Renewal Probability

Renewal probability is an estimate of the likelihood that a tenant will choose to renew their lease upon its expiration. This metric is typically expressed as a percentage and can be assigned to an individual tenant or a group of tenants within a property. Renewal probability helps property owners, investors, and property managers assess the stability of rental income and anticipate future leasing activity.

Several factors can influence a tenant's likelihood of renewal, including the amount of money invested in their space, satisfaction with the property and its management, current market conditions, and the availability of suitable alternative spaces. For example, if a tenant has made significant investments in their space, they may be more likely to renew their lease.

In general, renewal probabilities can vary across different property types and tenant profiles. An average renewal probability of 70% is often used as a benchmark, but specific probabilities should be based on historical data, tenant characteristics, and market conditions.