Vacancy rate
Vacancy rate is the share of a property or portfolio that is unoccupied over a period, measured by units or by potential rent. It is a direct driver of income: every vacant unit is rent not collected.
The formula
Vacancy rate = vacant units / total units (or vacant potential rent / total potential rent) over a period. A 5 percent vacancy rate means 5 percent of capacity went unrented.
What is the difference between physical and economic vacancy?
Physical vacancy counts empty units. Economic vacancy counts lost rent, including concessions and non-payment, so it can be higher than physical vacancy even in a full building.
What is a good vacancy rate?
It varies by market and asset class. The useful comparison is against local market vacancy for similar properties, not a universal benchmark.
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