What is the vacancy rate in commercial real estate?

Vacancy rate in commercial real estate measures the percentage of total available space in a market, building, or portfolio that is currently unoccupied and available for lease. It is one of the most fundamental demand-supply indicators in commercial real estate inversely correlated with rental rates and property values.

Vacancy Rate Formula

Vacancy Rate (%) = (Total Vacant Space ÷ Total Available Space) × 100

What Vacancy Rates Indicate

• Below 10%: Tight market landlord has pricing power; rents tend to rise.
• 10–15%: Balanced market moderate rent growth or stability.
• Above 15%: Tenant-friendly market rental pressure; landlords offer more incentives.

India Grade A Office Vacancy (2024 Approximate)

• Bengaluru: 12–15% (some pressure from WFH-related demand softness).
• Hyderabad: 15–18% (high new supply).
• Mumbai: 8–12% (tight supply in Grade A).
• Pune: 13–16%.

Vacancy rate is the most widely quoted indicator of commercial real estate market health. Investors should track vacancy trends by sub-market rather than city average as hyperlocal micro-market dynamics often diverge significantly from headline city figures.