Occupancy is a building’s revenue source—a tenant will rent an apartment, a retailer leases a commercial space, or a corporation leases a portion of a building for its staff.

Technically, occupancy is referred to as a percentage of the total square feet or units leased.

Expectations of tenancy or occupancy drive future income expectations for sponsors and landlords, and help investors determine future cash flows.

Investors also take into account expected vacancy rates, which may range from 5-10% depending on the type of real estate and market conditions.

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