The vacancy rate in property is the percentage of units in a building, city or market that are empty and available to rent or buy at a given time. It is calculated for rental housing, owner-occupied housing, offices, shops, warehouses and hotels. Landlords, investors, lenders, planners and central banks watch it because it shows how tight or loose a property market is, much as prices do, and it tends to move ahead of rents and prices.
The property vacancy rate is the mirror image of the occupancy rate. It should not be confused with the job vacancy rate, which measures unfilled job vacancies in the labour market, although both describe the gap between what is offered and what is taken up. In the United States, the Census Bureau publishes official national rental and homeowner vacancy rates every quarter; commercial property figures mostly come from private research firms and brokers.
Vacancy rate in plain terms
Picture a car park. If nearly every space is full, drivers circle around and the owner can raise the fee. If half the spaces sit empty, the owner may cut prices to attract cars. The share of empty spaces tells you which way prices are likely to go.
Property works the same way. A low vacancy rate means tenants compete for scarce space, and rents tend to rise. A high rate means landlords compete for tenants, offering discounts or free months instead.
Formula and example
The basic calculation is:
A 200-unit apartment complex with 14 empty flats has a vacancy rate of , and an occupancy rate of 93%. Offices and shops are usually measured by floor area rather than units, so a 50,000-square-metre tower with 10,000 square metres empty has a 20% vacancy rate.
Property managers also track economic vacancy, the share of potential rent lost to empty units, rent-free periods and discounts. It is often higher than physical vacancy, since a building can be full but filled at concessionary rents.
How vacancy is measured
The US Census Bureau's Housing Vacancies and Homeownership survey reports a rental vacancy rate and a homeowner vacancy rate. National rental vacancy was 7.1% in the first quarter of 2025, 7.2% in the fourth quarter of 2025 and 7.3% in the first quarter of 2026, while the homeowner vacancy rate was 1.2%. The survey counts only units on the market; homes held for seasonal use or left empty for other reasons are classified separately. Figures are subject to seasonal swings and sampling error, so analysts look at trends over several quarters.
Other countries use different sources. Many rely on census counts, local tax records on empty homes or utility data, and commercial vacancy is tracked by brokers for each city. Definitions vary widely, so international comparisons need care.
What vacancy rates signal
- Rents and inflation. Falling vacancy usually precedes faster rent growth, and rents feed the housing component of the consumer price index. Central banks therefore treat vacancy as one of the leading indicators of shelter inflation.
- Construction. Low vacancy encourages developers to build; a wave of completions then pushes vacancy back up. This lag helps explain the property cycle within the wider business cycle.
- Investment values. Higher vacancy cuts a landlord's income, which lowers the value of the building and can strain loans secured on it, sometimes leaving owners with negative equity.
- Market health. Every market needs some empty units so that people can move. Economists call this the natural vacancy rate, similar to frictional unemployment in the job market. Vacancy persistently below it signals a shortage; persistently above it signals oversupply.
Vacancy reflects supply and demand: new building adds supply, while population, incomes and interest rates drive demand. When mortgage rates are high, some would-be buyers keep renting, which can lower rental vacancy.
Offices after the pandemic
The spread of working from home and hybrid working after 2020 cut demand for office space in many cities, and office vacancy in the United States rose to record levels by industry measures. Older buildings were hit hardest, while modern, well-located space fared better. The resulting losses on office loans became a concern for some lenders and for financial-stability authorities, and some cities encouraged converting empty offices to housing. Because buildings are illiquid assets that take years to repurpose, high office vacancy can persist long after the shock that caused it.