What type of expenses are unaffected by occupancy levels?

Fixed expenses are costs that do not change with the level of occupancy or production within a business. These expenses remain constant regardless of how much the property is utilized. For example, lease payments, property taxes, and insurance premiums fall under fixed expenses, as they must be paid irrespective of how many units are occupied or rented.

On the other hand, variable expenses fluctuate based on occupancy levels. For instance, utilities or maintenance costs might increase as more tenants use the facilities. Contingent expenses and optional expenses also vary based on specific conditions and choices made by the property owner or management. Therefore, understanding that fixed expenses remain stable despite occupancy changes is crucial for financial planning and management in real estate.