The rent-to-sales ratio is expressed as a rating, which can affect property value. It is a common indicator used by investors to measure the performance and outlook of a potential acquisition by dividing the business’ total annual rent by their gross annual sales.
A vacant property is an investor’s worst nightmare, and the rent-to-sales ratio helps tenants decide if a location makes economic sense for their business. For a tenant, operating between a six to eight percent rent-to-sales ratio is considered healthy, where the tenant’s sales performance justifies the rent that they are paying the landlord.
For those with a higher ratio, the property is more likely to suffer during economic downfalls. With this in mind, it makes sense that a business with a lower rent-to-sales ratio tends to be more profitable and is better positioned through market fluctuations. So, how should investors respond to a high rent-to-sales ratio?
Click below to learn how an investor can plan ahead to receive a healthy rent-to-sales ratio.
28 Jun 2019
Rent-To-Sales Ratio: How can operating sales affect the value of your real estate? | Infographic
Category: Net Lease Retail
Tags: net lease retail, property value, rent to sales
Recent Articles
Recent Media & Thought Leadership
4/25/2024
Medical Office Market Report | Houston, TX
Houston Medical Office Market Report Market Overview Houston’s status as...
4/25/2024
Q1 Retail Market Report | Houston, TX
Houston Retail Market Report Macroeconomics: Federal Funds Rate The Fed...
4/25/2024
The Texas Property Tax Dilemma
The Texas Property Tax Dilemma | What NNN Owners Need...
4/25/2024
Self-Storage Market Report | Phoenix, AZ
Phoenix Self-Storage Market Report As the capital of Arizona and...
4/19/2024
Multifamily Market Report | Bowling Green, KY
Bowling Green, KY Multifamily Market Report Market Overview Bowling Green’s...
4/18/2024
Q1 Multifamily Market Report | Tri-Cities, CA
Glendale, CA Multifamily Submarket Report Submarket Overview Glendale, CA, is...
4/18/2024
Q1 Multifamily Market Report | Los Angeles, California
Q1 Los Angeles Multifamily Market Report Market Overview Los Angeles...
4/18/2024
Q1 Retail Market Report | Atlanta, GA
Q1 Atlanta Retail Market Report Market Overview Currently, there is...
4/17/2024
California Hospitality Challenges
Navigating New Legislation and Labor Shortages How is the Industry...