Logistics Real Estate Yield Calculator

Logistics real estate yields typically run 5-8% gross, slightly higher than office or retail thanks to e-commerce demand. A 2,000,000 warehouse with 140,000 annual rent yields 7% gross. After 20,000 annual operating costs, net yield is 6%. Compare against local benchmarks before committing — yields vary heavily by micro-market and asset grade.

Commercial property analysis.

Quick example

With purchase price of 2,000,000 and annual rent of 140,000 (plus annual operating costs of 20,000), the result is 6.00%. 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 Purchase Price, Annual Rent, and Annual Operating Costs. 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

Net yield = (rent - operating costs) / price. Gross yield = rent / price. 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.

Where this fits in planning

This is a "what-if" tool, not a forecast. Use it to test ideas before committing: what happens if the rate is 2% lower than hoped, what happens if you add five more years. The value is in the scenarios you run, not the single answer you get from the defaults.

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.

Worked example with realistic numbers

Suppose you evaluate a 5,000,000 distribution centre with annual rent of 375,000. Operating costs (maintenance, property tax, insurance, utilities) total 45,000 per year. The gross yield is 7.5% (375,000 ÷ 5,000,000). The net yield is 6.6% ([375,000 − 45,000] ÷ 5,000,000). This shows how operating costs reduce the headline return by 0.9 percentage points. If operating costs rise to 65,000, net yield falls to 6.2%, illustrating sensitivity to cost assumptions.

Common scenarios where yield matters

• Portfolio comparison: A logistics yield of 6.5% against a competing office property at 4.2% shows relative income strength, but does not account for capital growth, tenant stability, or lease term.
• Refinancing decisions: If financing costs rise above your net yield, the property becomes a cash drain rather than a generator of positive return.
• Tenant stress: If a tenant defaults, rent drops to zero while operating costs remain. This shows why asset diversification and lease length matter.
• Market entry pricing: Comparing your yield against comparable local assets helps identify whether a purchase price is competitive or inflated relative to rental income.

What the result captures and what it omits

This calculator models annual income yield: the rent collected minus day-to-day costs, expressed as a percentage of purchase price. It does not include capital gains or losses, tenant acquisition costs, void periods (empty lease months), lease break clauses, major refurbishment, inflation or deflation of rents, changes in property value, or financing costs above the operating line.

The output is for educational illustration only and does not predict future returns.