Stabilized occupancy is the assumed long-run baseline used for underwriting and valuation. Properties under lease-up (the first 3–9 months) operate below stabilized levels. Properties at stabilization should hold the assumed occupancy rate over multiple quarters.
For coliving underwriting, stabilized occupancy assumptions are critical and frequently optimistic. Conservative underwriting uses 88%; aggressive uses 93–95%. The difference between 90% and 93% is a 3.3% revenue swing, which compounds to multiple percentage points of NOI margin and cap rate-implied valuation.
In the field
European stabilized coliving: 88–93% (Lisbon, Madrid, Berlin). UK: 90–94% (London H16 schemes). Asia-Pacific: 85–93% (Singapore, Bangalore). US: 88–95% (Austin, NYC, premium product). Outside these ranges typically signals lease-up issues.
Common pitfalls
- ×Using a single property's peak occupancy as the stabilized number — peaks are not sustainable baselines.
- ×Excluding planned-vacancy downtime from the calculation — flatters the underwriting assumption.
- ×Not testing stabilized assumptions against trailing-12-month observed performance.
- ×Assuming stabilization happens within 3–6 months — most coliving lease-ups take 9–18 months in new markets.