Calculate cap rate for office, retail, or industrial
For commercial investors calculating capitalization rate: NOI divided by purchase price reveals property yield and valuation.
Commercial Cap Rate Calculator
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Create Free AccountWhat it does
The Commercial Cap Rate Calculator divides net operating income by purchase price to produce the annualized yield on office, retail, industrial, or mixed-use properties. Input NOI and purchase price to compare commercial property investments across different tenant types and markets.
Commercial properties trade on cap rate because income streams are standardized — leases, expense loads, and market expectations create comparable yield metrics. This calculator shows commercial investors whether a property's cap rate offers sufficient return compensation for property type risk and market risk.
Who it's for
- Commercial property investors benchmarking properties across asset classes and markets
- Commercial brokers presenting investment analysis to institutional and 1031 buyers
- REIT managers allocating capital across commercial assets based on cap rate targets
- Lenders underwriting commercial loans and validating debt service capacity at yield targets
How it works
Calculate NOI (Net Operating Income)
Gross potential rent minus all operating expenses (not debt service).
Enter purchase price
The full property price.
Divide NOI by price
Cap rate = NOI ÷ purchase price.
Why it matters
Calculate cap rate for any commercial property type
Compare cap rates across markets and asset classes
Identify undervalued or overvalued assets
Determine purchase price for target cap rate
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Enter a property address to pre-fill value, rent, and tax data automatically.
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Frequently asked questions
What cap rate is good for commercial?
Office: 4–7%; retail: 5–8%; industrial: 4–6%. Lower cap = lower risk, higher price. Higher cap = higher risk or better value.
Should I use gross rent or effective rent?
Effective rent (after vacancy) gives real NOI. Gross rent overstates income. Use effective rent in NOI calculation.
Do I include debt service in cap rate?
No — cap rate is unleveraged return. Cash-on-cash includes financing; cap rate doesn't. Both metrics are useful.
Can a property have negative cap rate?
No — you need positive NOI. If NOI is negative, property is cash-flow negative and should not be purchased for income.
Is this calculator free to use?
Yes — create a free Investor Starter account to run 1 calculator per day. No credit card required. Upgrade to Core ($49/mo) for unlimited access to all 67 calculators.
How accurate are the results?
Results are only as accurate as your inputs. The formulas use industry-standard real estate investment math. Always verify with a licensed professional before committing capital.
Related calculators
NOI (Net Operating Income) Calculator
Calculate net operating income — gross income minus operating expenses before debt service.
Open calculatorCommercial DSCR Calculator
Check whether commercial NOI meets the 1.25x debt service coverage ratio required by most lenders.
Open calculatorCommercial Property Value Calculator
Value commercial property using the income approach by dividing stabilized NOI by market cap rate.
Open calculatorCommercial Loan Calculator
Calculate commercial mortgage payments, amortization, and balloon payment on investor loans.
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