CBRE Cap Rate Survey
A CBRE Publication
First Half 2014
In This Issue:
Overviewpg 2
Officepg 8
Multifamilypg 17
Retailpg 26
Industrialpg 36
Hotelspg 41
Appendixpg 45
Click to Enter
Cap Rate Survey
First Half 2014
In This Issue:
United States | Overview
Overview
Key National Observations
•
Office
The CBRE Cap Rate Survey for mid-year 2014 points to
meaningful declines in national average cap rates for the
following property sectors:
<< | >>
•
Class A neighborhood center cap rates declined by 32 bps;
Class B neighborhood center cap rates were essentially flat;
Class C neighborhood center cap rates rose by 29 bps,
pointing to a perception of greater variation in risk across the
various retail asset classes and subtypes. Power center cap
rates moved in a more uniform fashion, however, with all
classes declining by approximately 30 bps. The greater
differentiation in cap rates seen in neighborhood centers has
not carried over to power centers in our survey results.
•
Across all of the property types surveyed, CBRE Capital
Markets and Valuation professionals anticipate that between
75% and 80% of markets will see little to no change in cap
rates over the next six months, while 20% to 25% of markets
will see contracting cap rates. Only a handful of markets
are anticipated to see rising cap rates over the next
six months, and in most cases, the rise in cap rates
in these markets are anticipated to be less than 25 bps.
•
Along with an exploration of the survey results, CBRE analyzes
the expectations and realities of recent and potential
future movements in interest rates and cap rates,
with a focus on the industrial sector.
»» Industrial (approximately 20-30 basis points (bps)
»» Class A, Retail Neighborhood Centers and Power Centers
(both by approximately 30 bps)
Multifamily
»» Central Business District Hotels (20-35 bps)
Retail
•
Cap rates for office, multifamily, and suburban hotel properties
saw little change at the national level. Rising cap rates
in a number of gateway office markets and declining
cap rates in a number of non-gateway office markets
essentially offset each other, leaving the national statistics
virtually unchanged, but pointing to a shift in investor focus. •
High street retail exhibited the greatest absolute change
in cap rates with a 36 bps decline, taking it to a national
average cap rate of 4.45%, compared to 4.81% from the
previous half. High street retail represents the smallest
sample size in the survey; this property subtype is comprised
solely of prime retail shopping thoroughfares in ten
urban submarkets serving as focal points for high-end shops
and luxury retailers. The decline in high street retail cap rates
is aligned with the trend of increased demand for
this investment type as the recovery progresses and
has now pushed the average cap rates for this sector
below that of in-fill Class A multifamily assets.
Industrial
Hotels
Appendix
2
Cap Rate Survey
First Half 2014
In This Issue:
Overview
United States | Overview (continued)
National Level Stabilized Capitalization Rates (by section, class and/or segment)
Sector
Office
Multifamily
CBD Office
Suburban Office
Industrial
Retail
Retail-Neighborhood Centers
Industrial
Retail-Power Centers
Retail-High Street
Hotels
Multifamily - Infill
Appendix
<< | >>
Multifamily - Suburban
CBD Hotels
Suburban Hotels
Class/Segment
2013 Q4
2014 Q2
BPS Change
BPS Spread to Treas.
A
5.49%
5.53%
4
291
429
B
6.92%
6.91%
-1
C
8.95%
8.85%
-10
623
A
6.67%
6.63%
-4
401
B
7.95%
7.81%
-14
519
C
9.41%
9.30%
-11
669
A
6.25%
5.97%
-28
335
B
7.36%
7.04%
-32
442
C
8.56%
8.33%
-23
571
A
6.25%
5.93%
-32
331
B
7.15%
7.14%
-1
452
C
8.43%
8.72%
29
610
A
6.82
6.52
-30
390
B
7.72%
7.41%
-31
479
C
8.71%
8.44%
-27
582
A
4.81%
4.45%
-36
183
A
4.64%
4.59%
-5
197
B
5.16%
5.18%
2
256
C
5.93%
5.95%
2
333
A
5.32%
5.29%
-3
267
B
5.93%
5.82%
-11
320
C
6.89%
6.75%
-14
413
Economy
9.03%
8.69%
-34
607
Full Service
7.54%
7.54%
0
492
Luxury
6.94
6.66%
-28
404
Select Service
8.06%
7.88%
-18
526
Economy
9.62%
9.60%
-2
698
Full Service
8.03%
8.14%
11
552
Luxury
7.48%
7.35%
-13
473
Select Service
8.38%
8.32%
-6
570
Source: CBRE Cap Rate Survey; Federal Reserve for Treasury rates, 2014.
3
Cap Rate Survey
First Half 2014
In This Issue:
United States | Overview (continued)
Overview
Interest Rates and Cap Rates: Expectations and Reality
Office
Last year, the investment markets were in turmoil after the Federal
Reserve Bank announced its intentions to begin tapering its
Quantitative Easing (QE) program. There was a great deal of fear
at this time that this tapering would sink the commercial real estate
market, but the reality has been far gentler.
Multifamily
The QE program helped hold down the long-end of the yield
curve in an attempt to incentivize long-term investments that might
Trend for the 10-year Treasury
did not Quite Hit Fears from a Year Ago
Retail
Industrial
<< | >>
Ten Year Treasury, %
4.0
3.5
Every month the Wall Street Journal conducts a survey of
professional economists asking for their views on future trends
on a variety of economic indicators. The following chart highlights
the consensus view for the UST in August of 2013. At the time, these
economists expected the UST to climb to 3% by mid-year 2014. In
reality, the average for the second quarter was 2.62%. While the
simple explanation for this is that economists sometimes get things
wrong, there are other factors that were holding back the expansion
of rates on the long end of the yield curve.
The consensus published in August 2013 was set in the previous
months when the averages for the second quarter were not yet
in place. Participants expected that the UST would go up,
just not as quickly as it did, as many simply could not quantify
the fear reaction that took hold when the tapering of the QE
program was announced. The “animal spirits” of the market moved
much more quickly in the near-term than economic models could
anticipate. After that initial shock, the modeled approach also failed
relative to reality.
Hotels
3.0
2.5
2.0
Source: WSJ Consensus Survey August 2013, CBRE Research Calculations, 2014.
.4
15
.3
Trend
20
.2
15
20
15
.1
15
20
Reality
20
.4
14
.3
20
14
.2
August 2013 Consensus
20
14
.1
20
.4
14
20
13
.3
20
13
.2
20
13
20
13
.1
1.5
20
Appendix
spur economic growth. The long-end of the yield curve surged on
this news and between May 1 and August 1, 2013, the 10-year
Treasury (UST) shot up 110 bps. The fear at the time was that this
turmoil with interest rates would boil over to push up cap rates.
That turmoil is well in the past and did not impact the commercial
property markets negatively. This says something about where cap
rates will likely be headed in the future.
Along the way, expectations for future growth shifted downward.
There is a simple relationship one can use to determine where
interest rates should be given expectations for economic growth
rates and the overall rate of inflation, and any downward shift
4
Cap Rate Survey
First Half 2014
In This Issue:
United States | Overview (continued)
Overview
in growth expectations should lead to lower levels on the long end
of the yield curve. The expectations on growth have moved a great
deal over the last year.
Office
As shown in the following chart, the expectations for future growth
domestic product (GDP) growth by participants in the Open
Market Committee of the Federal Reserve Bank have shifted down
significantly from March 2013 to June 2014. The views of these
Committee members are important as this is the interest rate setting
board for the Federal Reserve Bank
Multifamily
Retail
Industrial
Hotels
Appendix
During this timeframe, as future growth expectations have
downshifted, cap rate spreads to Treasuries have generally
narrowed as well. For example, the mid-year 2014 CBRE
Cap Rate Survey shows that in the industrial sector, the average
cap rate for stabilized Class A assets now stands at 5.97%.
Throughout the second quarter, the 10-year UST averaged 2.62%,
yielding a 335 bps spread between the “risk-free” asset versus
the 426 bps spread observed six months ago in our last survey.
Has the spread of Class A industrial asset cap rates over Treasuries
now reduced as far is it might? Would a move to 4.25% for the
10-year Treasury imply a corresponding cap-rate shift up to 7.60%
for high-quality industrial assets?
If cap rates for stabilized Class A industrial assets move from
5.97% to 7.60% in two years, asset values would be obliterated,
suffering a roughly 27% decline—assuming there are no changes
in property income. This line of thinking is flawed, however,
as there is not a constant spread between cap rates and interest
rates over time. The following chart shows the appraisal-based
cap rate data for high-quality industrial assets held by investment
managers contributing data to National Council of Real Estate
<< | >>
Growth Expectations of Federal Reserve
Open Market Committee Members Downshifting
Number of Participants
10
9
8
7
6
5
4
3
2
1
0
1.8-1.9 2.0-2.1 2.2-2.3 2.4-2.5 2.6-2.7 2.8-2.9 3.0-3.1 3.2-3.3 3.4-3.5
Ranges on Long-Term GDP Growth Expectations
March 2013
June 2013
June 2014
Source: Federal Open Market Committee (FOMC) Meeting Notes, CBRE Research Calculations, 2014.
Investment Fiduciaries (NCREIF) have exhibited a roughly 300
bps spread to the 10-year Treasury. The comparable spread for
the CBRE Cap Rate Survey figure would be roughly 360 bps,
given CBRE’s inclusion of data in secondary and tertiary markets
where NCREIF is typically under-represented.
The spread between cap rates and interest rates has not remained
constant over time, just as investor perceptions of the risks in
the industrial sector have not remained constant. This is true
for all major property sectors, with the perception of risk rising
and falling. For high quality industrial assets, it appears that
5
Cap Rate Survey
First Half 2014
In This Issue:
United States | Overview (continued)
Overview
Office
Cap Rate Spreads to the Ten-Year Treasury
are Not Constant
BPS Spread, Warehouse Cap Rates to Ten Year
500
Average of 300 BPS Spread since 1993
450
Multifamily
400
350
300
250
Retail
200
150
100
Industrial
50
1993.1
1994.1
1995.1
1996.1
1997.1
1998.1
1999.1
2000.1
2001.1
2002.1
2003.1
2004.1
2005.1
2006.1
2007.1
2008.1
2009.1
2010.1
2011.1
2012.1
2013.1
2014.1
0
Hotels
Spread
1993 to 2014 Average
Source: NCREIF, Federal Reserve Bank, CBRE Research Calculations, 2014.
Appendix
the risk spread over Treasuries remains at a reasonable level,
and based on historical data, may even have room to narrow a bit
more in response to rising interest rates, while still remaining within
the range of the historical observations noted in the chart above. Review of Fundamentals by Property Sector
By mid-year 2014, the office vacancy rate was at 14.5%
nationally, versus 15.2% for mid-year 2013. This 70-bps decline
in the office vacancy rate came about from declining vacancy
<< | >>
in both CBD and suburban submarkets. The vacancy rate for
CBD submarkets fell 50 bps from one year earlier to hit 11.8%.
The vacancy rate for suburban submarkets fell more quickly,
however, dropping 90 bps from a year earlier to hit 15.9%.
Overall, there is still more slack capacity in the suburban
submarkets, making it easier for the figure to fall more quickly.
Of note, the 15.9% level is now just under the 16.1% average
level recorded since 1988 and rent pressures should begin to build
in many suburban submarkets. CBD vacancy rates, by contrast,
are now well below the long-term average of 12.8%, with many
CBD submarkets exhibiting healthy rent trends for some time now.
The national industrial availability rate reduced to 10.8% as of
mid-year 2014, from 11.9% at mid-year 2013. This year-overyear improvement is in keeping with a trend of approximately 100
bps improvements over each year since the worst of the recession
in 2008 when the availability rate stood at 14.5%. Should this
trend continue, the national availability rate for industrial would
reduce to a level below the long term average of 10.0% by the first
half of 2015. As a result of the tightening availability rate, average
asking rents have risen 4.4% over the past year, following several
years of declining or flat rent growth throughout the early stages
of the recovery from the recession.
The retail sector has lagged other property types throughout
the recovery period; however, retail leasing is now catching up with
other property sectors and availability rates are down 50 bps from a
year earlier, having fallen to 11.7% by mid-year 2014. Nationally,
net absorption has improved significantly over the last two years
with average annual absorption of over 25 million square feet.
This level is half of the long term average seen from 1992-2007,
6
Cap Rate Survey
First Half 2014
In This Issue:
United States | Overview (continued)
Overview
but represents a significant turnaround from the extremely limited
absorption of the early period of the recovery from the recession,
and a dramatic improvement from the negative net absorption of
28 million square feet that occurred in 2009. Office
Multifamily
Retail
Industrial
Hotels
Multifamily continues to enjoy the healthiest fundamentals among
the main property sectors. Vacancy stood at 4.4% at mid-year
2014, down from 4.6% a year earlier. The long-term average
vacancy rate for the sector is between 5.0% and 6.0%, and as
demand continues to grow, rents are climbing as well, albeit at a
slower pace than the prior two years. Effective market rents are up
2.6% from a year earlier, but rents were up nearly 5.0% in 2011.
Renters can absorb only so much of a rent increase. Still, while rents
are not growing as quickly as they have in the past, cap rates for
the multifamily sector remain the lowest among the major property
sectors. For Class A stabilized assets in urban locations, cap rates
came in at a national average rate of 4.59%, a 5 bps decline
from the last survey in March 2014. Infill urban Class B and C
average cap rates were nearly unchanged at 5.18% and 5.95%,
respectively.
