Occupancy Optimization
Occupancy is the foundation metric — but raw numbers lie. Learn the difference between physical and performing occupancy, and how to optimize both.
The Four Types of Occupancy
Units with stuff in them ÷ total units. The basic metric everyone tracks.
Paying tenants only. Excludes delinquent, overlocked, and lien accounts. This is your real revenue base.
Actual revenue ÷ potential revenue at street rates. Reveals pricing discipline.
Where you should be operating. For most markets: 88-92%. Higher means you're underpriced.
The Occupancy Illusion
A facility at 95% physical but 72% performing is in crisis. The numbers look good on paper while revenue bleeds out.
Physical occupancy can mask serious problems: delinquent tenants, overlocked units in lien process, or comp units. Always track performing occupancy as your primary metric. The gap between physical and performing tells you how healthy your collections really are.
Optimize by Unit Type
| Unit Size | Typical Demand | Strategy |
|---|---|---|
| 5×5, 5×10 | High velocity, short tenure | Price aggressively, high turnover expected |
| 10×10 | Highest demand | Never discount — your cash cow |
| 10×15, 10×20 | Moderate demand | Seasonal — push hard before summer moves |
| 10×30+ | Low velocity, long tenure | Accept lower occupancy, don't over-discount |
The 92% Rule
At 92%+ performing occupancy, you have pricing power. Use it.
The True Cost of Vacancy
Every empty unit has a daily cost. A 10×10 at $150/month = $5/day lost. A 500-unit facility at 80% (100 empty) loses $500/day — $182,500/year.
Calculate your vacancy cost: Empty units × avg rent ÷ 30 = daily loss. Make it visible. Review it weekly.
Key Takeaway
Stop celebrating physical occupancy. Track performing occupancy as your north star. Know your vacancy cost in dollars, not percentages. And remember: at 92%+, the answer is always "raise rates" — never "stop marketing."