Welcome to Value Nation's Valuation Tip of the
Day, your quick guide to U .S. property valuation.
I'm your host, Charlie Johnson, with one tip
to help elevate your real estate skills. Today's
tip, how to read capitalization rate or cap rate
for commercial properties. So cap rates measure
a property's income potential, which is crucial
for mortgage pros appraising retail or industrial
spaces and for buyers investing in commercial
real estate. It's pretty simple. you're going
to divide the property's net operating income
by its purchase price. So for example, a $1 million
warehouse earning $70 ,000 annually has a 7 %
cap rate. In 2025, so far in 2025, cap rates
average 68 % for industrial properties, but are
climbing closer to 10 % for logic. Lower cap
rates mean higher valuations, signaling strong
demand for that market, like in e -commerce driven
warehouses, for instance. Higher cap rates, like
in struggling office markets, suggest riskier
investments. So mortgage pros, compare cap rates
to local market averages just to validate the
appraisals. And buyers, a lower cap rate might
mean a pricier property, but better stability.
Check on income statements to ensure the net
operating income is accurate. Here's my takeaway.
Use sites like LoopNet to find local mortgage
cap rates. Mortgage pros, verify the income.
data you know buyers favor properties with stable
cap rates very simple look if you need help commercial
valuations like even an avm or bpos which are
fairly inexpensive head over to www .nationwideamc
.com and find more information under the solutions
tab or reach out to us directly at sales at nationwideamc
.com tune in next time for another valuation
valuation tip of the day