Occupancy Rate

This term refers to the number of units in a building rented out, as a percentage of the total number of units in the building. For example, a commercial real estate property containing 400 units, 200 of which had renters, would have a 50% occupancy rate. The vacancy rate, by contrast, refers to the number of units in a building not rented out, as a percentage of the total number of units in the building. Real estate investors view occupancy rates as an important indicator of a property’s potential for generation rental income. To an investor, a high occupancy rate is an encouraging sign; a low occupancy rate, that the property is probably not a good investment, to say the least. Investing in a property with a low occupancy rate could mean time and expense consumed in attracting renters, while not earning any income on the unoccupied space in the building, and paying property taxes and maintenance.