Physical V Economic Occupancy: The Difference is Important What is it?

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Physical V Economic Occupancy: The Difference is Important What is it?

That is why when looking at our properties and ones we are interested in we look at two different metrics for occupancy - Physical Occupancy and Economic Occupancy. Economic occupancy is defined as the percentage of potential gross income that a property achieves in a given period. Economic Occupancy = ((90 paying units - 5 non paying units x $1,000) / (100 units x $1,000)) x 10085% = (85,000 / 100,000) x 100It may sound obvious but take note that the economic occupancy is lower then the physical occupancy, this is fairly common. If your property has a delta between the physical and economic occupancy it is possible that your property has an issue. Interestingly enough some property owners and asset managers don't actually want their properties to be at 100% physical occupancy.

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