By the Numbers
Most owners get one number stuck in their head—what they paid, or what a neighbor sold for two years ago—and anchor to it. In 2026, that number is almost always wrong in one direction or the other. Here’s how your building actually gets priced, and the two inputs that move value the most.
Value starts with your net operating income, not your square footage
The price of an income-producing industrial property is your net operating income (NOI) divided by a cap rate. NOI is the rent you collect after operating expenses. The cap rate is the return a buyer expects for that income stream in your submarket.
A simple example: a multi-tenant park producing $300,000 in NOI, priced at a 6.5% cap rate, is worth about $4.6 million ($300,000 ÷ 0.065). Move the cap rate to 7.5% and the same income is worth $4.0 million. Same building, same tenants—a $600,000 swing from one input.
In-place rents vs. market rents—this is where the money is
Buyers pay for the income that’s actually under contract, then they handicap the upside. If your leases are below today’s market rents, you have something most sellers don’t: a clear, provable path to higher income. That gap is what a buyer underwrites—and what a good broker prices into the marketing, instead of giving it away.
East Bay small-bay industrial has had years of rent growth, so a lot of older leases are now 15–30% under market. If you signed a five-year deal in 2021, your rents likely haven’t caught up. Sometimes the cleanest way to capture that gap is to sell into it and let the buyer pay you for the upside today.
What’s happening to cap rates in 2026
Cap rates moved up over the last two years as financing got more expensive, and most participants expect them to hold through at least mid-2026. But “elevated” is not the same as “weak.” Stabilized industrial with strong in-place rents is still trading at attractive pricing because the supply pipeline is thin and demand for small-bay space remains healthy.
The other inputs that nudge your number
Price per square foot is a sanity check against recent comparable sales—useful, but it’s an output of the income math, not a substitute for it. Building quality (clear height, dock vs. grade loading, power, roof age, yard) matters: a 24′ clear, dock-served building prices differently than a low-clear, grade-only one. Tenant credit and term matter too—a national tenant with seven years left is worth more than month-to-month locals at the same rent. And location within the submarket counts: Concord and Fairfield with I-680/I-80 access price differently than secondary pockets.
Pro Tip: Get a number tied to your rent roll
A per-square-foot guess isn’t a valuation. A current Broker Opinion of Value ties your in-place income, the right cap rate for your submarket, the comp set, and the upside a buyer would actually pay for into one number—specific to your building.
How to get a real number
If you’re weighing a sale this year, a current valuation is the place to start. It’s specific to your rent roll—not a market average—and it shows you both today’s number and the levers that move it.
Curious What Your Building Would Trade For?
I’ll run the comps on your property and send you a current Broker Opinion of Value—along with what it would take to push the number higher. No obligation.
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