Maximizing Commercial Real Estate Value: The Power of Stacking Plans

Stacking plans are more than just an asset management tool in Commercial Real Estate (CRE). They’re a powerful resource for maximizing a property's value.

A well-designed stacking plan provides a comprehensive, visual view of a building’s tenants, lease expirations, rent rates, and square footage. But a stacking plan’s true strength lies in the ways it helps property owners, asset managers, and leasing teams make smarter, faster decisions that ultimately drive up the building’s value. Let’s understand how.

Understanding the Basics of Stacking Plans

At its core, a stacking plan is a graphical representation of a building’s floors, each showing which tenants occupy specific spaces, when leases expire, and which units are vacant or soon to be available. Think of it as a strategic blueprint that allows a complete view of tenant occupancy across all levels of a building. Not only does it show the layout and allocation of tenants within a property, but it also gives insights into which areas of the building are most valuable based on rental rates, tenant types, and lease terms.

A few years back, we worked with a sponsor who owned a multi-story office building with high tenant turnover. They struggled to keep track of tenants, renewals, and vacancies, which created gaps in occupancy and led to revenue shortfalls. By implementing a dynamic stacking plan, we were able to visualize everything in one place, making it easy to spot upcoming vacancies and focus our leasing efforts accordingly.

How Stacking Plans Add Value to Commercial Real Estate

Enhancing Tenant Retention and Minimizing Vacancies

Tenant retention is a critical piece of the puzzle when it comes to maximizing property value. Every time a tenant leaves, a property owner risks incurring vacancy costs and tenant improvement expenses to attract new tenants. With a stacking plan, you can see which tenants have leases set to expire and prioritize outreach for renewal discussions well in advance.

Take, for instance, another building that one of our clients managed where they identified an anchor tenant’s lease nearing expiration. Using the stacking plan, they strategized to offer a competitive lease renewal well ahead of time. Because of that early engagement, the tenant renewed, saving them time, reducing vacancy, and minimizing the cost and risk associated with replacing a significant tenant.

Strategic Lease Management

A stacking plan also helps me to approach lease management strategically. It’s easy to identify underutilized areas, recognize opportunities for upselling, and pinpoint underperforming units. In one project, a sponsor had a floor with several small tenants with short-term leases. Rather than treating each lease individually, they used the stacking plan to visualize which spaces could be combined and marketed to larger, more stable tenants at higher rental rates.

Furthermore, a stacking plan allows you to manage rent escalations better. By understanding when rent bumps are due and aligning them with market trends, you can keep the property’s cash flow steady and maximize rent revenue.

Improving Space Utilization and Increasing Revenue per Square Foot

Space utilization is crucial in today’s CRE landscape, where tenants look for efficient, adaptable spaces. With the insights stacking plans offer, you can identify where space usage could be optimized, either through consolidation of smaller spaces or conversion of underused areas into higher-value ones. This helps increase the revenue per square foot while meeting the demands of modern tenants.

Visualizing and Forecasting Cash Flow

Stacking plans provide more than just tenant information—they give me the foresight needed for cash flow forecasting. When you look at a stacking plan, you can project future rental income based on current leases and vacancy rates. This visibility is particularly helpful when planning renovations, calculating potential improvements in net operating income (NOI), and anticipating periods of fluctuating occupancy.

For example, once a sponsor was performing property evaluations. The stacking plan indicated several leases expiring within six months. Armed with this knowledge, they budgeted for potential vacancy costs, planned marketing campaigns, and calculated the capital needed to cover tenant improvements. These proactive steps ensured steady cash flow, minimized financial surprises, and provided a realistic snapshot of the property’s financial health.

Facilitating Better Communication and Decision-Making

Another often-overlooked benefit of stacking plans is that they simplify communication among stakeholders. Whether you are presenting data to investors, discussing lease adjustments with asset managers, or working with leasing agents to attract tenants, a stacking plan serves as a visual reference that everyone can understand.

Once, an investor was concerned about a property’s high vacancy rate. Instead of providing a lengthy report, the sponsor shared a stacking plan that illustrated lease expirations, current vacancies, and the tenant retention strategy. That simple visual clarified their plans, instilled confidence, and fostered better decision-making, all while saving valuable time.

Aligning Lease Expirations and Tenant Mix with Market Conditions

When lease expirations are staggered, a property is protected from significant fluctuations in occupancy and revenue. Stacking plans let me align lease expirations with market demand, ensuring that you aren’t left with a large block of vacancies during a market downturn. Similarly, the ability to track tenant types and mix is invaluable in planning for a building’s market positioning.

Maximizing Value with Technology-Driven Stacking Plans

Today, stacking plans are more than just paper charts or Excel sheets. Technology has transformed them into interactive, data-rich tools that provide real-time insights. Many CRE platforms now include dynamic stacking plans that are updated automatically and integrated with financial models, which means that you can track occupancy changes, rent roll, and lease expirations instantly. These digital stacking plans make it easier than ever to conduct quick analysis and execute strategic decisions on the fly, keeping the property’s performance optimized in line with current market trends.

Realizing the Financial Impact

When stacking plans are used effectively, the financial benefits are clear. For example, through tenant retention strategies and careful lease structuring, we saw a sponsor reduce vacancy rates in one property by 15% over two years. This translated to a substantial increase in rental revenue. Moreover, optimizing tenant mix allowed them to boost NOI and elevate the property’s valuation, making it more appealing to potential buyers or investors.

Stacking plans also enhance your negotiation power. When renewing leases, you can use insights from the stacking plan to negotiate terms that are both fair and financially advantageous.

Conclusion

Stacking plans are not just organizational tools—they’re powerful assets that drive real financial impact in commercial real estate. By providing a clear, comprehensive view of a building’s occupancy, lease expirations, and tenant mix, stacking plans enable property owners and managers to make smarter, data-driven decisions that maximize a building’s value.

The journey from understanding stacking plans to leveraging them effectively is invaluable. It transforms how you approach property management and asset optimization. Whether it’s securing tenant renewals, aligning lease expirations with market trends, or enhancing space utilization, stacking plans have become a core part of sponsors’ strategy for maximizing value in commercial real estate. If you haven’t yet explored the potential of stacking plans, now is the time to unlock their power and elevate your property’s performance to new heights.