An occupancy rate below 90% can be attributed to various factors, with changes in the market rate and incentive structures among the primary causes. If the market rate has significantly increased since the last lease negotiations with tenants, the rental income may not align with the property’s full revenue potential, leading to a lower economic occupancy rate. In some cases, property owners may offer incentives or discounts to long-term tenants, which can impact the bottom line and result in lower overall rental income.
Additionally, vacant units pose a significant challenge, especially in sectors such as apartment buildings and single-family residences. Vacancies represent lost rental income and can drag down the overall occupancy rate. Effective marketing strategies, competitive pricing, and proactive tenant retention efforts are essential to minimize vacancies and maintain a high occupancy rate. Addressing these factors requires careful assessment and strategic decision-making to optimize property performance and maximize revenue.