Three ways to value your property: income approach, sales-comp (price per square foot), or cap rate analysis. Built for Chicagoland commercial real estate.
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Commercial property is primarily valued by the income it produces. The formula is simple: Value = NOI ÷ Cap Rate. A building generating $100K NOI priced at a 7% cap rate is worth roughly $1.43M.
Lower cap rates = higher values but lower yield. Premium suburbs, credit tenants, and new construction trade at low caps (5–6%). Older buildings, weaker submarkets, and vacancy risk push caps higher (8–10%+).
Every $1 increase in NOI at a 7% cap rate adds ~$14 to your sale price. Raising rents, cutting expenses, or improving lease terms before listing can add six or seven figures to your sale.
Cap rate math is a starting point, not the final answer. A real valuation accounts for tenant credit quality, remaining lease term, rent escalations, deferred maintenance, submarket absorption trends, recent comparable sales, and factors only a local broker can see. Two properties with identical NOI can sell for 30% different prices based on these variables. If you're thinking about selling, a professional Broker Opinion of Value is the next step.
A calculator gives you the math. A Broker Opinion of Value gives you the answer. Submit your property details and Jason Bitton — #1 RE/MAX Commercial broker in Illinois — will deliver a professional valuation with comps, market positioning, and pricing strategy. No cost. No obligation.
Commercial property is valued primarily through the income approach: Value = Net Operating Income ÷ Cap Rate. NOI is your gross income minus vacancy loss minus operating expenses. The cap rate comes from comparable sales of similar properties in the same submarket. A $100K NOI at a 7% cap rate produces a value of roughly $1.43M.
"Good" depends on your goal. A lower cap rate (5–6%) is strong if you're selling — it means your property is priced like a premium, low-risk asset. A higher cap rate (8–10%) is strong if you're buying — it means higher yield and more upside. In Chicagoland today, NNN retail caps range roughly 5–7%, multi-tenant retail 6.5–9%, industrial 5.5–7.5%, and office 7–9.5%.
NOI = Gross Rental Income − Vacancy Loss − Operating Expenses. Operating expenses include property taxes, insurance, management fees, repairs, utilities (if landlord-paid), landscaping, snow removal, and common area maintenance. NOI does NOT include mortgage payments, depreciation, income taxes, or capital improvements. Buyers scrutinize NOI carefully during due diligence — inflated NOI kills deals.
No. A calculator is a starting point — it gives you a rough range. Actual pricing requires recent comps, replacement cost analysis, tenant credit quality, lease structure (NNN vs. gross), remaining lease term, and absorption trends in the submarket. Pricing from cap rate alone leaves money on the table or prices you out of the market. This is the core work of a Broker Opinion of Value.