In real estate, occupancy means people are living in or using a property. Landlords use the word in three related ways: whether a unit is occupied or vacant, how full a whole property or portfolio is, and how many people are allowed to live in a unit. Each one shows up in day to day decisions.
Occupancy as a measure
The simplest measure is the occupancy rate:
Occupancy rate = Occupied units / Total units x 100
A building with 46 of 50 units occupied has an occupancy rate of 92%. The other side of the coin is vacancy: 8% here.
Physical vs economic occupancy
Physical occupancy counts people in units. Economic occupancy counts money.
Economic occupancy = Rent actually collected / Gross potential rent x 100
Using the same building, suppose all 50 units would bring in $75,000 a month at full market rent. Four empty units cost $6,000, concessions on recent leases cost $1,500 and two tenants owe $2,000 they have not paid. Collected rent is $65,500, so economic occupancy is about 87%, five points below physical occupancy. That gap is money the building is not earning, which is why lenders and buyers look at both.
Leased vs occupied
- Occupied: a tenant lives there now.
- Leased: a lease is signed, including future move-ins.
- Notice to vacate: occupied, but the tenant is leaving.
A property can be 94% occupied and 97% leased, or the reverse if many tenants have given notice. Watching all three shows where occupancy is headed.
Occupancy limits
Local housing codes often set minimum space per person, and many landlords also set a written limit per bedroom. Federal fair housing guidance has long treated two people per bedroom as a general starting point while looking at factors like bedroom size, the age of children and the overall layout. Rules stricter than local codes can be challenged as discrimination against families. Separately, the certificate of occupancy sets how a building may legally be used, such as the number of dwelling units.
Why it matters for landlords
Occupancy drives income. Each percentage point on a 50 unit building at $1,500 is worth about $9,000 a year. Track occupied, leased and notice units together, and look at economic occupancy, not just heads in beds. TenantLoop’s rent roll shows every unit with its tenant, lease dates and balance from the ledger, so both kinds of occupancy are a report away.
Related terms
In practice. How the term shows up day to day.
What is the difference between occupancy and occupancy rate?
Occupancy is the broad idea of a property being lived in or used. Occupancy rate is the specific measure: occupied units divided by total units, shown as a percentage.
Can a landlord limit how many people live in a unit?
Yes, within limits. Occupancy rules must be reasonable, follow local housing codes and not be used to exclude families with children, which fair housing law protects.
Is a unit with a signed lease but no move-in yet occupied?
On most reports it counts as leased but not yet occupied. Many owners track both, because a leased unit will produce rent soon while an occupied unit is producing it now.