The cap rate is the ratio of a parking asset’s net operating income to its value, the market’s price for a dollar of parking income. In a parking facility:
- A facility producing $1,000,000 NOI at a 7.25% cap rate is worth about $13.8 million; every quarter-point of cap-rate movement swings value materially.
Considerations
- Parking cap rates carry a premium to core property types, reflecting operating intensity and demand risk. The cap rate is where operations become value.