Stacking Plan
A visual representation of a building showing a breakdown of space occupied by tenants on each individual floor. The breakdown may extend to include other details of the tenant such as their company name, occupied square footage, lease expiration date or rental rate.
Putting ‘Stacking Plan’ in Context
Pacific Crest Realty Advisors, a real estate investment manager, recently acquired The Montgomery Tower, a 25-story Class A office building located in the heart of San Francisco’s Central Business District (CBD). The tower, built in 2002, offers 500,000 square feet of rentable office space and boasts sweeping views of the Bay Bridge and access to nearby public transportation hubs. The acquisition aligns with Pacific Crest’s core investment strategy, targeting stable, well-located, and income-producing assets.
The Purpose of a Stacking Plan
Following the acquisition, Pacific Crest’s asset management team created a stacking plan for The Montgomery Tower. The stacking plan serves as a visual breakdown of the building’s occupancy by tenant, providing a snapshot of how space is utilized across the 25 floors. This plan is a crucial tool for the property management team, asset managers, and leasing brokers, as it supports strategic decision-making related to lease expirations, tenant retention, and future leasing strategies.
Details of the Stacking Plan
The stacking plan for The Montgomery Tower includes the following key details for each tenant:
- Tenant Name: The name of each tenant occupying space on each floor.
- Square Footage Occupied: The total square footage each tenant occupies on a given floor.
- Lease Expiration Date: The date when the tenant’s lease is set to expire.
- Rental Rate: The current rental rate being paid by each tenant (this is often displayed as a range or average for confidentiality).
The stacking plan reveals that Floors 2 through 6 are fully leased to a single tenant, Bluefin Tech Solutions, a fast-growing fintech company that occupies 120,000 square feet (5 floors at 24,000 SF each) under a long-term lease set to expire in December 2030. Bluefin Tech is considered an anchor tenant, providing stable cash flow for the property.
On Floors 7 through 10, the space is split among three smaller tenants per floor, each leasing between 8,000 and 10,000 square feet, with lease expirations staggered between 2026 and 2027. The diversity of these smaller tenants reduces leasing risk if one vacates, as it avoids a “lump sum” vacancy scenario.
The upper floors (Floors 11 through 25) are occupied by larger tenants in the legal, financial services, and consulting sectors. Most of these tenants lease full floors at approximately 20,000 square feet each, with leases expiring at various points between 2025 and 2029. One notable tenant is Summit Legal LLP, a large national law firm that occupies Floors 18 through 20 (60,000 square feet total) with a lease expiration in 2028.
How the Stacking Plan is Used
Lease Expiration Management
The stacking plan reveals that several key tenant leases, including those for Floors 7 through 10, are set to expire in 2026-2027. Knowing this, Pacific Crest’s asset management team can proactively engage with tenants to negotiate renewals before expiration or begin marketing the spaces in advance to reduce downtime.
Tenant Risk Assessment
The stacking plan helps Pacific Crest assess concentration risk. For instance, they recognize that Bluefin Tech Solutions occupies 24% of the total building (120,000 SF out of 500,000 SF), so the team will monitor Bluefin’s financial health closely since any issues with this tenant could have a material impact on the building’s cash flow.
Leasing Strategy
With visibility into tenant lease terms, the team can stagger lease expirations to avoid a situation where multiple large spaces become vacant at once. For example, the current expiration schedule shows that Summit Legal LLP’s lease expires in 2028, while the other larger tenants in the upper floors have expirations spread between 2025 and 2029, thereby reducing “cliff risk” (a large, sudden vacancy).
Property Valuation
The stacking plan plays a vital role in underwriting the building’s value. Lease expirations, tenant quality, and the stability of rent payments are key drivers in determining the Net Operating Income (NOI) and, by extension, the building’s market value. If the plan revealed that a large percentage of the leases were expiring within a single year, this could signal a higher leasing risk, which would reduce the perceived stability of future cash flows.
Leasing Broker Support
Leasing brokers can use the stacking plan to market space to potential tenants, identifying which floors and which square footage will become available in the near future.
Example Calculation: Pro Rata Share for Bluefin Tech Solutions
If Bluefin Tech Solutions occupies 120,000 square feet out of the total 500,000 rentable square feet, their pro rata share of common expenses would be calculated as follows:
Pro Rata Share = Tenant’s Square Footage / Total Building Square Footage
Pro Rata Share = 120,000 SF / 500,000 SF = 24%
This means that Bluefin Tech is responsible for 24% of the building’s operating expenses, property taxes, and CAM (Common Area Maintenance) charges, depending on the terms of their lease.
Conclusion
The stacking plan for The Montgomery Tower provides Pacific Crest Realty Advisors with a clear, visual layout of tenant occupancy, lease terms, and upcoming expirations. It serves as an essential tool for managing leasing risk, optimizing asset strategy, and supporting leasing brokers as they market space to prospective tenants. By monitoring the stacking plan, Pacific Crest can maintain stable cash flow, avoid large vacancies, and effectively plan leasing strategies to maintain The Montgomery Tower’s value over time.
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