<< | >>
In the hotel sector, the revenue per available room (RevPAR)
continued to grow throughout the first half of 2014.In the full-service
segment, RevPAR was up 7.5% from a year earlier, while the limitedservice sector RevPAR was up 10.7% from mid-year 2013.This pace
of RevPAR growth is up compared to the growth rates seen in 2013,
when growth in RevPAR slowed somewhat following the 8.0%-9.0%
pace of 2010-2012. In the limited-service sector, for instance, the
average pace of annual RevPAR growth from the middle of 2010
through the middle of 2012 was 8.0%. The supply of rooms was
fairly constrained during that time frame, however. The CBRE Cap
Rate Survey shows that investors are placing the most value on the
RevPAR trends from the luxury segments for assets in CBD locations,
with an average 6.66% cap rate across markets. The economy
segments meanwhile have an average cap rate of 8.69%, though
the range is fairly wide, with markets falling anywhere from 7.25%
to 10.88% on the spectrum.
Appendix
7
Cap Rate Survey
First Half 2014
In This Issue:
Office | Overview
Overview
Investment volume in the office sector in the 12 months ending at mid-year 2014 was up 30.9% compared to the year-earlier period,
with total volume of $115.8 billion, according to Real Capital Analytics (RCA). To put this figure into perspective, office transaction volume
averaged about $108 billion per year from 2004 to 2006. Volume is still down from the record $213 billion pace recorded in 2007,
but those figures represented an artificial high from the unwinding of REITs to the private market. The volume of sales in suburban
submarkets has been growing at a faster pace than in the CBD submarkets. Of note, the suburban submarkets accounted for approximately
51% of office transaction volume during the past 12 months. This shift towards greater volume in suburban submarkets is significant,
as that segment saw sales grow at a slower pace in the early stages of the economic recovery when investors were mostly focused
on CBD office investments.
Office
Multifamily
Retail
Industrial
Hotels
Appendix
<< | >>
This edition of the CBRE Cap Rate Survey reflects very limited change in both CBD and suburban office cap rates. The greatest change
was in Class C suburban office which saw a 10 bps contraction in the national average cap rate. Going forward, CBRE Capital Markets
and Valuation professionals expect that across the 40 suburban markets surveyed, cap rates for stabilized Class A assets will contract
in 23 markets over the next six months, while 17 markets are expected to be flat. In CBD submarkets, the same basic pattern is in place,
with cap rates for stabilized Class A expected to contract in 18 markets, remain flat in 22, and expand slightly in one market.
Overall, where cap rates are expected to contract, the movement will be less than 25 bps, but greater contraction is anticipated
in Atlanta, Charlotte and Detroit.
Aside from the pivot towards greater interest in suburban investments, another notable trend in the office sector is a shift toward
somewhat higher cap rates in a few key gateway and major markets and lower cap rates in a few non-gateway and secondary markets.
Notable examples of stabilized Class A office cap rates rising in this survey as compared with the last edition include New York (+50 bps);
Los Angeles (+75 bps); and Dallas (+50 bps). Secondary and tertiary markets showing contracting Class A stabilized office cap rates
include Baltimore, Charlotte, Indianapolis, Austin, Orlando, Albuquerque, and Denver; all with reductions of 50-100 bps. Clearly investors
have broadened their horizons well beyond gateway CBD markets as both the volume of transactions and cap rates reflect this trend.
click to download
Select from the list below to access the current office key ratios, forecasts and maps.
CBD
SUBURBAN
Complete Office CBD Current Key Ratios Chart (PDF)
Complete Office Suburban Current Key Ratios Chart (PDF)
Complete Office CBD Current Forecast Chart (PDF)
Complete Office Suburban Current Forecast Chart (PDF)
Complete Office CBD Current Key Ratios Map (PDF)
Complete Office Suburban Current Key Ratios Map (PDF)
8
Cap Rate Survey
First Half 2014
Office CBD | Eastern Region
↓
↓
I
↓
I
9.00%
7.00% - 8.50%
8.50% - 9.00%
6.50% - 7.00%
8.50% - 9.50%
9.00% - 9.75%
8.75% - 9.25%
6.50% - 7.50%
N/A
6.50% - 7.00%
8.00% - 8.25%
N/A
8.50% - 9.00%
11.00% - 11.50%
8.00% - 10.00%
7.50% - 8.00%
N/A
I
N/A
I
↓
↓
↓
I
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
Appendix
↓
Class A
Stabilized
Cap Rates
Hotels
↓
↓
8.00% - 8.50%
5.75% - 6.25%
7.00% - 7.25%
5.00% - 6.00%
7.50% - 8.00%
8.50% - 9.00%
7.25% - 8.00%
5.00% - 6.00%
Return on Cost Compared
for Value-Add to 2H13
N/A
9.25% - 10.25%
10.00%
N/A
9.50% - 10.50%
11.00% - 12.00%
9.50% - 11.00%
7.50% - 8.50%
N/A
I
N/A
↓
I
FORECAST TRENDS*
Retail
Industrial
8.00% - 8.50%
6.00% - 7.50%
8.00% - 8.50%
6.00% - 6.50%
7.50% - 8.50%
8.00% - 8.75%
7.50% - 8.50%
5.50% - 6.50%
↓
I
I
I
↓
Stabilized Compared
Cap Rates to 2H13
↓
Multifamily
6.25% - 7.00%
4.50% - 5.00%
6.25% - 6.50%
4.50% - 5.00%
6.50% - 7.25%
7.00% - 8.00%
6.25% - 7.00%
4.50% - 5.50%
↓
↓
↓
Office
Baltimore
Boston
Charlotte
New York
Philadelphia
Pittsburgh
Raleigh
Washington, D.C.
Stabilized Compared Return on Cost Compared
Cap Rates to 2H13
for Value-Add to 2H13
↓
Stabilized Compared Return on Cost Compared
Cap Rates to 2H13
for Value-Add to 2H13
Class C
↓
↓
Class B
↓
Class A
↓
↓
↓
Overview
<< | >>
↓
In This Issue:
Return on Cost
for Value-Add
Class B
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class C
Stabilized
Cap Rates
Baltimore
Boston
Charlotte
New York
Philadelphia
Pittsburgh
Raleigh
Washington, D.C.
Return on Cost
for Value-Add
Decrease
Remain Flat
Increase
* Forecast trends represent the CBRE professionals’ opinion on where ratios are likely to trend in the 2nd half of 2014 in their local market.
9
Cap Rate Survey
First Half 2014
Office CBD | Midwestern Region
↓
I
↓
I
I
I
↓
↓
↓
↓
↓
Appendix
I
I
7.50% - 8.50%
10.00% - 11.00%
12.00% +
10.00% - 11.50%
12.00% - 14.00%
8.75% - 9.25%
11.00% - 12.00%
9.00% - 10.00%
9.50% - 10.50%
I
Return on Cost Compared
for Value-Add to 2H13
8.75% - 10.75%
12.00% - 13.00%
13.00% +
11.00% - 12.00%
12.00% - 15.00%
10.00% - 11.00%
11.00% - 12.00%
11.00% - 13.00%
9.00% - 10.00%
I
↓
I
I
I
↓
↓
Hotels
I
↓
I
I
Stabilized Compared
Cap Rates to 2H13
I
FORECAST TRENDS*
Class A
Industrial
↓
I
I
I
I
8.50% - 9.50%
10.00% - 10.50%
11.00% - 12.00%
9.75% - 10.75%
10.00% - 14.00%
9.50% - 10.00%
9.50% - 10.50%
9.00% - 10.00%
8.00% - 9.00%
↓
Retail
I
6.75% - 7.50%
8.50% - 9.00%
10.00% - 10.50%
8.50% - 9.50%
10.00% - 12.00%
8.00% - 8.50%
9.50% - 10.50%
7.50% - 8.50%
8.50% - 9.50%
Return on Cost Compared
for Value-Add to 2H13
↓
I
I
Stabilized Compared
Cap Rates to 2H13
Class C
↓
I
↓
↓
↓
↓
Multifamily
↓
I
I
7.00% - 7.50%
8.50% - 9.00%
10.00% - 11.00%
8.00% - 9.75%
9.50% - 12.00%
8.50% - 9.50%
8.25% - 8.75%
7.00% - 8.00%
7.50% - 8.50%
↓
↓
Office
Chicago
5.00% - 5.75%
Cincinnati
7.50% - 8.00%
Cleveland
9.50% - 10.00%
Columbus
7.50% - 8.50%
Detroit
9.00% - 10.00%
Indianapolis 7.50% - 8.00%
Kansas City
8.25% - 8.75%
Minneapolis 5.50% - 6.50%
St. Louis
8.00% - 9.00%
Return on Cost Compared
for Value-Add to 2H13
↓
↓
Stabilized Compared
Cap Rates to 2H13
Class B
↓
↓
Class A
↓
↓
Overview
<< | >>
↓
In This Issue:
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class B
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class C
Stabilized
Cap Rates
Chicago
Cincinnati
Cleveland
Columbus
Detroit
Indianapolis
Kansas City
Minneapolis
St. Louis
Return on Cost
for Value-Add
Decrease
Remain Flat
Increase
* Forecast trends represent the CBRE professionals’ opinion on where ratios are likely to trend in the 2nd half of 2014 in their local market.
10
Cap Rate Survey
First Half 2014
Office CBD | Southern Region
↓
↓
I
↓
I
↓
I
I
↓
I
I
↓
↓
↓
I
I
↓
↓
I
I
7.50% - 8.50%
7.00% - 7.50%
10.00% - 11.00%
8.00% - 9.00%
10.00% - 11.00%
11.00% - 12.00%
6.75% - 7.75%
9.00% - 9.50%
7.00% - 8.00%
8.25% - 8.75%
8.00% - 9.50%
Stabilized Compared
Cap Rates to 2H13
8.00% - 9.75%
8.00% - 8.50%
9.00% - 11.00%
8.00% - 9.00%
10.50% - 12.00%
11.00% - 12.00%
7.00% - 7.50%
9.00% - 9.50%
7.50% - 8.00%
8.50% - 9.00%
8.50% - 10.00%
I
I
I
↓
I
I
↓
↓
↓
↓
I
I
Return on Cost Compared
for Value-Add to 2H13
↓
I
Return on Cost Compared
for Value-Add to 2H13
9.00% - 11.00%
8.50% - 9.00%
11.00% - 12.00%
10.00% - 12.00%
12.00% +
12.00% +
7.50% - 9.00%
10.00% - 10.50%
8.00% - 8.50%
8.75% - 9.50%
9.00% - 11.00%
↓
↓
I
I
I
↓
I
↓
↓
I
↓
↓
I
I
I
I
7.00% - 8.00%
6.50% - 7.00%
8.00% - 9.00%
6.50% - 7.50%
9.50% - 10.25%
9.00% - 10.00%
6.00% - 7.00%
8.00% - 8.50%
6.50% - 7.00%
7.75% - 8.50%
7.75% - 9.00%
↓
I
I
I
I
7.00% - 7.50%
6.00% - 6.50%
8.50% - 9.00%
7.00% - 7.75%
9.50% - 10.50%
9.00% - 10.00%
6.50% - 7.50%
7.50% - 8.00%
6.50% - 7.00%
7.75% - 8.25%
7.00% - 8.50%
Stabilized Compared
Cap Rates to 2H13
Class C
↓
Retail
↓
↓
↓
Multifamily
6.00% - 7.00%
5.00% - 5.25%
6.50% - 7.00%
5.50% - 6.50%
8.00% - 9.00%
8.50% - 9.50%
5.00% - 5.75%
6.50% - 7.00%
6.00% - 6.50%
6.50% - 7.75%
6.50% - 7.50%
↓
Office
Atlanta
Austin
Dallas
Houston
Jacksonville
Memphis
Miami
Nashville
Orlando
San Antonio
Tampa
Return on Cost Compared
for Value-Add to 2H13
↓
Stabilized Compared
Cap Rates to 2H13
Class B
↓
Class A
↓
Overview
<< | >>
↓
In This Issue:
↓
I
FORECAST TRENDS*
Class A
Industrial
Hotels
Appendix
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class B
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class C
Stabilized
Cap Rates
Atlanta
Austin
Dallas
Houston
Jacksonville
Memphis
Miami
Nashville
Orlando
San Antonio
Tampa
Return on Cost
for Value-Add
Decrease
Remain Flat
Increase
* Forecast trends represent the CBRE professionals’ opinion on where ratios are likely to trend in the 2nd half of 2014 in their local market.
