Vacancy Rate (Area)
What is it?
Vacancy Rate (Area) is a key performance indicator that measures the percentage of the total leasable area in a property or portfolio that is currently vacant and not generating rental income. This metric provides an indication of how effectively a property is being utilized and how much of the available space is not under lease.
In Homepal, vacancy is defined as unlet. Thus, rental properties that are empty, blocked or similar are also included in this value.
How is it calculated?
(Available and blocked rentable area / Total rentable area) x 100 = Real Vacancy Rate (Area)
Why is it important to follow?
Tracking the vacancy rate (area) is important because:
Indicator of market demand for the property
A high vacancy rate may indicate a lack of demand for the space, which can negatively impact revenue.
Management and optimization
A low vacancy rate indicates that the property is being effectively utilized, which is positive for cash flow and profitability. By monitoring the vacancy rate, property managers can proactively work to improve leasing strategies and align the property’s offerings with market needs.
Risk management
Keeping track of the vacancy rate helps identify risks associated with vacant spaces and provides a basis for decisions on marketing efforts, renovations, or other actions to attract tenants.
Budgeting and forecasting
The vacancy rate directly impacts rental income and, therefore, budgeting and forecasting. Understanding the vacancy rate helps predict potential revenue shortfalls and adjust budgets accordingly.
Created by Homepal
9/11/2024
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