What Is Occupancy Cost Ratio?

Occupancy cost ratio is a retail leasing metric measuring a tenant's total occupancy costs — base rent, common area maintenance, and taxes — as a percentage of that tenant's gross sales.

Most useful for: Commercial Investor
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At a Glance
Occupancy Cost Ratio
Occupancy Cost Ratio=Total Occupancy Costs÷Tenant Gross Sales×100

Formula

Occupancy Cost Ratio = Total Occupancy Costs ÷ Tenant Gross Sales × 100

Why it matters

Landlords and tenants both watch OCR closely: a ratio that's too high for the tenant's business type can signal the tenant is at risk of struggling or eventually vacating.

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This definition is provided for general educational purposes and is not financial, legal, tax, or real estate advice. Verify important decisions with appropriately qualified professionals.

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