11
Cap Rate Survey
First Half 2014
Office CBD | Western Region
↓
↓
↓
Appendix
I
I
I
I
I
I
I
↓
↓
I
I
I
I
I
I
↓
I
9.00% - 10.00%
7.50% - 8.00%
8.50% - 10.00%
7.50% - 8.50%
7.75% - 8.50%
8.50% - 10.00%
8.00% - 9.00%
8.00% - 9.00%
8.00% - 9.80%
7.25% - 7.75%
6.50% - 7.00%
8.00% - 10.00%
7.00% - 8.50%
↓
↓
↓
I
I
I
I
I
Return on Cost Compared
for Value-Add to 2H13
10.00% - 13.00%
9.00% - 9.50%
10.00% - 12.00%
9.50% - 10.00%
9.50% - 10.50%
10.00% - 11.00%
8.50% - 10.00%
9.00% - 10.00%
9.00% - 10.00%
8.25% - 8.75%
8.50% - 9.50%
9.00% +
8.50% - 10.50%
↓
↓
I
I
I
I
I
↓
I
I
FORECAST TRENDS*
Class A
Hotels
I
↓
9.50% - 10.00%
7.50% - 8.00%
9.00% - 10.00%
8.50% - 9.00%
8.00% - 9.00%
8.00% - 9.00%
7.50% - 8.50%
8.00% - 9.00%
7.75% - 8.25%
7.00% - 7.50%
7.00% - 8.00%
7.50% - 8.50%
6.75% - 7.75%
↓
↓
Industrial
↓
Stabilized Compared
Cap Rates to 2H13
↓
↓
I
I
I
I
I
I
I
I
I
I
↓
I
8.50% - 9.00%
6.00% - 6.50%
7.50% - 8.00%
6.25% - 7.25%
6.25% - 7.25%
7.00% - 8.00%
7.00% - 8.00%
7.25% - 8.00%
7.00% - 8.00%
6.50% - 7.00%
4.00% - 5.50%
7.00% - 8.00%
5.75% - 6.50%
Return on Cost Compared
for Value-Add to 2H13
↓
↓
I
I
I
↓
I
↓
I
9.00% - 9.50%
6.50% - 7.00%
8.00% - 9.00%
7.50% - 8.00%
6.75% - 7.25%
7.00% - 7.50%
6.75% - 7.75%
7.50% - 8.00%
7.25% - 8.00%
6.50% - 7.00%
6.50% - 7.50%
7.00% - 8.00%
5.75% - 6.75%
Stabilized Compared
Cap Rates to 2H13
Class C
↓
Retail
↓
↓
Multifamily
8.00% - 8.50%
5.50% - 6.00%
7.50% - 8.00%
5.00% - 6.00%
5.50% - 6.00%
6.00% - 6.75%
6.00% - 7.00%
6.50% - 7.25%
5.50% - 7.00%
6.25% - 6.75%
3.00% - 4.00%
6.50% - 7.50%
4.75% - 5.50%
↓
↓
Office
Albuquerque
Denver
Las Vegas
Los Angeles
Orange County
Phoenix
Portland
Sacramento
Salt Lake City
San Diego
San Francisco
San Jose
Seattle
Return on Cost Compared
for Value-Add to 2H13
↓
Stabilized Compared
Cap Rates to 2H13
Class B
↓
↓
Class A
↓
↓
Overview
<< | >>
↓
↓
In This Issue:
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class B
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class C
Stabilized
Cap Rates
Albuquerque
Denver
Las Vegas
Los Angeles
Orange County
Phoenix
Portland
Sacramento
Salt Lake City
San Diego
San Francisco
San Jose
Seattle
Return on Cost
for Value-Add
Decrease
Remain Flat
Increase
* Forecast trends represent the CBRE professionals’ opinion on where ratios are likely to trend in the 2nd half of 2014 in their local market.
12
Cap Rate Survey
First Half 2014
Office Suburban | Eastern Region
↓
I
↓
I
9.00%
8.50% - 10.00%
9.00% - 9.50%
9.00% - 10.00%
9.50% - 10.00%
9.00% - 9.50%
7.50% - 8.50%
↓
↓
I
↓
↓
↓
↓
↓
I
↓
I
8.00% - 9.00%
6.75% - 7.75%
7.25% - 8.00%
7.50% - 8.50%
8.75% - 9.25%
7.50% - 8.25%
5.50% - 7.50%
Stabilized Compared
Cap Rates to 2H13
N/A
8.00% - 8.75%
8.50% - 9.00%
8.50% - 9.50%
11.00% - 12.00%
8.25% - 10.50%
8.00% - 10.00%
N/A
I
↓
I
↓
↓
↓
↓
↓
I
↓
↓
8.00% - 8.50%
7.00% - 8.00%
8.50% - 9.00%
7.50% - 8.50%
8.50% - 9.00%
7.75% - 8.75%
6.50% - 7.50%
↓
I
↓
↓
Multifamily
6.50% - 7.50%
6.00% - 6.50%
6.50% - 7.00%
6.25% - 7.25%
7.00% - 8.50%
6.50% - 7.25%
5.00% - 6.00%
↓
Office
Baltimore
Boston
Charlotte
Philadelphia
Pittsburgh
Raleigh
Washington, D.C.
Class C
Return on Cost Compared
for Value-Add to 2H13
I
Return on Cost Compared
for Value-Add to 2H13
N/A
9.50% - 11.00%
10.00%
10.00% - 11.00%
11.00% - 12.00%
9.75% - 11.50%
8.50% - 9.50%
N/A
I
↓
I
↓
↓
Class B
Stabilized Compared
Cap Rates to 2H13
↓
Class A
Stabilized Compared Return on Cost Compared
Cap Rates to 2H13
for Value-Add to 2H13
↓
Overview
<< | >>
↓
In This Issue:
FORECAST TRENDS*
Retail
Class A
Stabilized
Cap Rates
Industrial
Hotels
Return on Cost
for Value-Add
Class B
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class C
Stabilized
Cap Rates
Baltimore
Boston
Charlotte
Philadelphia
Pittsburgh
Raleigh
Washington, D.C.
Return on Cost
for Value-Add
Decrease
Remain Flat
Increase
* Forecast trends represent the CBRE professionals’ opinion on where ratios are likely to trend in the 2nd half of 2014 in their local market.
Appendix
13
Cap Rate Survey
First Half 2014
Office Suburban | Midwestern Region
↓
Hotels
Appendix
I
10.00% - 12.00%
11.00% - 11.50%
12.00% - 14.00%
8.50% - 10.50%
10.50% - 14.00%
8.75% - 9.25%
8.50% - 9.50%
10.50% - 11.50%
10.00% - 12.00%
I
↓
I
I
I
10.25% - 12.00%
10.00% - 11.00%
10.00% - 10.50%
10.50% - 11.00%
10.00% - 14.00%
9.00% - 9.50%
10.00% - 11.00%
10.00% - 11.00%
9.00% - 10.00%
I
I
I
I
Return on Cost Compared
for Value-Add to 2H13
12.00% - 14.00%
12.50% - 13.50%
13.00% +
11.50% - 12.50%
12.00% - 15.00%
9.50% - 10.00%
10.00% - 11.00%
12.00% - 13.00%
12.00% +
I
I
↓
I
I
FORECAST TRENDS*
Class A
Industrial
↓
↓
I
I
Stabilized Compared
Cap Rates to 2H13
↓
↓
↓
Retail
↓
↓
↓
I
I
8.00% - 10.00%
9.00% - 9.50%
9.00% - 9.50%
8.50% - 10.00%
9.50% - 11.50%
8.00% - 8.50%
8.50% - 9.50%
8.00% - 8.75%
8.00% - 9.00%
↓
↓
↓
I
I
Return on Cost Compared
for Value-Add to 2H13
↓
↓
I
9.00% - 10.50%
9.00% - 10.00%
10.00% - 11.00%
8.00% - 9.50%
9.50% - 12.00%
8.50% - 9.00%
7.25% - 7.75%
8.25% - 9.25%
8.00% - 9.50%
Stabilized Compared
Cap Rates to 2H13
Class C
↓
↓
↓
I
I
↓
↓
Multifamily
7.25% - 8.00%
8.00% - 8.50%
8.75% - 9.00%
7.50% - 9.50%
7.00% - 10.00%
7.75% - 8.25%
7.25% - 7.75%
6.75% - 7.50%
7.00% - 8.00%
↓
Office
Chicago
Cincinnati
Cleveland
Columbus
Detroit
Indianapolis
Kansas City
Minneapolis
St. Louis
Return on Cost Compared
for Value-Add to 2H13
↓
↓
↓
↓
↓
Stabilized Compared
Cap Rates to 2H13
Class B
↓
Class A
↓
↓
↓
Overview
<< | >>
↓
In This Issue:
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class B
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class C
Stabilized
Cap Rates
Chicago
Cincinnati
Cleveland
Columbus
Detroit
Indianapolis
Kansas City
Minneapolis
St. Louis
Return on Cost
for Value-Add
Decrease
Remain Flat
Increase
* Forecast trends represent the CBRE professionals’ opinion on where ratios are likely to trend in 2nd half of 2014 in their local market.
14
Cap Rate Survey
First Half 2014
Office Suburban | Southern Region
↓
I
I
↓
I
↓
↓
↓
↓
↓
8.50% - 10.00%
8.00% - 8.50%
8.50% - 10.00%
9.00% - 9.50%
9.00% - 10.00%
9.00% - 10.00%
7.50% - 9.00%
9.00% - 10.00%
8.50% - 9.50%
9.00% - 10.00%
9.00% - 11.00%
I
I
I
↓
I
I
↓
I
Stabilized Compared
Cap Rates to 2H13
↓
↓
Return on Cost Compared
for Value-Add to 2H13
9.50% - 11.50%
8.50% - 9.00%
10.50% - 11.50%
10.00% - 12.00%
12.00% +
11.00% - 12.00%
8.50% - 11.00%
10.00% - 10.50%
10.00% - 12.00%
8.50% - 9.00%
9.75% - 11.50%
↓
↓
I
I
I
I
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
I
I
8.00% - 9.00%
7.00% - 7.50%
9.00% - 10.50%
8.50% - 9.50%
10.50% - 12.00%
10.00% - 11.00%
7.75% - 9.50%
9.00% - 9.50%
8.50% - 9.50%
8.00% - 8.50%
8.25% - 9.50%
↓
I
↓
Return on Cost Compared
for Value-Add to 2H13
↓
↓
I
↓
↓
I
I
↓
I
I
7.50% - 8.50%
6.50% - 7.00%
6.50% - 7.00%
7.75% - 8.25%
8.50% - 9.50%
8.50% - 9.50%
7.00% - 8.00%
8.00% - 8.50%
7.50% - 8.00%
8.00% - 8.50%
7.75% - 8.75%
Class C
↓
↓
7.25% - 7.75%
6.50% - 7.00%
7.00% - 8.00%
7.50% - 8.00%
9.00% - 10.00%
8.25% - 8.75%
7.25% - 8.25%
7.50% - 8.00%
8.50% - 9.00%
7.50% - 7.75%
7.50% - 8.50%
Stabilized Compared
Cap Rates to 2H13
↓
Retail
↓
↓
↓
Multifamily
6.50% - 7.50%
5.50% - 6.00%
6.25% - 7.25%
6.00% - 6.50%
7.50% - 8.50%
7.50% - 8.00%
6.00% - 6.75%
6.50% - 7.50%
7.00% - 7.50%
7.50% - 8.00%
7.00% - 8.00%
↓
↓
Office
Atlanta
Austin
Dallas
Houston
Jacksonville
Memphis
Miami
Nashville
Orlando
San Antonio
Tampa
Return on Cost Compared
for Value-Add to 2H13
↓
↓
↓
Stabilized Compared
Cap Rates to 2H13
Class B
↓
Class A
↓
↓
Overview
<< | >>
↓
In This Issue:
FORECAST TRENDS*
Class A
Industrial
Hotels
Appendix
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class B
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class C
Stabilized
Cap Rates
Atlanta
Austin
Dallas
Houston
Jacksonville
Memphis
Miami
Nashville
Orlando
San Antonio
Tampa
Return on Cost
for Value-Add
Decrease
Remain Flat
Increase
* Forecast trends represent the CBRE professionals’ opinion on where ratios are likely to trend in the 2nd half of 2014 in their local market.
15
Cap Rate Survey
First Half 2014
Office Suburban | Western Region
↓
I
I
I
I
I
I
I
I
I
↓
I
I
I
I
↓
I
↓
I
I
I
↓
↓
↓
10.50% - 12.00%
10.25% - 10.75%
10.00% - 12.00%
9.00% - 10.00%
9.50% - 10.50%
11.00% - 12.00%
8.50% - 10.50%
9.75% - 11.00%
9.25% - 10.25%
8.00% - 8.50%
7.50% - 8.00%
9.00% +
8.50% - 10.00%
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
Appendix
I
↓
↓
I
I
I
↓
I
Return on Cost Compared
for Value-Add to 2H13
FORECAST TRENDS*
Class A
Hotels
I
9.50% - 11.00%
8.75% - 9.25%
8.50% - 10.00%
7.50% - 8.50%
7.75% - 8.50%
9.50% - 10.50%
8.50% - 9.50%
9.00% - 10.00%
8.75% - 9.50%
7.25% - 7.75%
7.50% - 8.50%
8.00% +
7.25% - 8.25%
↓
Industrial
I
I
↓
9.50% - 10.00%
8.50% - 9.00%
7.50% - 8.00%
8.00% - 9.00%
8.00% - 9.00%
7.50% - 9.00%
8.50% - 9.50%
8.75% - 9.75%
8.00% - 8.50%
7.00% - 7.50%
6.00% - 7.00%
7.50% - 8.50%
8.00% - 9.00%
Stabilized Compared
Cap Rates to 2H13
↓
I
I
I
I
I
I
I
↓
↓
I
I
↓
I
8.50% - 9.00%
6.75% - 7.25%
7.50% - 8.00%
6.50% - 7.50%
6.25% - 7.25%
7.00% - 8.00%
7.50% - 8.50%
8.00% - 9.00%
7.50% - 8.50%
6.75% - 7.25%
6.50% - 7.50%
6.50% - 7.50%
6.50% - 7.25%
Return on Cost Compared
for Value-Add to 2H13
↓
I
↓
I
I
9.00% - 9.50%
7.00% - 7.50%
7.50% - 8.00%
7.00% - 8.50%
6.75% - 7.25%
6.50% - 7.50%
7.75% - 8.75%
7.75% - 8.75%
7.50% - 8.25%
6.00% - 6.50%
5.00% - 6.00%
7.00% - 8.00%
7.00% - 8.00%
Stabilized Compared
Cap Rates to 2H13
Class C
↓
Retail
↓
↓
Multifamily
8.00% - 8.50%
6.25% - 6.75%
7.00% - 7.50%
5.50% - 7.00%
5.50% - 6.00%
6.00% - 6.75%
7.00% - 8.00%
7.00% - 8.00%
6.50% - 7.50%
5.75% - 6.25%
5.50% - 6.50%
5.75% - 6.50%
5.75% - 6.50%
↓
Office
Albuquerque
Denver
Las Vegas
Los Angeles
Orange County
Phoenix
Portland
Sacramento
Salt Lake City
San Diego
San Francisco
San Jose
Seattle
Return on Cost Compared
for Value-Add to 2H13
↓
Stabilized Compared
Cap Rates to 2H13
Class B
↓
↓
Class A
↓
↓
Overview
<< | >>
↓
↓
In This Issue:
Albuquerque
Denver
Las Vegas
Los Angeles
Orange County
Phoenix
Portland
Sacramento
Salt Lake City
San Diego
San Francisco
San Jose
Seattle
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class B
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class C
Stabilized
Cap Rates
Return on Cost
for Value-Add
Decrease
Remain Flat
Increase
* Forecast trends represent the CBRE professionals’ opinion on where ratios are likely to trend in the 2nd half of 2014 in their local market.
