How Do Landlords & Developers Decide Rental Rates to Quote?

Whether a ground-up development, an acquisition, or a long-term owned asset, how do owners and developers decide what rental rates to charge?

While no two owners are alike, and there are more variables than can be covered in a single paper, there are common practices for the development of rental rates and ownership returns in all forms of real estate, including healthcare real estate (“HRE”). The topic could cover volumes of books surrounding finance, economics, and real estate; this is by no means a comprehensive review of the subject matter. The goal of the HRE Practice Group at Davis Moore with this paper is to outline the most substantive considerations and contextual thoughts when owners and developers calculate rental rates for tenants. While we are solely focused on HRE, most thoughts and principles herein can be applied to almost any commercial real estate that is owned and rented to a third party.