Industry
Occupancy rate
Occupancy rate is the share of a property’s available units, or square feet, that are leased and occupied at a point in time.
Occupancy rate = Occupied units ÷ Total available units
Worked example
| Units in the property | 200 |
| Occupied units at month end | 188 |
188 ÷ 200 = 94% occupied (6% vacant)
Why it matters
Rental income depends on occupied units, while most operating costs do not fall when a unit is empty. A few points of occupancy can be the difference between a property that covers its costs and one that does not.
Common mistakes
Where it misleads
Treating physical occupancy as income: a unit with a tenant who is not paying, or on a free-rent concession, is occupied but earns nothing.
Excluding units that are down for renovation without saying so, which makes occupancy look higher.
Averaging occupancy across properties of different sizes instead of dividing total occupied units by total units.
Related terms
Keep reading
- Budget vs actualBudget vs actual compares what happened in a period with what was planned, line by line, to show where the business is ahead of or behind its plan.
- Accounts receivable aging (AR aging)An accounts receivable aging report groups unpaid customer invoices by how long they are past due, so you can see which money is at risk of never arriving.
- Operating marginOperating margin is the share of revenue left after the cost of goods sold and all operating expenses, before interest and taxes.
Stop calculating it by hand.
Dear CFO keeps your statements, forecasts and metrics current from the systems you already run.