16
Cap Rate Survey
First Half 2014
In This Issue:
Multifamily | Overview
Overview
Among all sectors of commercial real estate investment, multifamily saw the earliest turnaround in investor interest, as the positive trends
in income fundamentals seen over the past few years had been widely expected. The stabilizing influence of the debt provided
by the government-sponsored enterprises (Freddie Mac and Fannie Mae) was an enormous boost to market liquidity as well.
Multifamily transaction volume for the 12 months ended June 30, 2014 totaled $98.4 billion, according to RCA. This figure is down
from the total volume of a year earlier which totaled $106.8 billion. Multifamily pricing has become expensive and while fundamentals
remain strong, with growing rents and still record-low vacancy rates, investor demand has shifted somewhat.
Office
Multifamily
Retail
Industrial
<< | >>
Multifamily cap rates show little change in this edition of the cap rate survey. The greatest change was in Class C suburban multifamily,
where the average cap rate contracted by 14 bps to 6.75%. CBRE Capital Markets and Valuation professionals expect that
of the 42 multifamily markets surveyed, only 12 will experience further compression in cap rates for Class A stabilized assets in infill
locations over the next six months. With the exception of San Diego, the markets where further compression is expected are secondary
and tertiary markets. CBRE does not expect further compression in all secondary and tertiary markets. The expectation is that cap rates for
Class A stabilized assets will be flat in most secondary and tertiary markets with selected markets such as Indianapolis,
Kansas City, Minneapolis, St. Louis, Memphis, and Nashville seeing compression of less than 25 bps. click to download
Select from the list below to access the current multifamily key ratios, forecasts and maps.
Hotels
Appendix
Infill/Urban
Suburban
Complete Multifamily Infill/Urban Current Key Ratios Chart (PDF)
Complete Multifamily Suburban Current Key Ratios Chart (PDF)
Complete Multifamily Infill/Urban Current Forecast Chart (PDF)
Complete Multifamily Suburban Current Forecast Chart (PDF)
Complete Multifamily Infill/Urban Current Key Ratios Map (PDF)
Complete Multifamily Suburban Current Key Ratios Map (PDF)
17
Cap Rate Survey
First Half 2014
Multifamily Infill/Urban | Eastern Region
↓
↓
Stabilized
Cap Rates
Appendix
I
I
I
N/A
I
6.00% - 7.00%
N/A
6.25% - 6.75%
5.00% - 6.00%
6.50% - 7.00%
7.50% - 8.00%
6.25% - 6.75%
6.25% - 7.00%
N/A
I
I
↓
↓
↓
Class A
Hotels
I
I
I
6.75% - 7.50%
5.75% - 6.25%
6.25% - 6.75%
6.50% - 7.00%
7.50% - 8.00%
8.50% - 9.00%
6.25% - 6.75%
6.75% - 7.50%
↓
I
↓
I
I
N/A
FORECAST TRENDS*
Retail
Industrial
I
5.50% - 6.50%
5.50% - 6.00%
5.25% - 5.75%
5.50% - 6.00%
7.00% - 7.50%
7.00% - 7.50%
5.25% - 5.75%
5.50% - 6.50%
Return on Cost Compared
for Value-Add to 2H13
↓
↓
I
↓
I
↓
I
5.00% - 6.00%
4.50% - 5.00%
5.25% - 5.75%
4.50% - 5.00%
5.50% - 6.00%
6.50% - 7.00%
5.25% - 5.75%
5.00% - 5.50%
Stabilized Compared
Cap Rates to 2H13
↓
↓
I
I
↓
I
I
↓
I
4.75% - 5.50%
4.75% - 5.25%
5.00% - 5.25%
5.00% - 5.50%
6.50% - 7.00%
6.50% - 7.00%
5.00% - 5.25%
4.75% - 5.25%
↓
↓
I
Return on Cost Compared
for Value-Add to 2H13
↓
Multifamily
4.25% - 5.00%
4.00% - 4.50%
4.75% - 5.00%
4.00% - 4.50%
5.00% - 5.25%
6.00% - 6.50%
4.75% - 5.00%
4.25% - 4.75%
Stabilized Compared
Cap Rates to 2H13
Class C
↓
Office
Baltimore
Boston
Charlotte
New York
Philadelphia
Pittsburgh
Raleigh
Washington, D.C.
Return on Cost Compared
for Value-Add to 2H13
↓
Stabilized Compared
Cap Rates to 2H13
Class B
↓
Class A
↓
Overview
<< | >>
↓
In This Issue:
Return on Cost
for Value-Add
Class B
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class C
Stabilized
Cap Rates
Baltimore
Boston
Charlotte
New York
Philadelphia
Pittsburgh
Raleigh
Washington, D.C.
Return on Cost
for Value-Add
Decrease
Remain Flat
Increase
* Forecast trends represent the CBRE professionals’ opinion on where ratios are likely to trend in the 2nd half of 2014 in their local market.
18
Cap Rate Survey
First Half 2014
Multifamily Infill/Urban | Midwestern Region
↓
↓
Hotels
Appendix
↓
I
5.25% - 5.50%
7.00% - 7.50%
8.00% - 10.00%
7.50% - 9.00%
9.00% - 11.00%
8.00% - 8.50%
6.75% - 7.25%
5.75% - 6.25%
7.75% - 9.25%
I
N/A
I
I
N/A
I
N/A
N/A
I
↓
↓
I
I
Return on Cost Compared
for Value-Add to 2H13
5.00% - 5.25%
8.00% - 8.50%
N/A
8.75% - 9.25%
10.00% - 10.50%
8.50% - 9.00%
7.50% - 8.00%
6.25% - 6.75%
N/A
I
N/A
I
I
N/A
N/A
FORECAST TRENDS*
Class A
Industrial
I
↓
I
5.00% - 5.25%
7.00% - 7.50%
N/A
7.00% - 7.50%
8.25% - 8.75%
7.00% - 7.50%
6.50% - 7.00%
5.25% - 5.75%
N/A
Stabilized Compared
Cap Rates to 2H13
↓
↓
N/A
↓
↓
Retail
N/A
5.00% - 5.25%
6.00% - 6.25%
7.00% - 8.00%
6.75% - 7.25%
8.00% - 9.00%
6.75% - 7.25%
5.75% - 6.25%
5.25% - 5.50%
6.50% - 7.25%
↓
I
I
N/A
I
I
Return on Cost Compared
for Value-Add to 2H13
↓
↓
I
↓
I
↓
4.50% - 4.75%
6.00% - 6.50%
N/A
6.00% - 6.50%
7.75% - 8.25%
6.00% - 6.50%
5.75% - 6.25%
4.75% - 5.25%
N/A
Stabilized Compared
Cap Rates to 2H13
Class C
↓
↓
↓
Multifamily
4.50% - 4.75%
5.00% - 5.50%
6.50% - 7.50%
5.75% - 6.25%
7.50% - 8.00%
5.75% - 6.25%
5.25% - 5.75%
4.50% - 4.75%
5.50% - 6.25%
↓
Office
Chicago
Cincinnati
Cleveland
Columbus
Detroit
Indianapolis
Kansas City
Minneapolis
St. Louis
Return on Cost Compared
for Value-Add to 2H13
↓
↓
Stabilized Compared
Cap Rates to 2H13
Class B
↓
Class A
↓
↓
Overview
<< | >>
↓
In This Issue:
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class B
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class C
Stabilized
Cap Rates
Chicago
Cincinnati
Cleveland
Columbus
Detroit
Indianapolis
Kansas City
Minneapolis
St. Louis
Return on Cost
for Value-Add
Decrease
Remain Flat
Increase
* Forecast trends represent the CBRE professionals’ opinion on where ratios are likely to trend in the 2nd half of 2014 in their local market.
19
Cap Rate Survey
First Half 2014
Multifamily Infill/Urban | Southern Region
↓
I
↓
I
I
I
↓
↓
I
N/A
↓
↓
↓
I
↓
I
6.00% - 6.50%
5.00% - 5.50%
5.75% - 6.25%
6.00% - 6.50%
6.25% - 6.75%
8.00% +
5.00% - 7.50%
7.00% - 7.50%
7.25% - 7.75%
5.75% - 7.00%
6.25% - 6.75%
6.50% - 7.00%
I
I
I
I
↓
↓
↓
↓
↓
Class A
Stabilized
Cap Rates
Appendix
I
I
↓
6.00% - 6.50%
5.00% - 5.75%
5.50% - 6.00%
5.75% - 6.25%
6.00% - 6.50%
6.25% - 7.00%
5.00% - 6.50%
6.50% - 7.00%
N/A
5.50% - 7.25%
6.00% - 6.50%
5.50% - 6.00%
I
7.00% - 7.50%
5.00% - 5.75%
6.25% - 6.75%
6.25% - 6.75%
6.50% - 7.00%
8.00% +
6.50% - 8.00%
7.25% - 7.75%
N/A
6.25% - 8.25%
6.50% - 7.00%
7.00% - 7.50%
↓
I
I
I
↓
I
N/A
I
FORECAST TRENDS*
Industrial
Hotels
I
I
Return on Cost Compared
for Value-Add to 2H13
↓
↓
↓
↓
I
5.00% - 5.50%
4.75% - 5.25%
5.50% - 6.00%
5.50% - 6.00%
5.00% - 5.50%
6.00% - 7.50%
4.25% - 6.00%
6.00% - 6.50%
6.00% - 6.50%
5.25% - 6.25%
5.75% - 6.25%
5.25% - 5.75%
↓
↓
↓
I
I
I
I
↓
I
I
N/A
↓
N/A
I
↓
I
5.75% - 6.25%
4.50% - 5.25%
4.50% - 5.00%
4.75% - 5.25%
5.75% - 6.25%
5.75% - 6.25%
4.50% - 5.75%
5.75% - 6.25%
7.50% - 8.00%
5.00% - 6.50%
N/A
5.00% - 5.50%
Stabilized Compared
Cap Rates to 2H13
↓
Retail
I
I
I
I
I
Return on Cost Compared
for Value-Add to 2H13
↓
Multifamily
4.25% - 4.75%
4.25% - 4.75%
4.25% - 4.75%
4.50% - 5.00%
4.25% - 5.25%
5.50% - 6.00%
4.00% - 5.25%
5.00% - 5.50%
5.50% - 6.00%
4.75% - 5.50%
5.25% - 5.75%
4.50% - 5.00%
Stabilized Compared
Cap Rates to 2H13
Class C
↓
Office
Atlanta
Austin
Dallas
Houston
Jacksonville
Memphis
Miami
Nashville
Oklahoma City
Orlando
San Antonio
Tampa
Return on Cost Compared
for Value-Add to 2H13
↓
Stabilized Compared
Cap Rates to 2H13
Class B
↓
Class A
↓
Overview
<< | >>
↓
In This Issue:
Return on Cost
for Value-Add
Class B
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class C
Stabilized
Cap Rates
Atlanta
Austin
Dallas
Houston
Jacksonville
Memphis
Miami
Nashville
Oklahoma City
Orlando
San Antonio
Tampa
Return on Cost
for Value-Add
Decrease
Remain Flat
Increase
* Forecast trends represent the CBRE professionals’ opinion on where ratios are likely to trend in the 2nd half of 2014 in their local market.
