Vacancy is not a one-off event; it is an ongoing cost that compounds when tenants cluster. Core idea: Every month a unit sits empty costs rental income, increases per-unit fixed costs and may pressure the landlord to accept worse lease terms. Why it matters: That matters because optimistic occupancy assumptions are behind most real estate investment disappointments. In real life: A commercial property with three tenants whose leases all expire within 12 months faces a correlated re-leasing risk that most pro formas understate. Common slip: The mistake is underwriting 95% occupancy on a building that has historically averaged 88% without explaining what changed. Try this: On the next review, write down the one variable that would make you change your mind. The point is not to memorize the label. The point is to know what variable is actually doing the work.