Occupancy

What Is Economic Occupancy?

Economic occupancy measures the rent you actually collect as a share of the rent the property could collect if fully leased at market.

Economic occupancy = Collected income ÷ Gross potential income × 100

Physical occupancy counts filled units; economic occupancy counts dollars. They diverge when units are occupied but not paying full market rent, through concessions, delinquency, or below-market leases. Economic occupancy is the more honest number because it reflects what reaches the bank.

A verified figure comes from the rent roll, not the seller's peak-season claim. See how it feeds the analysis in requesting the right financials.

Related terms

• Rent Roll
• Operating Expense Ratio
• Net Operating Income (NOI)

Part of the RVP Underwriter glossary of income-property underwriting terms. Browse all definitions, or put them to work with the free calculators.