20
Cap Rate Survey
First Half 2014
Multifamily Infill/Urban | Western Region
↓
↓
I
I
I
↓
N/A
I
6.75% - 7.50%
5.75% - 6.25%
6.00% - 6.50%
4.75% - 5.75%
4.75% - 5.25%
6.00% - 6.50%
5.00% - 5.50%
5.75% - 6.25%
6.00% - 7.00%
5.00% - 5.50%
4.00% - 4.50%
4.50% - 5.00%
5.50% - 6.00%
↓
↓
↓
↓
I
I
I
I
I
N/A
I
9.50% - 10.00%
6.50% - 7.00%
6.50% - 7.00%
5.50% - 6.50%
6.25% - 6.75%
6.25% - 6.75%
4.75% - 5.25%
6.00% - 6.50%
6.25% - 7.00%
5.25% - 5.75%
3.75% - 4.25%
4.25% - 4.75%
5.25% - 6.25%
↓
I
I
↓
↓
I
I
N/A
↓
↓
↓
Appendix
N/A
I
↓
I
FORECAST TRENDS*
Class A
Hotels
I
↓
↓
I
I
I
I
I
8.00% - 9.00%
5.75% - 6.25%
5.50% - 6.00%
4.75% - 5.50%
5.75% - 6.25%
5.50% - 6.00%
4.50% - 4.75%
5.50% - 6.00%
6.00% - 6.50%
5.25% - 5.75%
3.75% - 4.25%
4.00% - 4.50%
5.00% - 5.50%
↓
N/A
N/A
I
I
↓
Industrial
I
I
6.00% - 6.50%
5.00% - 5.50%
5.00% - 5.50%
4.25% - 4.75%
4.50% - 5.00%
5.25% - 5.75%
4.50% - 5.00%
5.25% - 5.75%
5.75% - 6.25%
4.50% - 5.00%
3.75% - 4.00%
4.00% - 4.50%
4.75% - 5.25%
Stabilized Compared Return on Cost Compared
Cap Rates to 2H13
for Value-Add to 2H13
↓
↓
↓
↓
↓
I
I
N/A
I
I
↓
↓
I
↓
↓
I
N/A
↓
↓
↓
Retail
I
↓
7.00% - 8.00%
5.00% - 5.50%
5.00% - 5.50%
4.25% - 4.75%
4.75% - 5.25%
5.25%
4.00% - 4.50%
4.75% - 5.25%
5.75% - 6.25%
4.00% - 4.50%
N/A
N/A
4.50% - 5.00%
↓
Multifamily
5.75% - 6.00%
4.50% - 5.00%
4.75% - 5.25%
4.00% - 4.50%
3.75% - 4.25%
4.75% - 5.00%
4.00% - 4.50%
4.50% - 5.00%
5.50% - 6.00%
4.00% - 4.25%
3.50% - 4.00%
3.75% - 4.25%
4.00% - 4.50%
Class C
Stabilized Compared Return on Cost Compared
Cap Rates to 2H13
for Value-Add to 2H13
↓
Office
Albuquerque
Denver
Inland Empire
Los Angeles
Orange County
Phoenix
Portland
Sacramento
Salt Lake City
San Diego
San Francisco Bay Area
San Jose
Seattle
Class B
Return on Cost Compared
for Value-Add to 2H13
↓
↓
Class A
Stabilized Compared
Cap Rates to 2H13
↓
Overview
<< | >>
↓
In This Issue:
Albuquerque
Denver
Inland Empire
Los Angeles
Orange County
Phoenix
Portland
Sacramento
Salt Lake City
San Diego
San Francisco Bay Area
San Jose
Seattle
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class B
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class C
Stabilized
Cap Rates
Return on Cost
for Value-Add
Decrease
Remain Flat
Increase
* Forecast trends represent the CBRE professionals’ opinion on where ratios are likely to trend in the 2nd half of 2014 in their local market.
21
Cap Rate Survey
First Half 2014
Multifamily Suburban | Eastern Region
I
↓
↓
↓
Class A
Stabilized
Cap Rates
Hotels
↓
I
I
6.25% - 6.75%
6.00% - 6.50%
5.50% - 6.00%
7.00% - 7.50%
7.00% - 7.50%
5.50% - 6.00%
6.00% - 6.50%
I
I
I
I
I
6.50% - 7.00%
6.25% - 6.75%
6.50% - 7.00%
6.25% - 7.00%
7.50% - 8.00%
6.50% - 7.00%
6.50% - 7.50%
6.75% - 7.50%
7.25% - 7.75%
6.50% - 7.00%
7.50% - 8.00%
8.50% - 9.00%
6.50% - 7.00%
6.75% - 7.75%
I
I
I
FORECAST TRENDS*
Retail
Industrial
↓
I
5.50% - 6.25%
5.00% - 5.50%
5.25% - 5.75%
5.75% - 6.25%
6.50% - 7.00%
5.25% - 5.75%
5.75% - 6.25%
↓
↓
↓
I
Stabilized Compared Return on Cost Compared
Cap Rates to 2H13
for Value-Add to 2H13
↓
↓
↓
I
I
5.75% - 6.25%
5.00% - 5.50%
5.25% - 5.50%
6.50% - 7.00%
6.50% - 7.00%
5.25% - 5.50%
5.25% - 5.75%
↓
↓
I
Stabilized Compared Return on Cost Compared
Cap Rates to 2H13
for Value-Add to 2H13
↓
↓
Multifamily
5.25% - 6.00%
4.50% - 5.00%
5.00% - 5.25%
5.00% - 5.50%
6.00% - 6.50%
5.00% - 5.25%
4.75% - 5.75%
Class C
↓
Office
Baltimore
Boston
Charlotte
Philadelphia
Pittsburgh
Raleigh
Washington, D.C.
Return on Cost Compared
for Value-Add to 2H13
↓
Stabilized Compared
Cap Rates to 2H13
Class B
↓
Class A
↓
↓
↓
↓
↓
I
↓
Overview
<< | >>
↓
In This Issue:
Return on Cost
for Value-Add
Class B
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class C
Stabilized
Cap Rates
Baltimore
Boston
Charlotte
Philadelphia
Pittsburgh
Raleigh
Washington, D.C.
Return on Cost
for Value-Add
Decrease
Remain Flat
Increase
* Forecast trends represent the CBRE professionals’ opinion on where ratios are likely to trend in the 2nd half of 2014 in their local market.
Appendix
22
Cap Rate Survey
First Half 2014
Multifamily Suburban | Midwestern Region
↓
Appendix
↓
↓
Hotels
I
I
I
I
I
5.75% - 6.25%
7.00% - 7.50%
8.00% - 8.50%
7.25% - 7.75%
8.25% - 8.75%
7.50% - 8.00%
6.75% - 7.25%
6.00% - 6.50%
N/A
6.50% - 7.00%
8.00% - 8.50%
7.50% - 8.00%
8.00% - 9.00%
8.50% - 10.00%
8.00% - 8.50%
7.00% - 7.50%
6.25% - 6.75%
7.75% - 9.25%
N/A
I
I
I
N/A
I
I
I
I
Return on Cost Compared
for Value-Add to 2H13
6.50% - 7.00%
8.50% - 9.00%
9.00% - 9.50%
8.75% - 9.25%
10.00% - 10.50%
8.50% - 9.00%
7.50% - 8.00%
7.25% - 7.75%
N/A
I
N/A
I
I
↓
N/A
FORECAST TRENDS*
Class A
Industrial
I
I
↓
↓
↓
↓
↓
Retail
N/A
5.75% - 6.25%
6.50% - 7.00%
7.00% - 7.25%
7.00% - 7.50%
7.50% - 8.50%
7.00% - 7.50%
6.00% - 6.50%
5.50% - 6.00%
6.50% - 7.25%
↓
↓
I
I
N/A
I
I
↓
I
I
5.50% - 5.75%
6.50% - 7.00%
7.75% - 8.00%
6.25% - 6.75%
7.75% - 8.25%
6.50% - 7.00%
6.00% - 6.50%
5.50% - 5.75%
N/A
Stabilized Compared
Cap Rates to 2H13
↓
↓
I
↓
I
Stabilized Compared Return on Cost Compared
Cap Rates to 2H13
for Value-Add to 2H13
↓
↓
Multifamily
5.25% - 5.50%
5.50% - 6.00%
6.75% - 7.00%
6.00% - 6.50%
6.75% - 7.50%
6.00% - 6.50%
5.50% - 6.00%
5.00% - 5.25%
5.50% - 6.25%
↓
Office
Chicago
Cincinnati
Cleveland
Columbus
Detroit
Indianapolis
Kansas City
Minneapolis
St. Louis
Return on Cost Compared
for Value-Add to 2H13
Class C
↓
↓
Stabilized Compared
Cap Rates to 2H13
Class B
↓
Class A
↓
Overview
<< | >>
↓
In This Issue:
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class B
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class C
Stabilized
Cap Rates
Chicago
Cincinnati
Cleveland
Columbus
Detroit
Indianapolis
Kansas City
Minneapolis
St. Louis
Return on Cost
for Value-Add
Decrease
Remain Flat
Increase
* Forecast trends represent the CBRE professionals’ opinion on where ratios are likely to trend in the 2nd half of 2014 in their local market.
23
Cap Rate Survey
First Half 2014
Multifamily Suburban | Southern Region
N/A
↓
I
N/A
↓
↓
↓
I
↓
I
6.50% - 7.00%
6.00% - 6.50%
7.25% - 7.75%
7.25% - 7.75%
6.00% - 7.50%
8.00% +
6.00% - 7.50%
7.00% - 7.50%
7.75% - 8.00%
6.25% - 7.25%
6.25% - 7.00%
7.00% - 7.50%
I
I
I
I
I
↓
↓
↓
↓
I
6.75% - 7.25%
5.75% - 6.25%
5.50% - 6.00%
6.25% - 6.75%
6.50% - 7.00%
6.25% - 7.00%
5.25% - 6.50%
6.50% - 7.00%
9.00% - 9.50%
5.75% - 7.50%
6.00% - 6.50%
6.00% - 6.50%
I
7.50% - 8.00%
6.25% - 6.75%
7.25% - 7.75%
6.75% - 7.25%
7.00% - 7.50%
8.00% +
6.00% - 8.00%
7.50% - 8.00%
N/A
6.50% - 8.25%
6.50% - 7.25%
7.50% - 8.00%
↓
N/A
I
N/A
↓
↓
I
↓
↓
↓
↓
I
↓
↓
↓
↓
↓
Class A
Stabilized
Cap Rates
Appendix
↓
I
N/A
↓
5.50% - 6.00%
5.50% - 6.00%
5.50% - 6.00%
6.25% - 6.75%
5.00% - 6.50%
6.00% - 7.50%
5.00% - 6.00%
6.00% - 6.50%
6.00% - 6.50%
5.50% - 6.50%
5.75% - 6.25%
5.50% - 6.00%
Return on Cost Compared
for Value-Add to 2H13
↓
FORECAST TRENDS*
Industrial
Hotels
I
↓
↓
I
I
↓
I
I
6.00% - 6.50%
5.25% - 5.75%
5.25% - 5.75%
5.75% - 6.25%
6.00% - 6.50%
5.75% - 6.25%
5.00% - 5.75%
5.75% - 6.25%
8.00% - 8.50%
5.00% - 6.75%
5.50% - 6.00%
5.25% - 5.75%
Stabilized Compared
Cap Rates to 2H13
↓
Retail
I
I
I
I
↓
↓
Multifamily
5.00% - 5.50%
5.00% - 5.50%
5.25% - 5.75%
5.50% - 6.00%
4.75% - 5.50%
5.50% - 6.00%
4.50% - 5.25%
5.50% - 6.00%
5.75% - 6.25%
4.75% - 5.50%
5.25% - 5.75%
4.75% - 5.25%
Stabilized Compared Return on Cost Compared
Cap Rates to 2H13
for Value-Add to 2H13
↓
↓
I
↓
↓
Office
Atlanta
Austin
Dallas
Houston
Jacksonville
Memphis
Miami
Nashville
Oklahoma City
Orlando
San Antonio
Tampa
Return on Cost Compared
for Value-Add to 2H13
Class C
↓
↓
↓
Stabilized Compared
Cap Rates to 2H13
Class B
↓
↓
Class A
↓
Overview
<< | >>
↓
↓
↓
In This Issue:
Return on Cost
for Value-Add
Class B
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class C
Stabilized
Cap Rates
Atlanta
Austin
Dallas
Houston
Jacksonville
Memphis
Miami
Nashville
Oklahoma City
Orlando
San Antonio
Tampa
Return on Cost
for Value-Add
Decrease
Remain Flat
Increase
* Forecast trends represent the CBRE professionals’ opinion on where ratios are likely to trend in the 2nd half of 2014 in their local market.
24
Cap Rate Survey
First Half 2014
Multifamily Suburban | Western Region
Class B
↓
I
I
I
↓
↓
N/A
I
↓
N/A
I
7.00% - 7.75%
6.00% - 6.50%
6.00% - 6.50%
6.00% - 7.50%
5.50% - 6.00%
5.00% - 5.50%
6.00% - 6.50%
5.75% - 6.00%
6.25% - 6.75%
6.00% - 7.00%
5.00% - 5.50%
5.00% - 5.50%
4.75% - 5.25%
6.00% - 6.50%
↓
I
↓
I
I
I
↓
I
↓
I
I
↓
↓
↓
N/A
I
8.25% - 10.00%
6.75% - 7.25%
6.50% - 7.00%
6.50% - 8.00%
5.75% - 6.75%
6.00% - 6.50%
6.50% - 7.00%
5.75% - 6.25%
6.50% - 7.00%
6.25% - 7.00%
5.50% - 6.00%
4.00% - 4.50%
4.25% - 4.75%
6.00% - 6.50%
↓
I
I
I
↓
↓
↓
↓
N/A
N/A
I
↓
I
I
I
↓
I
I
I
I
7.75% - 9.00%
6.25% - 6.75%
5.50% - 6.00%
6.00% - 7.00%
5.25% - 5.75%
5.75% - 6.25%
5.75% - 6.25%
5.25% - 5.75%
5.75% - 6.25%
6.00% - 6.50%
5.50% - 6.00%
4.00% - 4.50%
4.25% - 4.75%
5.25% - 5.75%
↓
↓
↓
I
N/A
I
I
6.00% - 7.00%
5.25% - 5.75%
5.00% - 5.50%
5.50% - 6.50%
4.75% - 5.25%
4.75% - 5.25%
5.00% - 5.50%
5.50% - 6.00%
5.25% - 5.75%
5.75% - 6.25%
4.75% - 5.25%
4.25%
4.50% - 5.00%
5.00% - 5.50%
↓
↓
↓
I
I
I
↓
↓
I
I
I
↓
↓
I
I
7.00% - 8.25%
5.50% - 6.00%
5.25% - 5.75%
5.50% - 6.00%
5.00% - 6.00%
4.75% - 5.25%
5.50% - 6.00%
4.75% - 5.25%
5.50% - 6.00%
5.75% - 6.25%
4.25% - 4.75%
N/A
N/A
4.75% - 5.25%
↓
Retail
I
Stabilized Compared Return on Cost Compared
Cap Rates to 2H13
for Value-Add to 2H13
↓
Multifamily
5.75% - 6.25%
5.00% - 5.25%
4.75% - 5.25%
5.00% - 5.50%
4.50% - 5.00%
4.25% - 4.75%
5.00% - 5.50%
5.00% - 5.50%
5.00% - 5.50%
5.50% - 6.00%
4.25% - 4.75%
4.00%
4.00% - 4.50%
4.50% - 5.25%
↓
Office
Albuquerque
Denver
Inland Empire
Las Vegas
Los Angeles
Orange County
Phoenix
Portland
Sacramento
Salt Lake City
San Diego
San Francisco Bay Area
San Jose
Seattle
Stabilized Compared Return on Cost Compared
Cap Rates to 2H13
for Value-Add to 2H13
↓
↓
Stabilized Compared Return on Cost Compared
Cap Rates to 2H13
for Value-Add to 2H13
Class C
↓
Class A
↓
Overview
<< | >>
↓
↓
↓
↓
↓
In This Issue:
N/A
I
Industrial
FORECAST TRENDS*
Class A
Hotels
Appendix
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class B
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class C
Stabilized
Cap Rates
Albuquerque
Denver
Inland Empire
Las Vegas
Los Angeles
Orange County
Phoenix
Portland
Sacramento
Salt Lake City
San Diego
San Francisco Bay Area
San Jose
Seattle
Return on Cost
for Value-Add
Decrease
Remain Flat
Increase
* Forecast trends represent the CBRE professionals’ opinion on where ratios are likely to trend in 2nd half of 2014 in their local market.
