Occupancy Cost
Occupancy cost describes rent plus expenses retail tenants pay to landlords for items such as common area maintenance, utilities, taxes, and other costs. Industry commentary uses the term to describe the full occupancy burden beyond base rent.
- Where it applies
- Generally, not specific to New York
- When it comes up
- Leasing; asset management; tenant health monitoring
- Property types
- Retail
In practice
In retail underwriting, occupancy cost is a bridge metric linking lease terms to tenant unit economics and default/renewal risk.
Related terms
Operating Performance Metrics
- Average Daily Rate (ADR)
- EBITDA Per Available Room (EBITDA PAR)
- Gross Operating Profit Per Available Room (GOPPAR)
- Labor Cost Per Available Room (LPAR)
- Load Factor (Common Area Factor / Loss Factor)
- Net Effective Rent (NER)
- Occupancy Cost Ratio
- Rentable Area
- Revenue Per Available Room (RevPAR)
- Sales per Square Foot
General information, not legal, tax or financial advice.