Private & Real Assets
Commercial Real Estate
Commercial real estate income is rent. A business signs a contract to occupy space and pays for the right to use it, and everything else on this page — cap rates, leverage, depreciation, exchanges — is machinery bolted onto that one cash flow. This section covers fifteen property types, the arithmetic every deal runs through in the same order, and the tax rules that decide what an owner actually keeps.
The tiles above come from three different places and carry three different observation dates, so they are read one at a time rather than against each other. The property-price tiles are a quarterly year-on-year change from the FRED series named below; the benchmark tiles are published rates read from FRED, and the Treasury one is a constant-maturity yield rather than a bill quoted on a discount basis; any REIT median is a forward distribution yield computed from our own rows. Each figure's own as-of date is shown beside it further down the page.
Rent is the third of the six passive-income mechanisms: you own a thing, somebody pays to use it. Commercial property is that mechanism at its most contractual — a written lease, a fixed term, and an agreed rule for who pays the tax bill and who fixes the roof.
What the income actually is
Commercial real estate income is rent. A tenant signs a contract to occupy space for a period of years and pays for the right to use it. Everything else on this page — cap rates, depreciation, leverage, exchanges — is machinery bolted onto that one cash flow.
What makes it commercial rather than residential is the tenant and the lease, not the building. A commercial lease is a negotiated business contract between parties assumed to be able to look after themselves, which is why it can push property taxes, insurance and roof replacement onto the occupier in a way a residential lease generally cannot.
The income is therefore only as good as three things: the contract, the credit behind it, and the building's ability to attract the next tenant when the contract ends. A twenty-year lease from a fragile operator and a three-year lease from a strong one are different instruments wearing the same label.
Direct ownership is not passive on its own. Rent has to be billed and collected, expenses reconciled, vacancies leased, capital spending planned and funded, and lenders reported to. Those tasks can be delegated to a professional manager for a fee, which is what converts the position from a job into an investment — and the fee is a real, recurring cost that comes out of the same NOI everything else is measured against.
Market context: the commercial property price series
One published series, shown for direction. It is a rate of change in prices — not a yield, not a cap rate, and not something anyone receives.
The figure below answers one question only: are US commercial buildings, on average, worth more or less than they were a year ago. Positive means above, negative means below. The easy mistake: it is a percentage, and every other percentage on this page is a yield, so it is easy to read as income. Nobody is paid this number. It is also a national average published every three months and with a lag, so it says nothing about a particular building in a particular town today.
US commercial property prices, year over year · series COMREPUSQ159N · quarterly · published by FRED · observation dated Apr 01, 2025
Quarterly change in US commercial property prices versus the same quarter a year earlier. It is a rate of change, not a yield and not a price level.
Not current. Last published Apr 01, 2025. This series may have been discontinued. Read it as the last published reading rather than as today's, and check the source before relying on it.
The figure above is a percentage change, not a price and not an index level: it compares the most recent quarterly reading of US commercial property prices with the same quarter a year earlier. Positive means prices are above where they were a year ago, negative means below, and a figure near zero says the market average has gone roughly nowhere — none of which tells you what any building yields or rents for. The caveat: it is a national aggregate, published quarterly and with a lag, so it describes an average some months in the past rather than the price of a specific property today.
Data as of Apr 01, 2025.
The debt side, for context
Published benchmarks. Commercial mortgage terms are negotiated privately and are not quoted anywhere citable, so these are reference points, not CRE loan quotes.
Each row below is one published series with its own value, its own observation date and its provider beside it. The Treasury line is a constant-maturity yield — the investment-basis series this site uses everywhere for the curve, not a bill quoted on a discount basis — and the mortgage line is a weekly survey of quoted residential rates. The caveat that matters here: neither is a commercial mortgage quote, and commercial debt is priced privately deal by deal, usually at a spread above the Treasury line rather than anywhere near the survey rate.
The 10-year Treasury is the risk-free anchor longer-term property debt is priced against; the Freddie Mac survey rate is a residential benchmark, shown because it is the one published mortgage rate in the public record. Neither is a commercial mortgage quote. Both from FRED.
Series identifiers, in the order shown: DGS10, MORTGAGE30US.
The property types
What the tenant is buying, how the lease is usually written, who pays the taxes and fixes the roof, what drives demand, what breaks it, and the diligence specific to each.
Office
Space for people to work in, leased in floors and suites.
Read →Retail strip centre
A row of small shops sharing a parking lot, usually with an anchor.
