Development yield on cost calculator

Does a development pencil: what does stabilized NOI return on the total project cost?

CalculatorDevelopment yield on cost calculator

Stabilized NOI ($)Land ($)Hard costs ($)Soft costs (design, fees, financing, leasing) ($)Cap rate you would sell at (%)

Total project cost: $5,000,000
Yield on cost: 8.00%
Development spread: 1.00%
Value created: $714,286

Yield on cost = stabilized NOI ÷ total project cost. The spread over the exit cap rate is the margin that pays for the risk of building. The example figures are illustrative, not the terms of any property.

Matthew Danner, Esq.Development Associate, Windfield Real Estate, LLC · 816-612-5191

Worked examples

Read how we use it

Matthew Danner, Esq. · October 2026 · 6 min

Yield on Cost: How to Tell When a Retail Development Pencils

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