Tenant retention rate is the percentage of tenants who renew their lease rather than move out over a given period. It is the complement of turnover: a 70% retention rate means 30% of tenants left. Higher retention protects income by avoiding the vacancy, downtime, and re-leasing cost that follow every move-out.
How Is Tenant Retention Rate Calculated?
Tenant retention rate is calculated by dividing the number of tenants who renewed by the number whose leases were up for renewal in the period, then multiplying by 100. It is the mirror of turnover rate, which per Wall Street Prep is vacated tenants over the total. Retention plus turnover for the same pool equals 100%.
The pool matters. The denominator should be leases eligible to renew in the period, not the total tenant count, because tenants mid-lease cannot leave without breaking the contract. Measuring against all tenants understates turnover; measuring against expiring leases gives the true renewal decision. Retention is usually tracked annually so it maps to the lease-renewal cycle.
Input | Definition |
Renewed tenants | Tenants who signed a new term rather than vacating |
Eligible tenants | Tenants whose leases came up for renewal in the period |
Retention rate | Renewed tenants divided by eligible tenants, as a percentage |
Turnover rate | Vacated tenants divided by eligible tenants, the complement of retention |
Why Tenant Retention Rate Matters
Tenant retention rate matters because every move-out triggers cost that a renewal avoids: lost rent during downtime, make-ready and turnover expense, and leasing commissions or marketing to fill the unit. Retention is the cheapest occupancy an operator can buy, so a rising retention rate defends net operating income without any change in market rent.
For an operator, retention is a leading indicator of asset health and a direct lever on returns. Per RealPage's third-quarter 2025 analysis, resident retention in the US apartment market rose toward an all-time high as buying a home became less affordable, keeping renters in place longer. Strong retention offset cooling demand: fuller buildings with fewer turns held income steady even as new lease activity slowed. The retention rate tells the underwriter whether occupancy is stable or bought at the cost of constant re-leasing.
Example
A 200-unit apartment property had 150 leases come up for renewal this year. Of those, 105 tenants renewed and 45 moved out. Retention rate is 105 divided by 150, or 70%. Turnover on the eligible pool is 45 divided by 150, or 30%, and the two figures sum to 100% as expected.
Component | Value |
Leases eligible to renew | 150 |
Tenants who renewed | 105 |
Tenants who vacated | 45 |
Retention rate | 70% |
Turnover rate | 30% |
Each of the 45 move-outs carries turnover cost. If make-ready, downtime, and re-leasing average $2,500 per turn, the 45 vacancies cost $112,500 this year. Lifting retention from 70% to 80% would cut move-outs from 45 to 30, avoiding 15 turns and roughly $37,500 in cost, before counting any additional rent lost to vacant days.
Variations and Edge Cases
Tenant retention rate is defined differently across property types and data sources, so a headline figure needs its denominator confirmed before it can be compared to another property. The table below covers the variants that change the number, each of which can move reported retention by several points on the same underlying leases.
Variant | Treatment |
Eligible-lease basis | Renewals over expiring leases; the true renewal decision |
Total-tenant basis | Renewals over all tenants; understates turnover by including mid-lease tenants |
Residential vs commercial | Commercial retention typically runs higher, since businesses relocate less often |
Gross vs net turnover | Net turnover nets out internal transfers within the same portfolio |
Skips and evictions | Counted as move-outs; they reduce retention even without a renewal decision |
The most common mistake is treating high occupancy as high retention. A building can hold 95% occupancy while churning tenants constantly if move-outs are re-leased quickly. Occupancy measures the result at a point in time; retention measures how much of that occupancy came from tenants choosing to stay rather than from re-leasing empty units.
Tenant Retention Rate vs Occupancy Rate
Tenant retention rate is often confused with occupancy rate, and they measure different things. Tenant retention rate measures the share of expiring leases that renew, capturing whether existing tenants choose to stay. Occupancy rate measures the share of units currently leased at a point in time, regardless of how those tenants arrived.
The two can diverge sharply. A property may run 95% occupancy with 50% retention, meaning it stays full only by constantly re-leasing units that turn over. Retention is a flow measure of tenant loyalty over a period; occupancy is a snapshot of space in use. High retention produces stable occupancy at low cost, while high occupancy built on low retention hides recurring turnover expense.
Frequently Asked Questions
How do you calculate tenant retention rate?Divide the number of tenants who renewed by the number of tenants whose leases were eligible to renew in the period, then multiply by 100. If 105 of 150 expiring leases renew, retention is 70%. Retention rate and turnover rate for the same pool sum to 100%.
What is a good tenant retention rate?Benchmarks vary by property type, with commercial and retail typically running higher than residential because businesses relocate less often. Residential retention often sits in the 50% to 60% range and retail nearer 70%, but the target depends on strategy: value-add plans may accept lower retention to reprice units, while core holds prize high retention.
What is the difference between tenant retention and occupancy?Retention measures the share of expiring leases that renew over a period. Occupancy measures the share of units leased at a point in time. A property can be highly occupied yet have low retention if it stays full by constantly re-leasing units that turn over.
Related Terms
Vacancy Rate
Net Operating Income
Loss to Lease
Rent Roll
Capital Expenditures