25
Cap Rate Survey
First Half 2014
In This Issue:
Retail | Overview
Overview
The retail sector continues to see increases in sales volume, despite lagging other property sectors into the early stages of the recovery.
For the 12 months through mid-year 2014, sales volume reached $76 billion, up from the $54.1 billion pace set during
the previous 12 months. This 40.6% increase for retail overall is generally reflected in the trends seen among retail subtypes—sales volume
for strip-center retail was up 37.8% from a year earlier, hitting $31.7 billion in the 12 months through mid-year 2014, while the mall segment
saw volume of $44.3 billion during the same period, up 42.6% from a year earlier. Office
Multifamily
Retail
Industrial
<< | >>
Our survey results show that high street retail cap rates contracted by 36 bps and Class A neighborhood center cap rates declined by
32 bps. Power centers also registered meaningful declines in cap rates of approximately 30 bps. Class B neighborhood center cap rates
were little changed while Class C neighborhood center cap rates increased by 29 bps, pointing to greater dispersion of the perceptions
of risk across the retail sector classes and locations. For Class A stabilized neighborhood center assets, CBRE professionals expect that over the next six months cap rates will remain flat
or increase in 27 of the 40 markets surveyed, slightly decrease in 10 markets, and decrease more significantly in four. The same basic patterns
are seen in the power center subtypes going forward. As one moves up the risk spectrum to lower-grade assets, cap rate compression
is expected to dwindle in virtually all markets.
click to download
Select from the list below to access the current retail key ratios, forecasts and maps.
Hotels
NEIGHBORHOOD/COMMUNITY CENTER
Complete Retail Neighborhood/Community Center (Grocery Anchored) Current Key Ratios Chart (PDF)
Appendix
Complete Retail Neighborhood/Community Center (Grocery Anchored) Current Forecast Chart (PDF)
Complete Retail Neighborhood/Community Center (Grocery Anchored) Current Key Ratios Map (PDF)
POWER CENTER
Complete Retail Power Center Current Key Ratios Chart (PDF)
Complete Retail Power Center Current Forecast Chart (PDF)
Complete Retail Power Center Current Key Ratios Map (PDF)
HIGH STREET
Complete High Street Retail Current Key Ratios and Forecast Charts (PDF)
Complete High Street Retail Current Key Ratios Map (PDF)
26
Cap Rate Survey
First Half 2014
Retail Neighborhood/Community Center (Grocery Anchored) | Eastern Region
I
6.50% - 8.00%
6.25% - 7.50%
6.75% - 7.50%
6.75% - 7.50%
6.75% - 7.75%
6.75% - 7.50%
6.00% - 7.00%
↓
↓
8.00% - 9.50%
7.25% - 8.50%
7.75% - 8.50%
8.50% - 9.00%
9.00% - 10.00%
7.75% - 8.50%
7.50% - 8.50%
↓
I
↓
↓
↓
I
7.75% - 9.50%
7.75% - 9.00%
8.00% - 10.00%
7.50% - 8.50%
9.50% - 10.50%
8.00% - 10.00%
7.00% - 7.50%
I
I
↓
↓
↓
7.00% - 8.50%
5.50% - 6.50%
7.00% - 7.75%
7.25% - 8.00%
8.00% - 8.50%
7.00% - 7.75%
6.50% - 7.50%
Stabilized Compared
Cap Rates to 2H13
↓
↓
↓
↓
↓
↓
↓
↓
↓
I
Multifamily
5.50% - 7.00%
5.00% - 6.00%
5.75% - 6.50%
5.75% - 6.75%
6.50% - 7.25%
5.75% - 6.50%
5.00% - 6.00%
↓
↓
↓
↓
↓
Office
Baltimore
Boston
Charlotte
Philadelphia
Pittsburgh
Raleigh
Washington, D.C.
Class C
Return on Cost Compared
for Value-Add to 2H13
↓
Return on Cost Compared
for Value-Add to 2H13
9.50% - 10.00%
8.75% +
9.00% - 10.00%
9.50% - 11.00%
11.00% - 12.00%
9.00% - 10.00%
8.50% - 10.00%
↓
N/A
I
↓
↓
Class B
Stabilized Compared
Cap Rates to 2H13
↓
↓
↓
Class A
Stabilized Compared Return on Cost Compared
Cap Rates to 2H13
for Value-Add to 2H13
<< | >>
↓
↓
Overview
↓
↓
In This Issue:
FORECAST TRENDS*
Retail
Class A
Stabilized
Cap Rates
Industrial
Hotels
Return on Cost
for Value-Add
Class B
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class C
Stabilized
Cap Rates
Baltimore
Boston
Charlotte
Philadelphia
Pittsburgh
Raleigh
Washington, DC
Return on Cost
for Value-Add
Decrease
Remain Flat
Increase
* Forecast trends represent the CBRE professionals’ opinion on where ratios are likely to trend in the 2nd half of 2014 in their local market.
Appendix
27
Cap Rate Survey
First Half 2014
Retail Neighborhood/Community Center (Grocery Anchored) | Midwestern Region
Appendix
I
Hotels
I
I
I
I
I
7.25% - 7.75%
7.50% - 8.00%
7.75% - 8.25%
7.50% - 8.00%
9.00% - 10.00%
7.50% - 8.00%
7.50% - 8.00%
7.25% - 7.75%
7.75% - 8.50%
7.75% - 8.25%
8.00% - 8.50%
8.25% - 8.75%
8.00% - 8.50%
9.50% - 11.00%
8.00% - 8.50%
8.00% - 8.50%
7.75% - 8.25%
8.00% - 8.50%
I
I
I
I
I
I
I
I
I
I
Return on Cost Compared
for Value-Add to 2H13
8.25% - 8.75%
8.50% - 9.00%
8.75% - 9.25%
8.50% - 9.00%
10.00% - 12.00%
8.50% - 9.00%
8.50% - 9.00%
8.25% - 8.75%
9.25% - 10.50%
I
I
I
I
I
I
I
FORECAST TRENDS*
Class A
Industrial
I
I
Stabilized Compared
Cap Rates to 2H13
↓
I
Retail
6.75% - 7.25%
7.00% - 7.50%
7.25% - 7.75%
7.00% - 7.50%
8.00% - 9.50%
7.00% - 7.50%
7.00% - 7.50%
6.75% - 7.25%
7.00% - 7.75%
I
I
I
I
I
I
I
I
I
I
I
6.50% - 7.00%
6.75% - 7.25%
7.00% - 7.50%
7.00% - 7.50%
8.00% - 9.00%
6.75% - 7.25%
6.75% - 7.25%
6.50% - 7.00%
6.75% - 7.25%
I
Multifamily
5.50% - 6.00%
6.00% - 6.50%
6.25% - 6.75%
6.25% - 6.75%
7.00% - 8.00%
6.00% - 6.50%
6.00% - 6.50%
5.75% - 6.25%
6.00% - 6.50%
↓
I
I
I
I
I
I
I
↓
Office
Chicago
Cincinnati
Cleveland
Columbus
Detroit
Indianapolis
Kansas City
Minneapolis
St. Louis
Class C
Return on Cost Compared
for Value-Add to 2H13
I
Class B
Stabilized Compared
Cap Rates to 2H13
I
I
Class A
Stabilized Compared Return on Cost Compared
Cap Rates to 2H13
for Value-Add to 2H13
I
I
Overview
<< | >>
I
In This Issue:
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class B
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class C
Stabilized
Cap Rates
Chicago
Cincinnati
Cleveland
Columbus
Detroit
Indianapolis
Kansas City
Minneapolis
St. Louis
Return on Cost
for Value-Add
Decrease
Remain Flat
Increase
* Forecast trends represent the CBRE professionals’ opinion on where ratios are likely to trend in the 2nd half of 2014 in their local market.
28
Cap Rate Survey
First Half 2014
Retail Neighborhood/Community Center (Grocery Anchored) | Southern Region
↓
↓
↓
I
I
I
I
↓
↓
↓
↓
I
I
I
↓
I
7.50% - 10.00%
9.25% - 9.75%
9.00% +
9.25% +
8.00% +
9.50% - 10.50%
7.50% - 9.00%
9.00% - 9.50%
8.00% +
9.50% +
8.00% +
↓
↓
↓
I
7.00% - 8.00%
7.50% - 8.25%
7.50% - 8.75%
7.50% - 8.75
7.00% - 8.00%
8.50% - 9.00%
7.00% - 8.00%
9.00% - 9.50%
7.00% - 8.00%
7.75% - 9.00%
7.00% - 8.00%
↓
↓
↓
↓
↓
↓
↓
↓
↓
Stabilized Compared
Cap Rates to 2H13
Return on Cost Compared
for Value-Add to 2H13
8.00% - 10.00%
9.75% - 10.25%
9.50% +
9.75% +
9.00% +
10.50% - 11.50%
8.00% - 9.00%
10.00% - 10.50%
9.00% +
10.00% +
9.00% +
↓
I
I
I
↓
↓
↓
↓
I
I
I
I
I
6.50% - 7.50%
7.00% - 7.75%
7.00% - 8.25%
7.00% - 8.25%
6.75% - 7.25%
7.50% - 8.00%
6.00% - 6.75%
8.00% - 8.50%
6.50% - 7.00%
7.25% - 8.50%
6.50% - 7.00%
↓
↓
↓
I
6.00% - 7.00%
5.50% - 6.00%
5.75% - 6.75%
5.50% - 6.75%
6.50% - 7.00%
8.00% - 8.50%
6.50% - 7.00%
8.00% - 8.50%
6.50% - 7.00%
6.00% - 7.25%
7.00% - 8.00%
Stabilized Compared Return on Cost Compared
Cap Rates to 2H13
for Value-Add to 2H13
↓
↓
I
↓
Class C
↓
↓
Retail
↓
Multifamily
5.50% - 6.50%
5.00% - 5.50%
5.25% - 6.25%
5.00% - 6.25%
5.75% - 6.25%
7.00% - 7.50%
5.50% - 6.00%
7.00% - 7.50%
5.75% - 6.25%
5.50% - 6.75%
5.75% - 6.25%
↓
↓
↓
↓
Office
Atlanta
Austin
Dallas
Houston
Jacksonville
Memphis
Miami
Nashville
Orlando
San Antonio
Tampa
Return on Cost Compared
for Value-Add to 2H13
↓
Stabilized Compared
Cap Rates to 2H13
Class B
↓
↓
Class A
<< | >>
↓
↓
↓
↓
Overview
↓
↓
In This Issue:
FORECAST TRENDS*
Class A
Industrial
Hotels
Appendix
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class B
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class C
Stabilized
Cap Rates
Atlanta
Austin
Dallas
Houston
Jacksonville
Memphis
Miami
Nashville
Orlando
San Antonio
Tampa
Return on Cost
for Value-Add
Decrease
Remain Flat
Increase
* Forecast trends represent the CBRE professionals’ opinion on where ratios are likely to trend in the 2nd half of 2014 in their local market.
