Vertical Development Yield On Cost Calculator

Development yield on cost is the primary benchmark for ground-up real estate projects.

Stabilized NOI

Land cost

Hard cost

Soft cost

Development fee

Yield on cost

0.07%

Total cost

$36,700,000

Cost per $ NOI

15.29

How the math works

YoC = NOI / total cost. Total = land + hard + soft + dev fee.

$2.4M / ($8M + $24M + $3.5M + $1.2M) = $2.4M / $36.7M = 6.54%.

How to Use

Enter stabilized NOI.
Enter land cost.
Enter hard construction cost.
Enter soft cost.
Enter development fee.
Read yield on cost.

Frequently Asked Questions

Yield on cost?

YOC = stabilized NOI / total project cost. Spread over cap rate = development profit. Market cap rate 5% + development YOC 7% = 200 bps spread = good project. Spread <75 bps: insufficient return. Spread 150-300 bps: market-average. 300+ bps: value-add opportunity, likely exceptional land basis or market.

Typical YOC targets?

Multifamily Class A: 5.5-7% stabilized. Industrial Class A: 6-8%. Office (high risk): 7-9%. Hotel: 8-11%. Retail (mixed): 7-9%. Medical office: 6-8%. Cold storage: 7.5-9.5%. Data center (ground-up): 9-11%. Vary by market strength + lease-up risk + development complexity.

Component breakdown?

Land: 15-30% of total cost urban, 8-15% suburban. Hard construction: 55-75%. Soft (arch, engineering, permits, legal, marketing): 10-18%. Developer fee: 3-5%. Contingency: 3-7% hard + soft. Financing costs: 2-5%. Lease-up reserves: 1-4% (for multifamily lease-up). Working capital: 0.5-1.5%.

Risk factors?

Land cost variance: typically ±10%. Construction cost overrun: ±15-25% typical, ±40% in volatile markets. Lease-up delay: 6-18 months variance. Market rent achievement: ±10-20% vs pro-forma. Construction financing rate: ±100-200 bps. Entitlement delay: 6-36 months possible. Plan for: 20-30% project cost contingency in volatile environments.