Which scenario reflects the highest economic occupancy rate?

To determine the highest economic occupancy rate, understanding the relationship between gross potential rent, losses due to vacancy, concessions, and bad debt is crucial. Economic occupancy reflects how much rent is actually realized compared to the gross potential rent, accounting for any losses incurred during the period.

In the scenario where the gross potential rent is $400,000 with $10,000 attributed to vacancy losses, the calculation for economic occupancy would be as follows:

1. Start with the gross potential rent of $400,000.
2. Subtract the $10,000 lost to vacancy.
3. The actual rent collected would be $400,000 - $10,000 = $390,000.
4. The economic occupancy rate can then be calculated as: (Actual Rent Collected / Gross Potential Rent) x 100, which results in (390,000 / 400,000) x 100 = 97.5%.

This scenario demonstrates the least loss through vacancy compared to the other options, which have either higher concessions or higher bad debt. These losses directly affect the economic occupancy by reducing the effective income. Thus, the lower the losses from vacancy, concessions, or bad debt, the higher the economic occupancy rate. Therefore, this scenario effectively illustrates