What occupancy target generally indicates stabilization for BTR properties?

For Build-To-Rent (BTR) properties, a stabilization target typically indicates a level of occupancy at which the property has reached a consistent and sustainable demand. This threshold is generally set at 95% occupancy. A 95% occupancy level reflects that the property is not only attracting tenants but also effectively managing lease renewals and tenant turnover, which are key factors in achieving financial stability and operational success.

Achieving 95% occupancy suggests that the property is performing well within its market, providing confidence to investors and stakeholders regarding its profitability and stability. This level indicates that only a small fraction of units are vacant, thereby minimizing the risks associated with unoccupied units, such as lost rental income and increased costs related to marketing and leasing efforts.

Other occupancy targets, such as 90% or 85%, may indicate that a property is performing adequately but does not yet reflect the high demand and operational efficiency associated with full stabilization. Occupancy at 100% may also be unrealistic as it does not account for normal turnover rates and the need for repairs or renovations, which sometimes take units offline temporarily. Consequently, 95% is widely recognized as the benchmark that signifies stabilization in the context of BTR properties.