost of concessions and how they affect long term value
• Operational realities like staffing, marketing channels, and leasing execution

Quotes

• “Nobody is living in a vacuum so you have to figure out what exactly is going to affect your lease up projections”

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