Commercial Cap Rate Calculator
A capitalization (cap) rate is a commercial property's net operating income divided by its price or value, expressed as a percentage — the quickest way to compare the going-in yield of two deals.
Cap Rate
- NOI
- $150,000
- Price / value
- $2,500,000
- Cap rate
- 6.00%
Current Ontario Cap Rate Benchmarks by Asset Type
| Asset type | Median sale price | Cap rate range | Sales |
|---|---|---|---|
| Other | $1,900,000 | n/a | 7733 |
| Land | $2,450,000 | n/a | 5940 |
| Multifamily | $2,215,750 | n/a | 5462 |
| Industrial | $2,898,190 | n/a | 4672 |
| Retail | $1,850,000 | n/a | 4000 |
| Office | $2,200,000 | n/a | 2107 |
Source: EVALUAITE Market Intelligence — Ontario CRE transactions · Ontario, last 5 years · as of 2026-08-08.
Benchmarks are calculated from real closed transactions in EVALUAITE's Ontario transaction dataset (last 5 years). Cap-rate ranges use only sales with a disclosed cap rate — sparse for some asset types, shown as "n/a" rather than estimated.
By the EVALUAITE Team · Benchmarks as of 2026-08-08 · Powered by the EVALUAITE proforma engine.
Frequently Asked Questions
How do you calculate cap rate?
Cap rate = net operating income (NOI) ÷ purchase price or current value, expressed as a percentage. A property with $150,000 NOI on a $2,500,000 price has a 6% cap rate.
What is a good cap rate for commercial real estate in Ontario?
It varies by asset type and market conditions — office, retail, industrial, and multifamily properties typically trade at different cap-rate ranges. See the live Ontario benchmarks above for current medians by asset type.
Does a higher cap rate mean a better investment?
Not necessarily. A higher cap rate usually reflects higher perceived risk (weaker location, tenant credit, or building condition), while a lower cap rate reflects a premium, lower-risk asset. Cap rate alone doesn't capture financing, growth, or exit assumptions.
What's the difference between cap rate and cash-on-cash return?
Cap rate is unlevered — it ignores financing and answers 'what does this property yield if bought with cash?' Cash-on-cash return divides annual pre-tax cash flow by actual cash invested, so it reflects your specific financing and is typically higher when a property is well-levered.
Why do cap rates differ by property type?
Investors price risk and growth expectations differently across asset types — lease structures (NNN vs. gross), tenant credit quality, vacancy volatility, and capital-intensity all vary by sector, which shows up as different going-in cap rates.