Occupancy Rate

How is it calculated?

# of Occupied Units / Total # of Units

 

Goal of the Ratio

The goal of this ratio is to identify what percentage of the total units are currently leased.  Alternatively, Vacancy Rate attempts to show the same thing, but instead of look at what % of units are occupied, it identifies what % of units are vacant.

 

When is it used?

Residential Rental Business

 

Rules of Thumb

Higher is better

 

Pitfalls of this Ratio

One pitfall of this ratio is that the calculation does not take into consideration how the rental rates compare to the potential rental rates available.  A property with low rents, may have a strong occupancy rate, but due to offering below-market rental rates, it may still struggle to cover it's obligations.

 

What changes in the ratio could mean:

  1. Lease up previously unoccupied units
  2. Add new units
  3. Sell old units
  4. Lose occupants 

 

Other Relevant Terms

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A bit about me

Greetings! I'm Clay Sharkey, and there is nothing I like more than assisting others in achieving their goals. I firmly believe that by enhancing a banker's understanding of their customer's' business, they can provide superior service. This superior service, in turn, leads to stronger relationships for the bank, improved performance for the businesses, and better experiences for our communities.  Win-win-win.