Read →Single-tenant net lease
One building, one tenant, one long lease, minimal landlord duties.
Read →Industrial and warehouse
Boxes for storing and moving goods, priced on clear height and doors.
Read →Flex and R&D
Part office, part warehouse, in one leasable unit.
Read →Medical office
Clinical space, usually near or on a hospital campus.
Read →Self-storage
Small units let month to month, run more like a business than a building.
Read →Multifamily apartments
Homes let on short leases to many unrelated tenants.
Read → Operating businessHotel
An operating business that sells its rooms one night at a time.
Read →Mobile-home park
Land and utilities let to residents who own their own homes.
Read →Land
A parcel with no building, and usually no income.
Read → Operating businessGas station and convenience store
An operating business with fuel infrastructure, plus the real estate under it.
Read → Operating businessCar wash
Equipment, water and a site — an operating business first, property second.
Read →Restaurant pad
A freestanding building on its own parcel, purpose-built for food service.
Read →Day care and early education
A licensed childcare operation in a purpose-fitted building.
Read →Lease structures
The vocabulary every property type refers back to. The label on a lease is a summary; the allocation of expenses is in the document.
A lease type is shorthand for one question: out of the rent cheque, who pays the property taxes, the insurance and the repairs? At one end the landlord pays them out of the rent; at the other the tenant pays them on top of it. One thing to watch: two buildings can collect the same rent and hand the owner very different amounts, because the lease type decides what comes out of it before the owner sees anything.
- Gross (full-service) lease
- Landlord pays taxes, insurance, maintenance and usually utilities out of the rent.
- One number covers everything, so the tenant's cost is predictable and the landlord absorbs every increase. The rent looks high next to a net lease because it is not the same number: it is rent plus an operating budget. A gross lease transfers inflation risk in operating costs to the owner.
- Modified gross lease
- Landlord pays a defined base year of operating costs; the tenant pays its share of increases.
- The middle ground, and the most common source of billing disputes. A base-year stop, an expense stop or a pro-rata share of increases over a fixed amount all do the same job with different arithmetic. How the base year is defined — and whether it was an unusually low year — decides who really pays.
- Net, double net (NN) and triple net (NNN)
- Tenant pays some or all of property taxes, insurance and maintenance on top of base rent.
- Triple net conventionally means the tenant carries taxes, insurance and maintenance. What it does not automatically mean is roof, structure and parking lot — those are frequently carved back to the landlord, and the carve-out is where the capital expenditure lives. Read the lease, not the label.
- Absolute net (bondable) lease
- Tenant pays everything, including roof, structure and casualty, with no offsets.
- The closest a lease gets to a corporate bond: the tenant's obligation continues regardless of condemnation, casualty or anything else, and the landlord's job is to bank the payment. The income then depends almost entirely on the tenant's credit, because the building has stopped protecting anybody.
- Percentage rent
- Tenant pays base rent plus a percentage of sales above an agreed breakpoint.
- Standard in retail and in some restaurant and hospitality deals. It gives the landlord participation in the tenant's success and creates an audit right over sales reporting. It also means part of the income is a business's revenue line, not a contract — it falls when trade falls.
- Ground lease
- Tenant leases the land and owns or builds the improvements on it.
- A long-dated claim on land with rent escalations and a reversion at the end, when the improvements typically revert to the landowner. It is senior to the building financing in practice and is usually the most defensive position on a site — and the one with the least upside from the operating business.
The order of operations on a deal
Every commercial deal runs the same arithmetic in the same sequence. Skipping a step is how an attractive summary hides an unattractive property.
Work down this list in order and you end up at the only number that matters to an owner: the cash left over. Rent on the schedule comes first, then the rent actually collected, then what is left after running the building, then what is left after the loan is paid. Where this goes wrong: a headline percentage quoted on its own has skipped most of these steps. Ask which line of this sequence it was calculated from before comparing it with anything.
