CAP rates have been rising all over the US

By
Commercial Real Estate Agent with Sperry Van Ness

 

Neil Victor, CCIM   is Senior Advisor with Sperry Van Ness Huntsville Office.  Being part of the SVN organization offers us the most comprehensive  commercial real estate marketing tools in the industry such as CCIM , Site To Do Business, Alabama Commercial Information Exchange, NALCOM, Listing Link and many other value propositions. We are happy to share this information with you.

Written By Maulik Shah, AVP-Sperry Van Ness | Better Capital Partners

 

It is a known fact that CAP rates have been rising all over the US. However, many people believe that utilizing a blanket cap rate for all property types is hurting the market.

 

Nationwide properties are losing their values, but there are several property types that have been performing fairly well.  If you’re an investor, don’t simply believe that a properties lower CAP rate is to good to be true. 

 

Here is an example utilizing two fast food (franchise) restaurants located in the same city/market.  The market should be open to the possibility that one location could perform better than the other.  One location could have a lower cap rate based on their current profit and loss statements. 

 

There are numerous factors that are calculated into these valuations.  One of the most important is the location of the property.  If there is one property in a high traffic and densely populated area and a second property in a lower traffic area, causing lower sales, how can the same CAP rate be justified for both the properties? 

 

Even within the same city a property can be worth a lot more if there is a lot of traffic that can help increase sales for that particular restaurant.  A property’s surrounding area should be taken into account when it is being valued, rather than using a blanket CAP rate.  Just a little something to think about!


Eric Better  |  Principal & President

Sperry Van Ness  |  Better Capital Partners 

Nationwide  |  All Property Types  

1575 Westwood Blvd., Suite 201 | Los Angeles, CA 90024

O: 310.231.8979  |  M:  310.418.5261  |  F: 310.388.0447  

www.svnbcp.com | ebetter@bettercapitalpartners.com

 

 

Sperry Van Ness International has specialist's  in all disciplines of commercial real estate brokerage.  Members of the Sperry Van Ness Multi Family Team, Auction Team, Sale-Lease back, Asset Recovery  mini-storage team and other teams are comprised of Commercial Real Estate professional brokers of the highest caliber who are experts in their fields. This site is maintained by Neil Victor, CCIM, and the Sperry Van Ness Huntsville Alabama office.

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Rainmaker
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Jeremy K. Frost
Keller Williams Realty - Dripping Springs, TX

I love reading a great post like this one. thanks for making it RAIN!!!

November 02, 2009 09:08 AM #1
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Neil Victor
Sperry Van Ness - Huntsville, AL
Neil Victor, CCIM

Jeremy

I appreciate the comments.

November 02, 2009 09:32 AM #2
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