29
Cap Rate Survey
First Half 2014
Retail Neighborhood/Community Center (Grocery Anchored) | Western Region
I
↓
↓
↓
I
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
I
8.75% - 9.50%
8.50% - 9.00%
8.00% - 9.00%
8.50% - 10.00%
8.50% - 10.00%
8.50% - 10.00%
9.00% - 10.50%
8.00% - 10.00%
8.50% - 10.00%
8.50% - 10.00%
8.50% - 10.00%
8.50% - 10.00%
6.75% - 7.25%
Return on Cost Compared
for Value-Add to 2H13
9.00% - 10.00%
9.00% - 9.50%
10.00% - 12.00%
9.00% +
9.00% +
9.00% +
9.00% - 11.00%
9.00% - 11.00%
9.00% +
9.00% +
9.00% +
9.00% +
7.50% - 8.50%
I
↓
↓
I
↓
↓
↓
↓
↓
I
I
I
↓
↓
↓
↓
↓
Class A
Stabilized
Cap Rates
Appendix
↓
↓
I
I
Stabilized Compared
Cap Rates to 2H13
FORECAST TRENDS*
Industrial
Hotels
I
↓
↓
↓
↓
I
I
8.50% - 9.50%
7.25% - 7.75%
9.00% - 10.00%
7.50% - 8.00%
7.50% - 8.00%
7.50% - 8.00%
8.00% - 8.50%
8.00% - 9.00%
7.50% - 8.00%
7.50% - 8.00%
7.50% - 8.00%
7.50% - 8.00%
7.00% - 8.00%
↓
↓
I
I
I
I
I
↓
I
7.50% - 8.75%
6.75% - 7.25%
7.25% - 8.00%
6.25% - 7.25%
6.25% - 7.25%
6.25% - 7.25%
6.50% - 7.50%
7.00% - 8.00%
6.25% - 7.25%
6.25% - 7.25%
6.25% - 7.25%
6.25% - 7.25%
6.00% - 6.75%
Class C
Return on Cost Compared
for Value-Add to 2H13
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
Retail
7.75% - 8.50%
6.25% - 7.25%
8.00% - 9.00%
7.00% - 7.50%
7.00% - 7.50%
7.00% - 7.50%
7.50% - 8.00%
7.00% - 8.00%
7.00% - 7.50%
7.00% - 7.50%
7.00% - 7.50%
7.00% - 7.50%
6.50% - 7.50%
↓
↓
Multifamily
6.75% - 7.50%
5.50% - 6.00%
6.75% - 7.25%
4.75% - 5.75%
4.75% - 5.75%
5.25% - 6.25%
5.25% - 6.25%
5.75% - 6.50%
5.25% - 6.25%
4.75% - 5.75%
4.75% - 5.75%
4.75% - 5.75%
5.00% - 5.75%
Stabilized Compared
Cap Rates to 2H13
↓
↓
↓
I
↓
Office
Albuquerque
Denver
Las Vegas
Los Angeles
Orange County
Phoenix
Portland
Sacramento
Salt Lake City
San Diego
San Francisco
San Jose
Seattle
Class B
Return on Cost Compared
for Value-Add to 2H13
↓
Class A
Stabilized Compared
Cap Rates to 2H13
↓
Overview
<< | >>
↓
↓
In This Issue:
Return on Cost
for Value-Add
Class B
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class C
Stabilized
Cap Rates
Albuquerque
Denver
Las Vegas
Los Angeles
Orange County
Phoenix
Portland
Sacramento
Salt Lake City
San Diego
San Francisco
San Jose
Seattle
Return on Cost
for Value-Add
Decrease
Remain Flat
Increase
* Forecast trends represent the CBRE professionals’ opinion on where ratios are likely to trend in the 2nd half of 2014 in their local market.
30
Cap Rate Survey
First Half 2014
Retail Power Center | Eastern Region
↓
Retail
Hotels
↓
7.00% - 8.50%
6.75% - 7.50%
7.25% - 7.75%
6.75% - 7.50%
7.50% - 8.25%
7.25% - 7.75%
6.50% - 7.25%
Class A
Stabilized
Cap Rates
Industrial
↓
Return on Cost
for Value-Add
↓
↓
9.00% - 10.00%
7.00% - 7.50%
8.25% - 8.75%
9.00% - 9.50%
9.00% - 10.00%
8.25% - 8.75%
8.50% -10.00%
Class B
Stabilized
Cap Rates
Return on Cost
for Value-Add
↓
↓
8.50% - 9.50%
7.75% - 9.00%
7.75% - 8.00%
7.50% - 8.50%
11.00% - 12.00%
7.75% - 8.50%
7.25% - 8.00%
I
↓
↓
↓
↓
↓
8.00% - 9.00%
6.50% - 7.00%
7.50% - 8.25%
7.75% - 8.50%
8.00% - 8.50%
7.50% - 8.25%
7.50% - 8.50%
Stabilized Compared
Cap Rates to 2H13
↓
Return on Cost Compared
for Value-Add to 2H13
10.00% - 12.00%
8.75% +
9.00% - 11.00%
10.00% - 11.50%
12.00% - 13.00%
9.00% - 11.00%
10.00% - 11.00%
↓
I
↓
↓
↓
↓
↓
↓
↓
↓
Multifamily
6.50% - 7.50%
6.25% - 6.75%
6.50% - 7.00%
6.00% - 6.75%
6.50% - 7.25%
6.50% - 7.00%
5.75% - 6.50%
↓
↓
↓
↓
↓
Office
Baltimore
Boston
Charlotte
Philadelphia
Pittsburgh
Raleigh
Washington, D.C.
Class C
Return on Cost Compared
for Value-Add to 2H13
↓
Class B
Stabilized Compared
Cap Rates to 2H13
↓
↓
↓
↓
↓
Class A
Stabilized Compared Return on Cost Compared
Cap Rates to 2H13
for Value-Add to 2H13
↓
↓
↓
↓
Overview
<< | >>
↓
↓
In This Issue:
↓
Class C
Stabilized
Cap Rates
Baltimore
Boston
Charlotte
Philadelphia
Pittsburgh
Raleigh
Washington, DC
Return on Cost
for Value-Add
Decrease
Remain Flat
Increase
* Forecast trends represent the CBRE professionals’ opinion on where ratios are likely to trend in the 2nd half of 2014 in their local market.
Appendix
31
Cap Rate Survey
First Half 2014
Retail Power Center | Midwestern Region
Class B
I
Retail
I
I
I
↓
7.00% - 7.50%
7.25% - 7.75%
7.50% - 8.00%
7.25% - 7.75%
8.00% - 9.50%
7.25% - 7.75%
7.25% - 7.75%
7.00% - 7.50%
7.00% - 7.50%
Hotels
Appendix
I
I
I
I
I
7.75% - 8.25%
8.00% - 8.50%
8.25% - 8.75%
8.00% - 8.50%
9.00%-10.00%
8.00% - 8.50%
8.00% - 8.50%
7.75% - 8.25%
8.00% - 8.75%
I
I
I
I
I
I
I
I
I
Stabilized Compared
Cap Rates to 2H13
7.75% - 8.25%
8.00% - 8.50%
8.25% - 8.75%
8.00% - 8.50%
9.50% -11.00%
8.00% - 8.50%
8.00% - 8.50%
7.75% - 8.25%
8.50% - 9.25%
I
I
I
I
I
I
I
I
Return on Cost Compared
for Value-Add to 2H13
8.50% - 9.00%
8.75% - 9.25%
9.00% - 9.50%
8.75% - 9.25%
10.00% - 12.00%
8.75% - 9.25%
8.75% - 9.25%
8.50% - 9.00%
8.75% - 9.25%
I
I
I
I
I
I
I
FORECAST TRENDS*
Class A
Industrial
I
↓
I
I
I
I
I
I
I
I
I
7.00% - 7.50%
7.25% - 7.75%
7.50% - 8.00%
7.50% - 8.00%
8.00% - 9.00%
7.25% - 7.75%
7.25% - 7.75%
7.00% - 7.50%
7.25% - 7.75%
I
I
I
I
Multifamily
6.25% - 6.75%
6.50% - 7.00%
6.75% - 7.25%
6.75% - 7.25%
7.00% - 8.00%
6.50% - 7.00%
6.50% - 7.00%
6.25% - 6.75%
6.25% - 7.00%
I
I
Office
Chicago
Cincinnati
Cleveland
Columbus
Detroit
Indianapolis
Kansas City
Minneapolis
St. Louis
Class C
Stabilized Compared Return on Cost Compared
Cap Rates to 2H13
for Value-Add to 2H13
↓
Class A
Stabilized Compared Return on Cost Compared
Cap Rates to 2H13
for Value-Add to 2H13
I
Overview
<< | >>
I
In This Issue:
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class B
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class C
Stabilized
Cap Rates
Chicago
Cincinnati
Cleveland
Columbus
Detroit
Indianapolis
Kansas City
Minneapolis
St. Louis
Return on Cost
for Value-Add
Decrease
Remain Flat
Increase
* Forecast trends represent the CBRE professionals’ opinion on where ratios are likely to trend in the 2nd half of 2014 in their local market.
32
Cap Rate Survey
First Half 2014
Retail Power Center | Southern Region
I
↓
↓
I
↓
↓
↓
↓
I
I
I
N/A
↓
I
I
8.25% - 10.00%
9.25% - 9.75%
9.00% +
9.50% +
8.50% +
10.00% - 11.00%
7.50% - 8.50%
9.00% - 9.50%
8.00% +
N/A
8.00% +
↓
I
N/A
Stabilized Compared
Cap Rates to 2H13
Return on Cost Compared
for Value-Add to 2H13
8.75% - 11.00%
9.75% - 10.25%
9.50% +
10.00% +
10.00% +
10.50% - 11.50%
8.00% - 9.50%
10.00% - 10.50%
9.50%
10.00% +
9.50% +
↓
I
N/A
I
I
I
↓
↓
↓
↓
↓
↓
↓
↓
I
I
7.75% - 8.50%
7.75% - 8.50%
7.75% - 9.00%
7.50% - 9.00%
8.00% - 9.00%
9.50% - 10.00%
7.25% - 7.75%
9.00% - 9.50%
8.25% - 9.25%
7.75% - 9.00%
8.25% - 9.25%
↓
↓
↓
↓
↓
↓
↓
↓
I
↓
I
I
I
I
↓
↓
↓
I
N/A
7.25% - 8.00%
7.25% - 8.00%
7.25% - 8.50%
7.00% - 8.25%
7.25% - 8.00%
8.75% - 9.25%
6.75% - 7.25%
8.00% - 8.50%
7.25% - 8.25%
7.25% - 8.50%
7.25% - 8.25%
↓
I
↓
↓
Retail
↓
6.75% - 7.50%
6.75% - 7.25%
6.75% - 7.75%
6.75% - 7.75%
7.00% - 8.00%
8.25% - 8.75%
6.50% - 7.25%
8.00% - 8.50%
7.00% - 8.00%
7.00% - 8.00%
7.00% - 8.00%
↓
↓
Multifamily
6.25% - 7.00%
6.25% - 6.75%
6.25% - 7.25%
6.25% - 7.25%
6.25% - 7.00%
7.75% - 8.25%
6.00% - 6.50%
7.00% - 7.50%
6.25% - 7.00%
6.50% - 7.50%
6.25% - 7.00%
↓
Office
Atlanta
Austin
Dallas
Houston
Jacksonville
Memphis
Miami
Nashville
Orlando
San Antonio
Tampa
Class C
Return on Cost Compared
for Value-Add to 2H13
↓
Class B
Stabilized Compared
Cap Rates to 2H13
↓
Class A
Stabilized Compared Return on Cost Compared
Cap Rates to 2H13
for Value-Add to 2H13
↓
Overview
<< | >>
↓
↓
In This Issue:
FORECAST TRENDS*
Class A
Industrial
Hotels
Appendix
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class B
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class C
Stabilized
Cap Rates
Atlanta
Austin
Dallas
Houston
Jacksonville
Memphis
Miami
Nashville
Orlando
San Antonio
Tampa
Return on Cost
for Value-Add
Decrease
Remain Flat
Increase
* Forecast trends represent the CBRE professionals’ opinion on where ratios are likely to trend in the 2nd half of 2014 in their local market.
33
Cap Rate Survey
First Half 2014
Retail Power Center | Western Region
I
I
I
↓
I
↓
I
8.50% - 9.50%
9.00% - 9.50%
N/A
7.75% - 11.00%
7.75% - 11.00%
7.75% - 11.00%
9.00% - 11.00%
9.00% - 11.00%
7.75% - 11.00%
7.75% - 11.00%
7.75% - 11.00%
7.75% - 11.00%
7.00% - 7.75%
↓
N/A
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
Appendix
↓
I
I
↓
I
9.00% - 10.00%
10.75% -11.25%
10.00% - 12.00%
10.00% +
10.00% +
10.00% +
10.00% - 12.00%
9.00% - 10.00%
10.00% +
10.00% +
10.00% +
10.00% +
9.00% - 10.00%
↓
↓
↓
↓
I
↓
↓
FORECAST TRENDS*
Class A
Hotels
↓
↓
8.50% - 9.50%
6.75% - 7.25%
8.50% - 10.00%
8.00% - 8.50%
8.00% - 8.50%
8.00% - 8.50%
8.50% - 9.00%
8.00% - 9.00%
8.00% - 8.50%
8.00% - 8.50%
8.00% - 8.50%
8.00% - 8.50%
8.00% - 9.00%
↓
↓
↓
↓
↓
I
↓
I
↓
↓
I
Return on Cost Compared
for Value-Add to 2H13
↓
↓
↓
I
I
7.50% - 8.50%
6.75% - 7.25%
7.25% - 7.75%
7.00% - 8.00%
7.00% - 8.00%
7.00% - 8.00%
7.25% - 8.25%
7.00% - 8.00%
7.00% - 8.00%
7.00% - 8.00%
7.00% - 8.00%
7.00% - 8.00%
6.50% - 7.25%
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
Industrial
I
Stabilized Compared
Cap Rates to 2H13
↓
8.00% - 8.50%
6.25% - 6.75%
7.50% - 9.00%
7.50% - 8.00%
7.50% - 8.00%
7.50% - 8.00%
8.00% - 8.50%
7.00% - 8.00%
7.50% - 8.00%
7.50 - 8.00%
7.50% - 8.00%
7.50% - 8.00%
7.00% - 8.00%
↓
↓
Retail
I
↓
Multifamily
6.75% - 7.75%
5.75% - 6.25%
6.00% - 7.25%
5.50% - 6.25%
5.50% - 6.25%
5.50% - 6.25%
5.75% - 6.50%
6.00% - 7.00%
5.50% - 6.25%
5.50% - 6.25%
5.50% - 6.25%
5.50% - 6.25%
6.00% - 6.50%
↓
Office
Albuquerque
Denver
Las Vegas
Los Angeles
Orange County
Phoenix
Portland
Sacramento
Salt Lake City
San Diego
San Francisco
San Jose
Seattle
Class C
Return on Cost Compared
for Value-Add to 2H13
↓
Class B
Stabilized Compared
Cap Rates to 2H13
↓
↓
Class A
Stabilized Compared Return on Cost Compared
Cap Rates to 2H13
for Value-Add to 2H13
↓
Overview
<< | >>
↓
In This Issue:
Albuquerque
Denver
Las Vegas
Los Angeles
Orange County
Phoenix
Portland
Sacramento
Salt Lake City
San Diego
San Francisco
San Jose
Seattle
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class B
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class C
Stabilized
Cap Rates
Return on Cost
for Value-Add
Decrease
Remain Flat
Increase
* Forecast trends represent the CBRE professionals’ opinion on where ratios are likely to trend in the 2nd half of 2014 in their local market.
