Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Vacancy Rate

What it is:

Vacancy rate is the ratio of rental units not rented versus the total number in the building, city, state, etc.

How it works (Example):

The formula for vacancy rate is:

Vacancy rate = Units not rented out / Total units

For example, let's assume that Company XYZ owns an apartment building that has 300 units. Of those units, 25 are not rented out. Using this information and the formula above, we can calculate that Company XYZ's vacancy rate is:

Vacancy rate = 25/300 = 8.33%

Though our example uses units as the basis for calculating vacancy rate, it is possible to use square feet or rent dollars instead.

Why it Matters:

The vacancy rate is equal to 1 - Occupancy rate. In our example, the occupancy rate would equal 1 - 0.0833 = 91.67%.