Dictionary of Real Estate Terms: natural vacancy rate
natural vacancy rate
the average vacancy rate for a rental property market that would result if supply and demand were in balance. The level to which vacancy rates adjust over the long term. A benchmark by which current vacancy rates in the market are considered high or low.
Example: During a period of rapid population growth, apartment vacancy rates fell to less than 1%. The natural vacancy rate for the local market was 5%. Because of the unusually low vacancy rate, rents soared and plans were started on new apartment developments in the area.