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Rent roll
Contract rent, tenant by tenantStart from the leases, not from a summary. Each line has a start date, an expiry, an escalation schedule, options, and any free rent or unamortised concession still running. The rent roll is a legal document set, and the estoppel certificates are how a buyer confirms the tenants agree with it. -
Potential gross income
Contract rent + market rent on vacant space + other income + expense recoveriesWhat the property would produce fully leased, including parking, signage, storage, late fees and the reimbursements tenants owe for taxes, insurance and common-area costs. Recoveries are income and the matching expense is an expense — netting them hides the recovery ratio. -
Effective gross income
Potential gross income − vacancy − credit loss − concessionsDeduct what will not actually be collected: physical vacancy, tenants who do not pay, and concessions granted. Using an assumed market vacancy rather than the property's own history is one of the most common places a model becomes optimistic. -
Operating expenses
Taxes + insurance + utilities + repairs + management + admin + payrollThe cost of running the building for a year. Two lines deserve independent verification rather than acceptance: property taxes, which are frequently reassessed on a sale, and insurance, which is quoted to the buyer and not inherited from the seller. A market management fee belongs here even if the current owner charges none. -
Net operating income
Effective gross income − Operating expenses = NOIThe property's own income, before financing and before tax. This is the number that value, cap rate and every lender covenant are calculated from, which is exactly why it is the number most often presented flatteringly. -
Value and cap rate
Value = NOI ÷ Cap rate · Cap rate = NOI ÷ PriceOne equation used in both directions. Divide NOI by a cap rate to estimate value; divide NOI by a price to see what a deal is being priced at. Because value is derived from NOI, every dollar added to or removed from NOI moves the value by a multiple of itself. -
Capital items below the line
NOI − capital expenditure − tenant improvements − leasing commissionsExcluded from NOI by convention, but paid in cash. Roofs, parking lots, HVAC replacement, fitting out space for a new tenant and the commission that won the lease all come out of the same account. A reserve for them is the difference between an honest analysis and a brochure. -
Debt service
Cash flow before tax = NOI − annual debt service (− capital items)Interest and principal on the loan. This is where DSCR is tested, where the loan constant decides whether leverage is adding to or subtracting from cash flow, and where a covenant breach can divert income into a lender-controlled account before the owner sees it. -
After tax
Taxable income = NOI − interest − depreciation ± other adjustmentsCash flow and taxable income are different numbers. Depreciation is deducted though no cash left, principal repayment is cash out though it is not deductible, and the resulting loss may be suspended under the passive activity rules rather than used. At sale, recapture and gain settle the difference.
Run the sequence with your own numbers
An illustration computed in your browser from figures you type. Nothing is stored, and none of it is a market quote.
Include a market management fee even if the current owner charges none.
Below the NOI line by convention, but paid in cash.
Nine figures come out, in the order a deal is actually underwritten. Effective gross income is the rent you expect to collect rather than the rent on the schedule; net operating income takes operating expenses off it; the cap rate expresses that income as a percentage of the price, before any borrowing. The debt block follows — annual debt service is the yearly payment, the loan constant expresses that payment as a percentage of the loan, and DSCR is how many times the income covers it. Cash flow before tax is what is left after debt and the capital reserve, and cash-on-cash sets that against the equity you actually put in. The caveat: every one of them is arithmetic on figures you typed, so they are only as realistic as the rent, vacancy and expense assumptions behind them.
Illustrative arithmetic only, not a projection, a valuation or a recommendation. It assumes level annual figures, a fully amortising fixed-rate loan, and no change in rent, expenses, occupancy or value. It ignores income tax, depreciation, tenant improvements and leasing commissions beyond whatever you enter as a capital reserve, and every closing cost not entered above. Cap rate is calculated before the capital reserve, per convention; cash flow is calculated after it. Real deals differ.
Deal arithmetic — the concepts
Definition, the formula where one exists, what it does and does not tell you, and the misreading it most often invites.
Net operating income (NOI)
The property's income after operating costs and before debt, tax and capital spending.
Read →Capitalisation rate (cap rate)
NOI divided by price — a one-year, unlevered snapshot of how a property is priced.
Read →Cash-on-cash return
Cash received in a year divided by the cash actually invested.
Read →Internal rate of return (IRR)
The discount rate at which a deal's cash flows have a present value of zero.
Read →Equity multiple
Total cash returned divided by total cash invested, ignoring time.
Read →Going-in versus exit cap rate
The cap rate paid at purchase against the one assumed at sale.
Read →Debt — the concepts
Definition, the formula where one exists, what it does and does not tell you, and the misreading it most often invites.
Debt service coverage ratio (DSCR)
NOI divided by annual debt service — the lender's margin of safety.
Read →Loan-to-value (LTV)
Loan balance divided by property value — how much of the asset is borrowed.
Read →Loan constant
Annual debt service divided by the loan amount — the true annual cost of the debt.
Read →Tax — the concepts
Definition, the formula where one exists, what it does and does not tell you, and the misreading it most often invites.
