Vacancy Rate Impact Calculator

It's a stress-test tool. Most deal pro formas assume a single vacancy number — usually a hopeful one. This calculator lets you see exactly what happens to your cap rate, NOI, and effective income across a range of vacancy scenarios.

Use it to pressure-test your underwriting before you sign, and to figure out at what vacancy your deal stops penciling.

• Lost Income = Gross Rental Income × Vacancy Rate
• Effective Gross Income (EGI) = Gross Rental Income − Lost Income
• Net Operating Income (NOI) = EGI − Operating Expenses
• Cap Rate = (NOI / Property Value) × 100
• Break-even Vacancy = the vacancy rate where NOI = $0, i.e. (1 − Operating Expenses / Gross Income) × 100

Break-even vacancy is the rate at which your NOI hits zero — every dollar of effective rent is consumed by operating expenses. Above break-even vacancy, the property bleeds cash; you're paying out of pocket to operate.

Most healthy stabilized deals have break-even vacancy of 30–50%. Below 25% means thin operating margins and high sensitivity to occupancy swings. This number tells you the floor of your defensive position.

It varies significantly by asset class, market, and business plan:

• Multifamily Class A urban: 3–5%
• Multifamily suburban Class B/C: 5–8%
• Office: 8–15% (post-2020 reality, varies wildly by market)
• Retail (anchored): 5–10%
• Single-tenant retail: 0% when leased, 100% when not
• Industrial: 3–7%
• Hospitality: 30–40% (measured as occupancy inverse)

Value-add and lease-up deals routinely run 15%+ during the business-plan execution period.

• Direct income hit: every percentage point of vacancy reduces NOI by 1% of gross income
• Cap rate compression in reverse: lower NOI at a constant cap rate equals lower value
• Lender perception: high vacancy reduces DSCR and may push lenders to require higher coverage or lower LTV
• Buyer perception: high vacancy is read as either market weakness or operator failure — buyers underwrite more conservatively
• Refinance risk: elevated vacancy at maturity can prevent recapitalization at favorable terms

• Price to market. Above-market rents are the #1 cause of self-inflicted vacancy.
• Tenant retention. Renewals are 5–10x cheaper than new leasing. Address concerns fast.
• Marketing visibility. Multiple channels, professional photos, accurate listings.
• Property condition. Tour-ready space leases faster — empty space is your inventory.
• Lease structure. Stagger expiration dates to avoid concentration risk.
• Concessions over rent cuts. A month free preserves face rent and protects future valuation.

Physical vacancy = empty units / total units. Pure occupancy math.

Economic vacancy = lost rent (vacancy + concessions + collection loss + non-revenue units) / scheduled gross rent. This is the number that actually hits your P&L.

Underwriting typically uses economic vacancy because it captures the full revenue impact, not just the count of empty doors.