Stabilized
A property operating at expected steady-state occupancy, rents, and expenses—typically after lease-up—so NOI reflects a normal year rather than a ramp.
Definition
Stabilized means the asset has reached the occupancy and income level the business plan assumed for a normal operating year. For small bay, that often means physical occupancy in the low-to-mid 90%s (market dependent), market-aligned rents on most units, and expenses that are no longer inflated by lease-up or renovation. Cap rates, appraisals, and permanent loan sizing usually assume stabilized NOI. A building still absorbing vacant bays, marking leases to market, or finishing TI is not stabilized even if some units are full. Value-add and development underwriting explicitly separate going-in or interim NOI from stabilized NOI when quoting yield on cost or exit value.
Example
A newly subdivided 60,000 SF flex building leases from 40% to 93% occupancy over 18 months. The buyer treats month 19—93% occupied, in-place rents near market, and normalized OpEx—as stabilized for permanent financing and a going-in cap on that NOI.
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