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Vacancy Rate

Source: Investopedia
This Article has been Edited for Accessibility

Vacancy Rate

What is the 'Vacancy Rate'

The vacancy rate is the percentage of all available units in a rental property, such as a hotel or apartment complex, that are vacant or unoccupied at a particular time. It is the opposite of the occupancy rate, which is the percentage of units in a rental property that are occupied. High vacancy rates indicate that the property is not renting well; low vacancy rates point to strong rental sales. Next Up Effective Gross Income - EGI Real Estate Investment Group Gross Income Multiplier Occupancy Rate

Explaining 'Vacancy Rate'

The vacancy rate can also apply to the number of open positions a company currently has in comparison to the total number of positions available throughout the company. When related to other employment metrics, such as turnover or employee longevity, a vacancy rate can provide indications as to how successful the company is at advertising open positions and retaining current employees.

Analysis of Vacancy Rates

A property owner can use vacancy rates as a metric for analysis. Changes in the percentage of vacant units versus occupied units, the length of time occupied units are remaining active, or other rental conditions can provide guidance regarding how competitive a property owner has set the property. If a property owner is charging significantly more or less than the rest of the rental market, this may be reflected in the overall vacancy rates. It can also provide information regarding the effects of price changes or advertising on unit occupancy.


Additional Resources

  1. Chapter 2 Basic Real Estate Economics [isites.harvard.edu]
  2. How Vacancy Rate Points To An Unaffordable Housing Market | [northeastern.edu]
  3. The Vacancy Rate And ]amesfrew* [pages.jh.edu]
  4. 2015 Apartment Vacancy And Rental Rate Survey Within The Davis ... [housing.ucdavis.edu]
  5. Rental Housing Markets, The Incidence And Duration Of Vacancy, And ... [lusk.usc.edu]