Unlocking the full potential of your commercial real estate (CRE) property starts with a clear understanding of how the space is used-and that’s where stacking plans are a powerful tool.
What is a stacking plan?
A stacking plan is a visual representation of a commercial structure that shows how it’s being used across different floors. For example, it can include information on vacant and occupied units, the square footage of each unit, current tenants, lease terms, rent rolls, and more.
By having all this information on a single visual, property owners, commercial real estate brokers, and other stakeholders can quickly make more informed business decisions.
Stacking plan vs. floor plan
That said, stacking plans are not to be confused with floor plans. A stacking plan offers a high-level view of tenant distribution and leasing in a commercial building, while a floor plan provides detailed information about the physical layout of a specific floor.
How does a stacking plan work?
A typical stacking plan is a vertical diagram of a building, showing each floor as a bar or block.
From there, blocks are often color-coded or labeled to indicate unit square footage, occupancy, and different lease terms. These might include lease expiration dates, renewal options, rent rolls, and rental rates. Similarly, vacancies are labeled to identify available rental units.
Overall, stacking plans are designed to provide a quick overview of a building’s occupancy and leasing status, making it easier to manage the property and make informed investing decisions.
Components of a stacking plan
Stacking plans can be broken down into the following components:
| Floor-by-floor breakdown | This is a visual representation of the building’s physical layout, including each floor with its corresponding floor number. |
| Tenant information | This can include each tenant’s name, point of contact, and industry. |
| Visualization of occupancy | This is usually a color-coded system that marks units differently based on their occupancy status. |
| Lease management | This includes basic lease information, such as lease expiration dates, renewal options, rent rolls, rental rates, and any other significant lease terms. |
| Asset management and sales | This includes other annotations regarding property management and potential leasing or sales opportunities. |
| Design and layout planning | This includes the layout and square footage of units, common areas, and other parts of the building, like lobbies and service areas. |
Stacking plan example
Now that you know what a stacking plan is, here’s an example of what one can look like:
Each horizontal bar represents a floor, while each block within a bar represents a unit. Some units are marked green to indicate they are vacant, while others are marked a different color based on when the occupying tenant’s lease started. Furthermore, each floor’s square footage is listed on the right.
Pros and cons of a stacking plan
Of course, stacking plans have their pros and cons:
| Pros | Description |
| Visualization | Stacking plans offer an easy way to understand a building’s current utilization and tenant mix. |
| Operations | Stacking plans can help owners and asset managers quickly assess tenant mix, space utilization, rent rolls, and rental income to identify areas for improvement. |
| Marketing | Stacking plans can help property owners sell or lease their space by showing its current use and what’s available. |
| Communication | Stacking plans provide an easy way to communicate leasing information to investors, property managers, brokers, and other stakeholders in a digestible format. |
| Cons | Description |
| Cost | Stacking plans can require a lot of time and money to create and update when done manually. |
| Incomplete picture | Stacking plans may provide an incomplete picture of a building’s financial health. |
Common types of stacking plans
Stacking plans can come in many shapes and sizes. The most common types are those created for office buildings. However, others are created for apartment, retail, and other types of commercial real estate properties.
How a stacking plan can increase your property’s value
On top of helping you visualize a building’s tenant mix and utilization, stacking plans can increase your property’s value. Here’s how:
First, stacking plans help building owners and asset managers better assess and ultimately improve a building’s operations. And since commercial properties are often valued based on local cap rates and net operating income (NOI), any improvement to NOI leads to a higher value.
Second, stacking plans can help owners and commercial real estate brokers market a property to potential tenants or buyers. By giving a detailed account of a property’s current tenant mix and types of commercial real estate leases, a stacking plan can make a property more attractive, thereby allowing building owners to sell or lease units at a higher price.
Common mistakes to avoid when creating stacking plans
That said, for your stacking plan to be effective, you must avoid these common mistakes:
- Incorrect tenant information. Accurate tenant information is the foundation of a good stacking plan. It includes tenant names, unit numbers, lease terms, and renewal options. Ensure it stays up-to-date so that you can make better forecasts and business decisions.
- Misrepresenting available space. If a stacking plan lists space before it is available or incorrectly sizes units, this could frustrate potential tenants and buyers.
- Poor visual quality. Stacking plans must strike a delicate balance between providing good information without overcrowding the image with too much detail. Use dedicated software to optimize the visual appeal of your stacking plans.
- Omitting important metrics. Don’t forget to include key data, such as square footage, rent rates, or common area allocations. These are important data points that stakeholders want to see.
6 best practices for creating a lucrative stacking plan
To create a lucrative stacking plan, follow these guidelines:
1. Use stacking plan software. The old way of creating stacking plans with Excel spreadsheets is time-consuming and error-prone. Instead, use dedicated software designed to produce accurate and visually appealing stacking plans in a fraction of the time.
2. Include a lot of data. The more data you include in your stacking plan, the more accurate it will be. This includes data on tenants, leases, vacancy status, and more. Furthermore, ensure data is updated regularly to keep your stacking plan up-to-date.
3. Adopt a color-coding system. A color-coded stacking plan allows stakeholders to quickly understand a commercial building’s tenant mix and operations. For example, you can color-code lease types and vacancy status.
4. Incorporate financial metrics. Consider including metrics like rent per square foot, rent escalation dates, and other financial metrics. This can help owners and asset managers identify value-add opportunities.
5. Make it collaborative. Most commercial buildings are managed by a team. As a result, it’s wise to give editing rights to authorized users who can update the document in real-time, leading to optimized workflows.
6. Prioritize data security. Of course, not just anyone should have access to a stacking plan. Ensure the document is protected against cyber theft and other unauthorized use. This can not only protect your business but also show stakeholders that you take data privacy seriously.
Conclusion
Ultimately, stacking plans can be a valuable tool in your commercial real estate business. When used effectively, they can improve your commercial building operations, streamline workflows, and even raise the value of your property.
