Retail with Apartments Mixed-Use Proforma Calculator

Lenders and appraisers value mixed-use property the same way the market trades it: each income stream gets its own cap rate, and the property's total value is the sum of those component values. Retail NOI is divided by a retail cap rate (typically 6.5–8.0% in 2026), apartment NOI is divided by an apartment cap rate (4.75–6.0% for stabilized urban product), and the totals are added. The implied blended cap rate is purely descriptive — you should not pick it directly.

This per-component approach matters because retail and apartment risk profiles are very different. Retail trades on lease term, tenant credit, sales per square foot, and submarket vacancy. Apartments trade on rent growth, expense ratio, and submarket employment. Forcing a single cap rate onto both understates the value of the stable income stream and overstates the risky one.

Brokers use it for opinion-of-value letters when listing a small mixed-use building, where a full Argus run is overkill. Investors use it to triage off-market deals — if the blended yield isn't there at quick assumptions, the deal is dead before due diligence. Lenders and appraisers use it to sanity-check borrower proformas, especially the cap-rate stack and DSCR.

It is most accurate for properties where the retail and residential components have distinct rent rolls and separately metered utilities. If your building has rooftop common areas, shared lobbies, or shared parking that produce material income, add those revenues to whichever component carries the lease (usually retail for parking, apartments for storage).

Consider a 24-unit apartment building over 12,000 SF of street-level retail. The retail leases at $32/SF base with $9/SF CAM recovery, 95% occupied, generating $364,800 in EGI minus $76,500 of OpEx = $288,300 NOI. At a 7.25% retail cap, that's $3,977,000 of retail value.

The apartments rent for $1,850/month average with $50/month other income per unit, 5% vacancy. That's $544,920 of EGI minus $117,000 OpEx = $427,900 NOI. At a 5.75% apartment cap, the apartment value is $7,442,000. Total value is $11,419,000 with a blended cap rate of 6.27%. At 65% LTV, the loan is $7.42M; at 7% for 25 years annual debt service is ~$629K. DSCR is 1.14× — below most lenders' 1.25× target, so you'd negotiate either a lower LTV or a longer amortization.

The most common error is allocating all building OpEx to one component. Property taxes, master-policy insurance, common-area utilities, management, and reserves must each be split — usually pro-rata to NOI or rentable area — and then matched against the income stream that bears them. Pushing OpEx onto the retail side inflates retail risk and depresses retail value.

A second mistake is using the same vacancy assumption for both. Retail structural vacancy is 5–8%, and a NNN single-tenant retail box can underwrite at 0–3%. Apartments typically underwrite at 5–7%. Using a blanket 5% across the board understates retail risk in soft markets and overstates apartment risk in tight ones.

Third, watch tenant credit. A national-credit retail tenant on a 10-year NNN can support a tighter cap rate than the surrounding multifamily market. A weak local tenant should be capped 100–200 bps wider than the comp set — don't anchor on submarket retail averages without underwriting the actual lease.