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
3/28/2024
Multifamily Market Report | Van Nuys, CA
Van Nuys, CA Multifamily Submarket Report Submarket Overview Van Nuys...
3/27/2024
Industrial Market Report | San Diego, CA
San Diego Industrial Market Report A Tale of Two Offerings...
3/26/2024
Industrial Market Report | San Francisco, CA
San Francisco Industrial Market Report Market Overview San Francisco stands...
3/26/2024
Mixed-Use Market Report | Central Brooklyn
Central Brooklyn Mixed-Use Market Report Market Overview Similar to many...
3/25/2024
Veterinary Real Estate's Response to the Pet Ownership Boom
Veterinary Real Estate Update Veterinary clinics have seen a rise...
3/21/2024
How Developers Are Clearing the Affordability Hurdle
How Developers Are Clearing the Affordability Hurdle The ongoing affordability...
3/20/2024
Healthcare Market Report | Michigan & Indiana
Michigan & Indiana Healthcare Market Report Michigan Market Overview With...
3/20/2024
Top Retailers Positioned for Growth in 2024
Top Retailers Positioned for Growth in 2024 If retail consumers...
3/20/2024
Multifamily Market Report | Orlando, FL
Orlando Multifamily Market Report Market Overview Orlando's multifamily market boasts...