What CAP rates are you seeing across the nation?

Question

Hey BP,

Here in California, deals I am underwriting (usually 80+ units) are seeing 4.35 to 5.5 on the top end. Out of curiosity, what are you seeing in your cities of investment?

Brian Burke · Answer

Cap rates range by property class, metro and submarket so we are seeing a range of cap rates. Then again we are underwriting A, B and C deals in several states. That said, I'm seeing as low as 4% for class A product in core CA markets, 5-5.5% for B product in Phoenix, Atlanta, Houston and Central Florida; and 5.5% to 6% for B- to C+ properties in those markets.

CBRE puts out a great cap rate study twice per year--you should get a copy if you are looking at multiple markets. It will show cap ranges in each major market for each class of property. Great resource.

Account Closed · Answer

Simply done out of curiosity Brent. How’s Ohio looking?

Todd Dexheimer · Answer

Minneapolis is around 4-4.75% in the A space. 4.75-5.75 in the B space and 5.75-7 in the C space. Those numbers are 1-1.5 above our typical market. I am seeing high cap markets like Cincinnati, Milwaukee, Louisville, Indianapolis greatly compressed as well. Those markets are approaching minneapolis cap rates, but still 0.5-1 pt higher.

Account Closed · Answer

I was actually looking at a couple projects in Dupont and Renton seeing those caps. One actually had a pretty high NOI, but no upside.

Russell Brazil · Answer

3% to 7% in the dc area

Account Closed · Answer

Thank you for your input. I will definitely check this out.

Brent Coombs · Answer

Anywhere from 3% to 25% (and perhaps even outside those numbers). Cheers...

Brent Coombs · Answer

[I don't see how any of these answers, good as they are, will help the OP].

In fact, why even ask such a question? Account Closed, is your curiosity now satiated?

Joseph Cornwell · Answer

Greater Cincinnati ranges from 5% to 12%, most C class areas (the vast majority of inventory) go between 7-9%. The areas I buy, I look for atleast an 8% cap with value add to increase.

Joe Splitrock · Answer

I am seeing 7% in my city, but that often doesn't include management or vacancy expense. Once you include those costs, it can run down to 5% or 6%. Still people are buying properties in less than a week.

What CAP rates are you seeing across the nation?

What CAP rates are you seeing across the nation?

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