Allen Buchanan: Do cap rates matter?

Investors in commercial real estate — folks who rely on the rent paid by a tenant for their livelihood — use a number of different measures to analyze their investment.
The most common metric is a capitalization rate or cap rate. Simply stated, a cap rate is the quotient of the yearly net operating income divided by the purchase price.
If a building sports an annual net operating income — the rent minus the expenses — of $100,000 and the building is worth $2 mil