This tool helps you estimate the cost of commercial real estate based on various input factors.
How to Use the CBRE Estimator
To estimate the value of a commercial property using this CBRE Estimator, please follow the steps below:
- Enter the Annual Rental Rate in dollars per square foot. This is the total annual income expected from the property.
- Provide the Vacancy Rate as a percentage. This represents the percentage of the property that is expected to remain unleased.
- Input the Operating Expenses in dollars per square foot. These are the expenses necessary for the upkeep and operations of the property.
- Provide the Capitalization Rate as a percentage. The Cap Rate reflects the return on the investment and is used to estimate the property’s value.
- Click the Calculate button to get the estimated property value.
How It Calculates the Results
The CBRE Estimator calculates the property’s estimated value using the following formula:
Net Operating Income (NOI) = (Annual Rental Rate x (1 - Vacancy Rate / 100)) - Operating Expenses
Property Value = NOI / (Capitalization Rate / 100)
Net Operating Income (NOI) is derived by subtracting the Operating Expenses from the Annual Rental Rate after adjusting for the Vacancy Rate. The estimated Property Value is then calculated by dividing the NOI by the Capitalization Rate.
Limitations
This CBRE Estimator provides an estimate based on the inputs provided and does not take into account market conditions, property-specific characteristics, or future financial projections. It is recommended to use this tool for preliminary analysis only and consult with a real estate professional for a comprehensive evaluation.
Use Cases for This Calculator
Calculating Property Value
Enter relevant information such as property type, location, size, and condition to accurately estimate the value of a property. The calculator takes into account market trends and other data points to provide you with a close estimate.
Determining Rental Income
Input details like property type, location, number of units, and rental rates to get an estimate of the potential rental income. The calculator factors in vacancy rates and other variables to give you a realistic projection.
Forecasting Appreciation Rate
By providing historical data and market analysis, estimate the property’s potential appreciation rate over a specific period. The tool considers economic indicators and property-specific factors for a more accurate forecast.
Assessing Cap Rate
Calculate the capitalization rate by entering property value and expected annual net operating income. The calculator helps you understand the property’s investment potential and compare it to similar properties in the market.
Evaluating Cash-on-Cash Return
Input details about financing, operating expenses, and rental income to determine the cash-on-cash return on your investment. The calculator considers your initial cash investment to provide a clear picture of the return percentage.
Estimating Operating Expenses
Estimate various operating expenses like maintenance, property taxes, insurance, and management fees to understand the full cost of owning a property. The calculator helps you budget effectively and plan for potential expenses.
Comparing Investment Properties
Enter data for multiple properties to compare key metrics such as ROI, cap rate, and cash-on-cash return. The tool allows you to make informed decisions by presenting side-by-side analyses of different investment opportunities.
Analyzing Market Trends
Access current market data and trends to make data-driven decisions about buying or selling a property. The calculator provides insights into the local market conditions and helps you stay informed about potential investment opportunities.
Calculating Potential ROI
By inputting property purchase price, rental income, and operating expenses, calculate the potential return on investment over a specific period. The calculator helps you assess the profitability of the investment and make informed financial decisions.
Simulating Investment Scenarios
Create different investment scenarios by adjusting variables such as property value, rental income, and expenses. The tool allows you to explore various possibilities and outcomes to optimize your investment strategy.