Economics Question: Download Economics PDF
Is there a rule of thumb for office rent or lease per gross income?
Answer:
There is a GRM (Gross Rent Multiplier) that compares the total rental/lease income to the value or price of the property.
The price can run 8 to 10 times the gross income, but that can vary based on market conditions, interest rates, management, building type, quality.
Capitalization Rate (cap rate) is a more comprehensive way of evaluation, but if the GRM is known for a building type and location, you can quickly determine a ballpark value.
The price can run 8 to 10 times the gross income, but that can vary based on market conditions, interest rates, management, building type, quality.
Capitalization Rate (cap rate) is a more comprehensive way of evaluation, but if the GRM is known for a building type and location, you can quickly determine a ballpark value.