Depreciation and the 27.5 and 39-year schedules
A deduction for the wearing out of the building — not the land — over a fixed life.
Read →Cost segregation
An engineering study that reclassifies parts of a building into shorter depreciation lives.
Read →Bonus depreciation
An immediate deduction for a percentage of qualifying short-life property.
Read →Depreciation recapture
The tax bill that arrives at sale for deductions taken during ownership.
Read →1031 like-kind exchange
Deferring gain by exchanging one investment property for another under strict rules.
Read →Opportunity zones
A capital-gain deferral and long-hold exclusion for investment in designated areas.
Read →Passive activity loss rules
Why rental losses often cannot be used against salary or portfolio income.
Read →Real estate professional status
A statutory test that can move rental losses out of the passive bucket.
Read →UBIT and debt-financed property in an IRA
Why leverage inside a retirement account can create a tax bill in a tax-exempt account.
Read →The listed version: net-lease REITs
A net-lease REIT owns a portfolio of the single-tenant buildings described above and distributes the rent. Same mechanism, daily pricing, public filings, and nothing to operate. A research screen, not a recommendation.
This is the version of the same rent that you can buy in a brokerage account: a company that owns hundreds of single-tenant buildings, collects the rent and passes most of it on. No tenant calls you, and you can sell on a Tuesday afternoon. The caveat: the yield column is a percentage of the share price, not of what the buildings cost. The company's borrowing, its costs and the market's mood all sit between the rent and that number, which is why it can move in the opposite direction to property values.
| Ticker | Company | Price | Distribution yield (forward)The last distribution, annualised, over today's share price — not a cap rate. | Annual rate (forward)What one share is on track to pay over a year, at that rate. | Pays | Market cap | Income scoreOur own research screen, and the order this table is in. Not a rating. |
|---|---|---|---|---|---|---|---|
| NNN | NNN REIT, Inc. | $46.12 | 5.38% | $2.48 | Quarterly | $8.77B | 83.30 |
| O | Realty Income Corporation | $62.83 | 5.18% | $3.25 | Monthly | $58.59B | 79.60 |
| GTY | Getty Realty Corp. | $33.53 | 5.79% | $1.94 | Quarterly | $2.08B | 79.40 |
| FCPT | Four Corners Property Trust, Inc. | $25.35 | 6.22% | $1.58 | — | $2.78B | 67.20 |
| OLP | One Liberty Properties, Inc. | $24.57 | 7.33% | $1.80 | Quarterly | $536.10M | 65.00 |
| WPC | W. P. Carey Inc. | $71.78 | 5.24% | $3.76 | Quarterly | $16.35B | 63.80 |
| STAG | STAG Industrial, Inc. | $37.10 | 3.76% | $1.40 | Monthly | $7.15B | 62.50 |
| ADC | Agree Realty Corporation | $74.32 | 4.31% | $3.20 | Monthly | $8.93B | 61.60 |
| PINE | Alpine Income Property Trust, Inc. | $19.71 | 6.09% | $1.20 | Quarterly | $325.70M | 59.10 |
| EPRT | Essential Properties Realty Trust, Inc. | $30.80 | 4.16% | $1.28 | Quarterly | $6.66B | 55.60 |
Prices as of Aug 25, 2026.
A short list of the listed net-lease landlords we track, ordered by our own income score and then by yield, highest first — a research ordering, not a ranking of quality. Price comes from the daily quote pipeline, as does the market capitalisation the expert view adds; the distribution yield and annual rate are forward figures built from the last regular distribution and the payment frequency, not the cash paid over the past year; the income score is our own screen. The caveat worth holding on to: a REIT's distribution yield is a yield on a share price and is not the cap rate on the buildings — the REIT's leverage, fees and portfolio sit in between, which is why the two numbers can move in opposite directions.
What the listed route gives up is control, the tax treatment of direct ownership — a REIT shareholder does not get the property's depreciation, and REIT dividends are largely ordinary income — and the ability to choose the individual building. What it removes is the management obligation, the illiquidity and the concentration. REITs, triple-net lease properties and real estate syndications sit at three different points on that trade-off, and mortgage REITs are a different mechanism again — they lend against property rather than owning it.
Where commercial property is listed
Public listing venues and research services. Plain outbound links — no affiliate relationship exists with any of them.
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LoopNet ↗
The largest public listing site for commercial property for sale and for lease.
Listings are asking prices set by sellers and brokers, not transaction records.
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Crexi ↗
Listings marketplace with an online auction platform alongside brokered sales.
