The Vacancy Rate refers to the percentage of all available units in a rental property, such as an apartment complex, office space, or shopping center, that are vacant or unoccupied at a particular time. It is a critical economic indicator used to assess the performance of rental properties.
To calculate the vacancy rate, you divide the number of vacant units by the total number of units available and then multiply by 100 to get a percentage. For example, if a building with 100 units has 10 vacant, the vacancy rate is:
(10 / 100) × 100 = 10%
A low vacancy rate typically indicates a high demand for rental space, suggesting that the real estate market is strong in that area. Conversely, a high vacancy rate might indicate a less desirable location or market oversaturation, which can lead to reduced rental income for property owners and potentially lower property values. Investors and property managers closely monitor the vacancy rate as it affects rental income and the value of the real estate investment.