Development Yield On Cost Calculator

Yield on cost benchmarks development vs market cap.

Stabilized NOI

Total dev cost

Market cap %

Yield on cost

0.08%

Spread vs market

0.03%

Value created

$15,909,091

How the math works

YoC = NOI / cost. Spread = YoC − market cap. Value created = stabilized value − cost.

$2.8M / $35M = 8% YoC − 5.5% market = 250 bps spread. Value = $50.9M − $35M = $15.9M created.

How to Use

Enter stabilized NOI.
Enter total development cost.
Enter market cap rate %.
Read yield on cost + spread.

Frequently Asked Questions

YoC vs market cap?

Spread of 150-250 bps above market cap = good development. Less than 100 bps = tight. Spread > 300 bps = exceptional. Spread compensates for development risk, time, and complexity vs buying stabilized.

YoC targets?

Multifamily: 5.5-7% YoC in strong markets. Office: 7.5-9%. Industrial: 5.5-7.5%. Retail: 6.5-8.5%. Market cap typically 100-300 bps below. Compare to your market's current cap rates.

Common miss?

Not including all project costs: land, pre-dev, construction, carry, TIs, LC, reserves. Using projected NOI not stabilized (post-leasing). Ignoring turnover reserves. Always model to stabilization (usually 24-48 months post-CO).

How often should I rerun this?

Rerun this calculator whenever inputs change materially — new rent roll data, rate moves, loan balance updates, or quarterly operating data. For active deals, monthly refresh is typical. For stabilized assets under monitoring, quarterly is fine. Treat the output as a decision tool, not a one-time answer — market conditions evolve and so should your analysis.