In this guide
Commercial is priced on income, period
Value = NOI ÷ cap rate. A $300,000-NOI building at a 6.5% cap is worth ~$4.6M; the same building at a 7.5% cap is $4.0M — cap rate moves are worth more than most rent moves (sensitivity calculator). Comparable-sale cap rates in the submarket are the anchor of every negotiation.
Lease structure changes everything
Gross leases bundle costs into rent; triple net passes taxes, insurance, and maintenance to tenants; modified gross sits between. Never compare headline rents across structures — compare all-in occupancy cost (NNN calculator, rent calculator).
CAM: the fine print with a price tag
Common-area maintenance charges allocate shared costs pro-rata, often with an admin markup, and reconciliations regularly contain errors. Tenants: model your share before signing (CAM calculator) and negotiate caps on controllable costs.
Lender math: DSCR and debt yield set your loan
Commercial lenders size loans from DSCR (typically ≥1.25×) and debt yield (commonly ≥10%), not from asking price. Run both (DSCR, debt yield) to find the real maximum loan — then expect a balloon: 25-year amortization, due in 10 (commercial mortgage calculator).
Per-square-foot is the language
Rents, expenses, TI allowances, and sale prices all quote per square foot annually. Learn to move between $/SF and totals instantly — the office space calculator also converts headcount to required square footage (100–225 SF/person by density).
Tenant improvements and who pays for what
Landlords offer TI allowances ($/SF) toward build-outs; costs beyond the allowance are the tenant’s (TI calculator). Landlords: amortize TI and free rent into the effective rent to see the deal you actually signed (escalation calculator for the rent schedule).
Occupancy cost: the tenant health metric
Rent ÷ tenant sales — retail tenants above ~10–15% occupancy cost struggle to renew, which is a landlord problem too (calculator). Durable buildings are the ones whose tenants can afford them.
Reviewed July 2026 · Formulas and 2025 tax figures per the methodology page. Educational content, not financial advice.