How much does commercial real estate appreciate?

[Patrick Philip]

I've been noticing lately that commercial real estate can appreciate much faster than residential. Sometimes it's between 23-30% per year, and possibly more in some locations. Is this normal market behavior?

[Jason D.]

@Patrick Philip commercial property is valued based on the going CAP rate and the net operating income. So, since it's hard to know when, and how much, CAP rates will change, the easiest way to add value is to raise the operating income of the property. You can do this through increasing rent, or decreasing expenses.