My strip mall listing in Mesa hit 92% occupancy and I'm not celebrating

Everyone in my office acts like any number over 90% is a huge win, but it took a 15% rent cut on the last two units to get there. The previous owner was getting 87% occupancy at full price. I ran the numbers and the net operating income is actually down about 2% from last year. It looks good on paper, but we traded quality tenants for a higher head count. Has anyone else found that chasing a specific occupancy rate can hurt your bottom line more than help?

3 comments

3 Comments

bettyl372mo ago

You're right about chasing occupancy rates. That high number is just vanity if the money coming in is less. The old owner had the right idea focusing on solid tenants over a full building.

robinwalker28d ago

Yeah but here's what I keep coming back to - how do you actually figure out who those "solid tenants" are before they prove themselves? I've had people with perfect credit and good jobs turn into nightmare tenants after six months. Then I've had the guy with a spotty rental history who paid early every month for three years straight. It just feels like a guessing game sometimes. The old owner might have had a system though, you know? Like maybe he looked for certain things in their application or during the walkthrough. I wish I knew what his secret was because I'm still trying to crack that code myself.

emma_hayes802mo ago

I used to chase that high number too, but seeing the real drop in income... it changes your mind.