Solve for cap rate, property value, or required NOI. Then compare against typical stabilized cap-rate bands by asset class.
Approximate US stabilized cap-rate bands. Actual pricing varies by market, tenancy, and deal quality.
| Asset Class | Typical Range |
|---|---|
| Multifamily (Class A) | 4.5% – 5.5% |
| Grocery-Anchored Retail | 5.5% – 6.5% |
| Suburban Office | 7.5% – 9% |
| Industrial / Logistics | 5% – 6.5% |
| Single-Tenant Net Lease | 5.5% – 7% |
| Hospitality (Select-Service) | 8% – 10% |
The capitalization rate is the ratio of a property's annual net operating income (NOI) to its market value or purchase price. It's the CRE industry's quick shorthand for unlevered yield.
Cap Rate = NOI ÷ Property Value
A lower cap rate generally means a more expensive property relative to its income — usually reflecting lower risk, stronger tenants, better location, or expected NOI growth. A higher cap rate means cheaper relative to income — often reflecting more risk, shorter lease term, weaker credit, or a secondary market.
NOI is gross rental income plus reimbursements, minus operating expenses (property taxes, insurance, management, R&M, utilities not passed through). It excludes debt service, income taxes, capital expenditures, and depreciation.
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