CAP RATES WILL RISE

October 6, 2008 on 12:19 am | In Fascinating Information, Funny...Money, Investment Opportunities, Statistics, Trends, Uncategorized |

CAP RATES WILL RISE

Cap Rates are predicted to be going up in the next 12 months, marginally, mind you, but they will rise. Let’s look at the statistics, in October 2007, the average cap rate for commercial property was 6.94 percent, according to Real Capital Analytics. In 2006, the average cap rate was 7.12 percent.

Cap rates for top-tier properties are not expected to rise more than 25 basis points while cap rates for lower-tiered properties and markets will increase 50 basis points to 75 basis points, predicts Hessam Nadji, senior vice president and managing director of Marcus & Millichap Research Services.

“Many cap rates have been predicated on the availability of cheap debt, and that’s driven pricing to artificially high levels,” notes Bob Dougherty, chief acquisitions officer with Buchanan Street Partners “We’ve been underwriting a 100-basis-point increase in cap rates for almost two years because we’ve been expecting a correction. Now we think cap rates will return to historical norms of 200 [basis points] to 300 basis points over Treasuries.”

6 Comments »

RSS feed for comments on this post. TrackBack URI

  1. virtually every major initiative from Villaraigosa has been a dismal failure; from a poorly executed program to plant more trees to a subsidized drive to refashion downtown Los Angeles into a mini-Manhattan. Instead of reforming a generally miserable business climate, Villaraigosa has fixated on fostering “elegant density” through massive new residential construction. This gambit has failed miserably, with downtown property values plunging at least 35% since their peak. Many “luxury” condominiums there, as well as elsewhere in the city, remain largely unoccupied or have turned into rentals.

    Comment by Joel Kotkin — February 27, 2009 #

  2. PARSIPPANY, NJ-Overall availability increased from 20.51% in first quarter 2008 to 21.44% in Q1 2009, according to new stats from FirstService Williams’ New Jersey office. Meanwhile, the average asking rent decreased from $24.52 to $24.46 during that same time period. Surprisingly, sublease now represents 20.39% of total available space, decreasing from 22.95%

    Comment by Alyson Grala — April 4, 2009 #

  3. The residents of Miami, Fla. fully felt the effects of the real estate crash, including a 12% decrease in hotel occupancy for the first quarter of 2009, an increase in unemployment to 8.5% in March 2009 and a 9% year-over-year increase in foreclosures for April 2009. Yet, on average, Miamians owe more of their personal income to credit card companies than those in any other area of the U.S.

    While the median household income is a moderate $43,333–the national average is $50,233–average credit card debt in each home is $9,797.38. That means to pay off outstanding credit card bills, debtors would have to forgo 22.61% of their incomes.

    Other areas where Americans continue to spend far more than they earn include Tampa, Fla., where the average household owes 17.1% of its total income; Los Angeles, where it’s 16.81%; Jacksonville, Fla., which owes 16.38% on average; and Orlando, Fla., indebted by 16.37%.

    Comment by ABC News — July 11, 2009 #

  4. Where are you seeking a retirement community?

    SeniorLiving.com is a comprehensive guide to retirement communities for every senior living option. Within our directory, you will find choices ranging from retirement resorts, independent living, active adult communities, and senior apartments; to a wide range of health care options including continuing care retirement communities,
    assisted living facilities, nursing homes and Alzheimer’s care.

    Comment by SeniorLiving.com — July 31, 2009 #

  5. Small-Cap Properties See Continued Rent Drops, But Less Than Before

    Rents at small-capitalization properties continued to fall last month, but the rate of decline has tapered off somewhat, which might indicate that the worst could be over for the sector.

    According to Boxwood Means Inc., a Stamford, Conn., research company that focuses on small-cap properties, all sectors continued to see rental drops, with industrial and certain retail buildings seeing the biggest drops. But those declines are nowhere near as large as they had been during the market’s freefall during the middle of last year, when monthly drops in some subsectors were greater than 100 basis points.

    Another reason for optimism: Boxwood has found a strong correlation between the performance of the residential housing market and small-cap commercial properties. And the residential market has seen an uptick in sales and potential stabilization of pricing, which could portend a period of stabilization for many small-cap properties, particularly retail.

    Comment by CRE News — August 15, 2009 #

  6. Does anyone know a good resource for South Bay commercial real estate statistics? Specifically, I’d like to keep up with local cap rates sorted by property type.

    Comment by Rob Viglione — June 19, 2010 #

Leave a comment

XHTML: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Powered by Ground Zero with WordPress