Why Occupancy Rate Alone Misleads
Two buildings, twenty units each, both at 85% occupancy. They look identical — but one has its cheapest units vacant while the other has its most expensive ones vacant. Same number, entirely different financial reality.
Three Measures, Not One
- Unit occupancy: leased units over total. Useful operationally.
- Revenue occupancy: actual revenue over potential revenue if all units were leased at their rate. The true financial measure.
- Area occupancy: important in commercial where sizes vary widely.
The gap between the first two reveals which units are struggling. If unit occupancy exceeds revenue occupancy, your vacancies are in the expensive units.
Vacancy Duration: The Operational Metric
Occupancy is a snapshot; vacancy duration measures performance. Short duration means correct pricing and effective marketing; long duration means overpricing, poor unit condition, or weak marketing.
Opportunity Cost
Convert vacancies into a discussable number: vacant days times daily rent, per unit. The total is what you actually lost. This transforms the conversation from debate into calculation.
Chronic Vacancy
Watch units that repeatedly stay vacant longer than peers in the same building — they carry a specific problem: view, floor, condition, or pricing. Per-unit duration over time reveals this pattern; averages hide it.