This measures the value added by taking on the lease-up and construction risk. The greater the development spread is, the more likely the development will be financially feasible. To calculate the development risk, take the difference between the going-in cap rate and the going-out cap rate.
Development Spread
This measures the value added by taking on the lease-up and construction risk. The greater the development spread is, the more likely the development will be financially feasible. To calculate the development risk, take the difference between the going-in cap rate and the going-out cap rate.
