Occupancy Rate

How many renters are occupying the building? Like you have a building with 400 equally sized commercial office spaces. The building has $50 million in revenue and its occupancy rate is 75 percent, meaning that there are only 300 spaces rented. Against that $50 mil, it has $35 mil in expenses, including debt service. So it has $15 million in cash flow. What should the building sell for? Well, the low occupancy rate represents financial upside. That is, if the new managers could rent those open or unoccupied 100 offices and generate another, say $20 million in revenue, costs would only increase modestly...like for added janitorial care and electricity/utilities/insurance. So maybe an additional $3 million in costs to glow $17 million to the bottom line and take the building from $15 mil in cash flow to $32 million. There's a big swing in value attributed to the building based on those numbers which are driving lovingly by the occupancy rate. One is not always the loneliest number.