Posted in Finance, Accounting and Economics Terms, Total Reads: 212
Definition: Vacancy Rate
Vacancy Rate can be defined in percentage as number of available units that are vacant or unoccupied in a rental property or hotel. It is the exact opposite of occupancy rate. The formula for vacancy rate is Units not rented out/Total Units.
The vacancy rate and occupancy rate should add up to 100%. It is a metric for evaluating a rental property or hotel. High vacancy rates means that the rental sales are low while it is opposite for low vacancy rates. Vacancy rate decides supply and demand in the real estate market. Despite the fact that high opening rate is undesirable, both tenant and landlord oblige time to hunt down a decent arrangement or particular counter-parties that are suitable to them two. This prompts empty space in the real estate market. Regularly when the actual vacancy rate surpasses the normal vacancy rate, the landlord decreases the rent and the other way around.
Taking an example to explain vacancy rate, let us assume that a company owns an apartment ABC which has 100 houses out of which 10 are not rented or are vacant. Then the occupancy rate will be 90% and vacancy rate will be 10%.