Vacancy Rate

Category: business

The percentage of all available units in a rental property or market that are vacant or unoccupied at a particular time.

Vacancy is the "empty gauge." A 5% vacancy rate in multifamily is considered "functionally full" (just accounting for turnover). In commercial retail, high vacancy is a death spiral, as it drives away foot traffic and triggers co-tenancy exit clauses for the remaining stores.

Common Examples

• The economic downturn pushed the downtown office vacancy rate above 20%, triggering a massive drop in commercial lease pricing.
• Lenders typically underwrite properties assuming a baseline 5% vacancy rate, even if the building is currently 100% occupied.