Auction results and asking prices are different data; check which you are reading.
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CoStar ↗
Subscription research service covering leases, sales comparables and market analytics.
Paid, professional-tier data. Coverage and accuracy vary by market.
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Ten-X ↗
Online auction platform for commercial assets, including lender-driven sales.
Auction terms are set by the seller; diligence windows are short by design.
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Brevitas ↗
Listing marketplace covering openly marketed and privately marketed offerings.
Private listings require registration, which limits what can be verified externally.
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CommercialSearch ↗
Listing directory for commercial space for lease and properties for sale.
A directory of listings, not a source of closed-transaction data.
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Marcus & Millichap ↗
Brokerage publishing its own listings and market research across US markets.
A broker represents the seller. Their research is published marketing material.
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CBRE ↗
Global commercial brokerage with listings and published market reports.
Same caveat: a listing is an offer to sell, and research is published by a party with an interest.
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BizBuySell ↗
Business-for-sale marketplace — where gas stations, car washes and similar operating businesses are listed, often with the real estate.
Seller-reported financials. Operating businesses require accounting diligence, not just property diligence.
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BizQuest ↗
Second business-for-sale marketplace with overlapping and distinct listings.
Listing figures are seller-stated and unaudited unless independently verified.
These are listing venues and research services, listed because they are where commercial property is publicly advertised in the US. Inclusion is not endorsement, we have no commercial relationship with any of them, and none of these links is an affiliate link. A listing price is an asking price: it is what a seller hopes for, not evidence of what anything is worth.
Where commercial property is researched and financed
A CoStar-operated listing marketplace for US commercial property for sale and for lease, searchable by asset type and market.
Asking prices, not transaction prices
Visit LoopNet ↗A commercial real estate marketplace covering for-sale listings, online auctions and lease space, with broker-supplied offering memoranda.
Visit Crexi ↗An online marketplace where accredited investors commit capital to individual commercial property deals run by third-party sponsors.
Deal-level risk sits with the sponsor; the platform is not the operator
Visit CrowdStreet ↗A platform that pools retail money into non-traded real estate and credit funds, with redemptions handled through periodic windows rather than an exchange.
Share values are set by the sponsor's NAV, not by a market price
Visit Fundrise ↗Listed for research. A plain link is not a sponsorship, and nothing here is a recommendation to buy, finance or list any property.
Primary sources
The authorities behind the tax and environmental material in this section.
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IRS Publication 946 — How To Depreciate Property ↗
Recovery periods, conventions and the depreciation system itself.
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IRS Publication 925 — Passive Activity and At-Risk Rules ↗
Passive losses, the special allowance and its phase-out, real estate professional tests.
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IRS Publication 544 — Sales and Other Dispositions of Assets ↗
Gain, character of gain, and depreciation recapture on disposal.
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IRS Publication 598 — Unrelated Business Income ↗
UBTI and debt-financed income for tax-exempt accounts.
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IRS Form 8824 — Like-Kind Exchanges ↗
The 1031 exchange reporting form and its instructions.
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IRS — Opportunity Zones ↗
Current federal guidance on qualified opportunity funds.
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CDFI Fund — Opportunity Zones ↗
Designation of qualified opportunity zones.
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EPA — Underground Storage Tanks ↗
Federal tank rules: leak detection, financial responsibility, release response.
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EPA — All Appropriate Inquiries ↗
The environmental due-diligence standard behind a Phase I assessment.
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FEMA Flood Map Service Center ↗
Official flood-zone determination for a specific parcel.
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ADA.gov ↗
Accessibility standards that apply to places of public accommodation.
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FRED — US commercial property price index (COMREPUSQ159N) ↗
The series behind the index shown on this page. An index level, not a yield.
Commercial real estate — frequently asked
What is commercial real estate income, exactly?
Is direct commercial real estate passive income?
Why is a cap rate not a return?
How do I own commercial property income without operating anything?
What does the commercial property index on this page mean?
What is the difference between buying a gas station and buying a net-leased building?
What is the most commonly underestimated cost in a commercial deal?
Does depreciation make real estate tax-free?
This section is a structural reference, not investment, tax or legal advice, and nothing in it recommends buying, selling or financing any property. It contains no market quotes: no current cap rates, rents or prices, because those are negotiated privately and are not publicly quotable. Tax rules described here are general US federal mechanisms that change with legislation, and state and local rules differ. Verify anything that matters with an attorney, an accountant and an appraiser who know the specific property and jurisdiction.