Loss to lease describes the difference between the rent a unit could command at today's market rate and the rent actually being collected under its existing lease. The gap opens up naturally over time: leases signed months or years earlier reflect market conditions at signing, not current conditions, and rent growth or renewal caps can widen the spread further. A property with a large loss to lease is often collecting below-market rent across a meaningful share of its units.
Investors and asset managers track this figure closely because it represents embedded upside. As leases expire and roll over to new tenants or renewed terms, in-place rents can move toward market levels, lifting revenue without any change to the physical asset. This process is central to mark-to-market real estate strategies, where closing the loss-to-lease gap is treated as a core driver of value creation rather than a one-time event.
Further reading: How Mark-to-Market Strategies Influence Tenant Retention
ACCESS
