Commercial Property ROI Calculator

Commercial property ROI calculator measures yield on offices, retail, industrial properties. Cap rate = NOI / property price. Commercial typically 6-10% cap rate vs residential 3-5% - higher yields compensate for more variable demand and longer void periods. 1M industrial unit at 80k NOI = 8% cap rate.

Example: 1M property, 100k annual rent, 5% vacancy assumption, 15k expenses, 5-year lease. Effective rent 95k. NOI = 80k. Cap rate = 8%. Total NOI over 5 years = 400k. Strong cash flow vs residential. Trade-off: longer void periods (6-18 months between tenants common), specialist tenant marketing, tenant default risk concentration.

Commercial property types and typical cap rates: Office (/major cities): 4-6%. Office (regional): 6-9%. Retail (high street): 6-10%. Industrial/logistics: 5-8% (high demand from e-commerce). Multi-let industrial: 7-10%. Warehousing: 6-9%. Pubs/restaurants: 8-12%. Higher cap rate often signals higher risk - vacancy, tenant quality, maintenance burden. Long leases (5-10 years) preferred - reduce void risk and stabilise income.

Quick example

With property price of 1,000,000 and annual rent of 100,000 (plus annual operating expenses of 15,000 and vacancy rate of 5%), the result is 8.00%. Change any figure and watch the output shift — it's often more useful to see the pattern than to memorise the formula.

Which inputs matter most

You enter Property Price, Annual Rent, Annual Operating Expenses, Vacancy Rate %, and Lease Term (years). Not every input has equal weight. Adjusting one input at a time toward extreme values shows which ones move the result most.

What's happening under the hood

NOI = (rent × (1 - vacancy)) - expenses. Cap rate = NOI / price × 100. The formula is listed in full below. If the number looks off, you can retrace the calculation by hand — that's the point of showing the working.

Why investors run this

Most people's intuition for compounding is wrong — not because the math is hard, but because linear thinking doesn't account for curves. Running numbers through a calculator like this one is the cheapest way to recalibrate that intuition before making an irreversible decision about contribution rate, asset mix, or retirement age.

What this doesn't capture

Steady-rate math ignores real-world volatility. Actual returns are lumpy; sequence-of-returns risk matters most in drawdown; fees and taxes drag on compound growth; and behaviour changes in drawdowns can reduce outcomes below the projection. The number represents one scenario rather than a forecast.