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Vacancy Drag On Cap Rate Calculator
Vacancy widens cap rate. This calculator adjusts.
Effective cap rate %
10.50%
Value impact (negative = drag)
-$8,791,209
Vacancy premium bps
400
How the math works
Vacancy premium = (prop vac − market vac) × 4000 bps. Effective cap = market + premium.
15% vacancy vs 5% market = 10 pts gap × 40 bps = 400 bps premium. 6.5% base + 4% = 10.5% effective. $1.5M NOI / 10.5% = $14.3M vs $23.1M at market cap. $8.8M value drag from vacancy.
EveryCalc calculators are designed for fast, practical estimates with transparent inputs and no required account. We use plain formulas, visible assumptions, and related tools so visitors can check the result from more than one angle.
Results are informational only. For financial, tax, legal, medical, construction, or other high-impact decisions, verify the output against primary sources or a qualified professional.
Learn more about our review process on the EveryCalc methodology page.
How this calculator works
What this page estimates
This Vacancy Drag On Cap Rate Calculator is built to give a quick, browser-based estimate for vacancy drag on cap rate. Vacancy widens cap rate. This calculator adjusts. The inputs stay on the page during normal use, and the result should be treated as an estimate for planning, comparison, or education rather than professional advice.
Calculation approach
The calculator applies the standard relationship implied by the inputs, then formats the answer so it can be checked and reused. For finance tools, the most important step is using consistent units, rates, time periods, and assumptions before comparing the result with another calculator or outside quote.
Example workflow
For example, start with a realistic value you already know, change one input at a time, and watch how the answer moves. That makes it easier to tell whether the result is being driven by the main amount, the rate, the time period, or a unit conversion.
Practical checks
- Use current, real-world numbers when the result affects money, health, tax, or legal decisions.
- Run a low, base, and high case when the inputs are estimates.
- Check the related calculators below when the next decision depends on a different assumption.
How to interpret the vacancy drag on cap rate result
Best use
Use the result as a planning number for comparing payments, rates, returns, tax reserves, or cash-flow choices before you request a quote or make a commitment.
Cross-check
Compare the answer with the contract, lender estimate, tax form, brokerage statement, payroll record, or invoice that will control the real-world outcome.
Watch for
Do not rely on a single optimistic rate, return, or fee assumption. Money pages work best when you run low, base, and high cases and keep professional advice separate from the estimate.
This page belongs to the Finance calculator library, so the answer should be read in the context of the decision you are modeling rather than as a universal rule.
Before relying on this vacancy drag on cap rate estimate
Most calculator mistakes come from the inputs, not the arithmetic. Use this short audit before you reuse the answer in a spreadsheet, quote, application, or important conversation.
Confirm source numbers
Match balances, rates, fees, taxes, income, and payment dates against the lender quote, payroll record, tax form, statement, invoice, or contract.
Separate cash flow from total cost
A lower monthly payment can still cost more over time if fees, interest, taxes, or a longer term are hidden in the structure.
Run conservative cases
Test at least one higher-cost or lower-return case before using the output for a purchase, refinance, investment, loan, or tax decision.
Rerun this page when the rate, price, term, fee, tax rule, income, expense, or expected holding period changes.
How to Use
- Enter market cap rate %.
- Enter property vacancy %.
- Enter market vacancy %.
- Enter NOI.
- Read effective cap and value impact.
Frequently Asked Questions
How does vacancy affect cap?
Buyers discount vacant properties (higher risk, higher cost to stabilize). Cap rate 50-150 bps wider for material vacancy. Very full buildings: tighter cap. Each 5% above market vacancy: ~25-50 bps cap expansion typical.
Stabilized vs current?
Current cap: based on current NOI (depressed if vacant). Stabilized cap: based on pro-forma stabilized NOI (market occupancy). Savvy sellers market on stabilized; buyers underwrite on current. Gap = lease-up risk discount.
Buyer math?
Discount future NOI uplift from stabilization. E.g., 85% occupied now, 95% stabilized in 12 months: buyer pays for 85% today + discounts 10% lift over 12 months at appropriate rate. Translates to wider apparent cap rate on current NOI.
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