34
Cap Rate Survey
First Half 2014
High Street Retail | National
Overview
I
N/A
↓
I
↓
Retail
Boston
Chicago
Honolulu
Los Angeles
Manhattan
Miami
Philadelphia
San Francisco
Seattle
Washington, DC
Compared
to 2H13
↓
↓
Multifamily
Class A
Stabilized
Cap Rates
4.00% - 5.00%
4.25% - 5.00%
4.75% - 5.50%
3.75% - 4.75%
3.50% - 4.00%
4.50% - 5.50%
4.75% - 5.75%
3.75% - 4.75%
4.25% - 5.25%
4.00% - 5.00%
↓
↓
Office
<< | >>
↓
In This Issue:
FORECAST TRENDS*
Class A
Industrial
Hotels
Appendix
Stabilized
Cap Rates
Boston
Chicago
Honolulu
Los Angeles
Manhattan
Miami
Philadelphia
San Francisco
Seattle
Washington, D.C.
Decrease
Remain Flat
Increase
* Forecast trends represent the CBRE professionals’ opinion on where ratios are likely to trend in the 2nd half of 2014 in their local market.
35
Cap Rate Survey
First Half 2014
In This Issue:
Industrial | Overview
Overview
Through mid-year 2014, transaction activity in the industrial sector was $54.4 billion, up 28.3% over the year-earlier period.
Most of this growth came in the warehouse segment, which saw volume of $38.3 billion through mid-year 2014, up 34.6%
from a year earlier. The flex segment, by contrast, experienced only 15.4% growth to hit $16 billion in volume. If total volume
for the remainder of 2014 continues on the pace set in the first half of the year, 2014 calendar year industrial sales volume could reach
$61 billion. By comparison, the peak volume set in 2007 was $61.7 billion. The market is on pace to come close to the previous peak
but according to figures from RCA, the average prices are still lower. The average industrial deal traded at $68.12 per square foot
in the second quarter of 2014 versus a peak of $75.06 back in 2007, so there is likely some run room left on pricing.
Office
Multifamily
Retail
Industrial
<< | >>
CBRE Capital Markets and Valuation professionals report that on average, industrial cap rates declined by 20-25 bps across all classes.
Our professionals further expect that cap rates for Class A industrial assets will decrease over the next six months in 29 of the 41 markets
included in the survey. Most of these markets are anticipated to see less than 25 bps reductions, although five markets are anticipated to see
25-50 bps reductions. Markets showing larger cap rate contraction on the horizon include Cleveland, Detroit, Austin, Jacksonville,
and Orlando. Similar results hold true for Class B and C industrial, albeit with a somewhat greater proportion of the Class B and C markets
anticipated to see cap rates basically unchanged.
click to download
Hotels
Select from the list below to access the current industrial key ratios, forecast and map.
Complete Industrial Current Key Ratios Chart (PDF)
Complete Industrial Current Forecast Chart (PDF)
Appendix
Complete Industrial Current Key Ratios Map (PDF)
36
Cap Rate Survey
First Half 2014
Industrial | Eastern Region
↓
↓
Stabilized
Cap Rates
Appendix
↓
↓
Class A
Hotels
I
↓
8.00%
8.50% - 10.00%
9.00% - 10.00%
7.00% - 8.00%
7.75% - 9.00%
9.50% - 10.50%
8.25% - 10.00%
7.00% - 9.00%
I
↓
I
9.00% +
9.75% +
9.00% - 10.00%
8.75% - 9.50%
9.50% - 10.00%
10.50% - 11.50%
8.50% - 10.50%
N/A
I
↓
I
I
N/A
FORECAST TRENDS*
Retail
Industrial
↓
↓
↓
↓
↓
I
I
7.25% - 8.00%
9.50% - 10.50%
8.00% - 9.00%
6.50% - 7.25%
7.50% - 8.50%
8.75% - 9.75%
7.75% - 8.25%
7.00% - 8.00%
Return on Cost Compared
for Value-Add to 2H13
↓
↓
6.00% - 6.50%
7.25% - 8.25%
7.00% - 7.50%
5.50% - 6.25%
6.25% - 7.00%
8.00% - 9.00%
7.25% - 8.00%
6.00% - 7.50%
↓
↓
↓
↓
↓
↓
↓
↓
6.50% - 7.00%
7.75% - 9.00%
7.00% - 8.00%
5.75% - 6.50%
6.50% - 7.00%
7.75% - 8.50%
6.50% - 7.50%
6.00% - 7.00%
Stabilized Compared
Cap Rates to 2H13
↓
↓
↓
↓
↓
Multifamily
5.75% - 6.25%
6.75% - 7.25%
6.00% - 6.25%
4.75% - 5.25%
5.50% - 6.25%
6.75% - 7.75%
6.00% - 7.00%
5.50% - 6.25%
↓
↓
↓
↓
↓
↓
↓
↓
Office
Baltimore
Boston
Charlotte
Northern New Jersey
Philadelphia
Pittsburgh
Raleigh
Washington, D.C.
Class C
Return on Cost Compared
for Value-Add to 2H13
↓
Class B
Stabilized Compared
Cap Rates to 2H13
↓
Class A
Stabilized Compared Return on Cost Compared
Cap Rates to 2H13
for Value-Add to 2H13
↓
Overview
<< | >>
↓
In This Issue:
Return on Cost
for Value-Add
Class B
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class C
Stabilized
Cap Rates
Baltimore
Boston
Charlotte
Northern New Jersey
Philadelphia
Pittsburgh
Raleigh
Washington, D.C.
Return on Cost
for Value-Add
Decrease
Remain Flat
Increase
* Forecast trends represent the CBRE professionals’ opinion on where ratios are likely to trend in the 2nd half of 2014 in their local market.
37
Cap Rate Survey
First Half 2014
Industrial | Midwestern Region
Hotels
Appendix
N/A
↓
7.50% - 8.00%
9.50% - 10.50%
8.50% - 10.00%
9.50% - 10.50%
9.00% - 9.75%
9.25% - 9.50%
8.75% - 9.50%
9.00% - 9.50%
9.50% - 10.25%
↓
I
I
↓
10.00% - 12.00%
10.50% - 11.00%
N/A
10.75% - 12.00%
10.00% - 12.00%
8.50% - 9.00%
9.75% - 11.75%
10.00% - 12.00%
10.00% - 10.75%
I
N/A
I
↓
I
FORECAST TRENDS*
Class A
Industrial
I
↓
I
↓
↓
↓
I
8.00% - 8.50%
8.50% - 9.00%
N/A
8.75% - 9.50%
7.50% - 8.50%
7.50% - 8.00%
8.75% - 9.25%
8.50% - 9.50%
9.00% - 12.00%
Return on Cost Compared
for Value-Add to 2H13
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
Retail
N/A
7.00% - 7.50%
7.00% - 7.50%
7.50% - 8.50%
7.25% - 7.75%
8.00% - 9.00%
7.50% - 8.25%
7.75% - 8.25%
7.50% - 8.00%
7.75% - 9.75%
↓
↓
↓
↓
↓
I
6.75% - 7.25%
7.00% - 7.50%
N/A
7.75% - 9.00%
7.00% - 7.50%
6.75% - 7.25%
7.75% - 8.25%
7.00% - 7.50%
7.00% - 8.00%
↓
I
↓
↓
↓
↓
↓
↓
Multifamily
5.25% - 5.75%
6.25% - 6.75%
6.50% - 7.50%
6.25% - 6.75%
7.25% - 7.75%
5.75% - 6.25%
6.25% - 6.75%
6.00% - 6.50%
6.25% - 6.50%
↓
Office
Chicago
Cincinnati
Cleveland
Columbus
Detroit
Indianapolis
Kansas City
Minneapolis
St. Louis
Class C
Stabilized Compared
Cap Rates to 2H13
↓
↓
Class B
Stabilized Compared Return on Cost Compared
Cap Rates to 2H13
for Value-Add to 2H13
↓
Class A
Stabilized Compared Return on Cost Compared
Cap Rates to 2H13
for Value-Add to 2H13
↓
Overview
<< | >>
↓
In This Issue:
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class B
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class C
Stabilized
Cap Rates
Chicago
Cincinnati
Cleveland
Columbus
Detroit
Indianapolis
Kansas City
Minneapolis
St. Louis
Return on Cost
for Value-Add
Decrease
Remain Flat
Increase
* Forecast trends represent the CBRE professional's opinion on where ratios are likely to trend in 2nd half of 2014 in their local market.
38
Cap Rate Survey
First Half 2014
Industrial | Southern Region
↓
↓
↓
↓
8.50% - 9.00%
8.50% - 9.00%
7.00% - 8.25%
7.00% - 9.00%
9.00% - 9.50%
9.00% - 9.50%
6.75% - 7.75%
9.00% - 9.50%
8.50% - 9.00%
8.50% +
9.00% - 9.50%
↓
↓
↓
↓
↓
↓
↓
7.50% - 8.00%
8.00% - 8.50%
6.75% - 7.75%
6.25% - 7.50%
9.00% - 9.75%
8.50% - 9.00%
6.50% - 7.25%
8.25% - 8.75%
7.75% - 8.50%
8.50% - 9.00%
8.50% - 9.00%
↓
↓
↓
↓
↓
I
6.50% - 7.00%
6.75% - 7.25%
6.00% - 7.00%
5.75% - 7.00%
8.00% - 9.00%
7.75% - 8.50%
6.00% - 6.50%
7.25% - 7.75%
7.00% - 7.50%
7.50% - 8.50%
7.50% - 8.25%
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
Retail
I
I
↓
6.75% - 7.25%
7.00% - 7.50%
5.50% - 6.25%
5.00% - 6.50%
8.00% - 8.50%
7.75% - 8.25%
6.00% - 6.75%
7.25% - 7.75%
7.00% - 7.50%
7.50% - 8.00%
7.25% - 8.00%
↓
↓
↓
↓
↓
↓
Multifamily
5.75% - 6.00%
6.00% - 6.50%
5.00% - 6.00%
4.75% - 5.50%
6.75% - 7.25%
6.75% - 7.25%
4.75% - 5.50%
6.50% - 7.00%
6.25% - 6.75%
6.25% - 7.25%
6.50% - 7.00%
↓
Office
Atlanta
Austin
Dallas
Houston
Jacksonville
Memphis
Miami
Nashville
Orlando
San Antonio
Tampa
Class C
Stabilized Compared
Cap Rates to 2H13
Return on Cost Compared
for Value-Add to 2H13
9.50% - 10.00%
8.75% - 9.25%
7.50% - 9.00%
8.00% - 9.00%
10.00% - 10.50%
10.00% - 10.50%
7.50% - 8.50%
10.00% - 10.50%
9.00% - 9.50%
9.00% +
9.50% - 10.00%
I
↓
↓
↓
↓
↓
Class B
Stabilized Compared Return on Cost Compared
Cap Rates to 2H13
for Value-Add to 2H13
↓
↓
Class A
Stabilized Compared Return on Cost Compared
Cap Rates to 2H13
for Value-Add to 2H13
↓
↓
↓
↓
↓
Overview
<< | >>
↓
↓
↓
In This Issue:
FORECAST TRENDS*
Class A
Industrial
Hotels
Appendix
Atlanta
Austin
Dallas
Houston
Jacksonville
Memphis
Miami
Nashville
Orlando
San Antonio
Tampa
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class B
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class C
Stabilized
Cap Rates
Return on Cost
for Value-Add
Decrease
Remain Flat
Increase
* Forecast trends represent the CBRE professionals’ opinion on where ratios are likely to trend in the 2nd half of 2014 in their local market.
39
Cap Rate Survey
First Half 2014
Industrial | Western Region
↓
↓
↓
I
I
I
↓
↓
↓
↓
↓
I
I
I
I
↓
I
10.00% - 11.00%
8.25% - 8.75%
7.50% - 8.50%
8.00% - 12.00%
7.00% - 8.00%
8.00% - 8.50%
9.00% - 11.00%
8.50% - 9.50%
9.00% - 11.00%
7.50% - 8.50%
7.75% - 8.25%
8.00% - 9.00%
7.50% - 8.50%
↓
↓
I
I
I
I
↓
↓
↓
Appendix
I
I
I
I
I
I
9.00% - 10.00%
7.50% - 8.00%
6.25% - 7.00%
8.00% - 10.00%
6.25% - 7.00%
5.50% - 6.50%
8.00% - 9.25%
7.50% - 8.50%
8.00% - 9.00%
7.00% - 8.00%
7.25% - 7.75%
7.00% - 8.00%
6.50% - 7.00%
Return on Cost Compared
for Value-Add to 2H13
I
FORECAST TRENDS*
Class A
Hotels
↓
I
I
I
I
↓
I
I
I
9.00% - 9.50%
7.50% - 8.00%
6.75% - 7.50%
7.00% - 8.00%
7.00% - 7.75%
7.00% - 7.50%
7.50% - 8.50%
7.50% - 8.50%
8.00% - 9.00%
7.00% - 7.50%
6.50% - 7.00%
6.50% - 7.50%
6.75% - 7.50%
↓
↓
Industrial
I
8.00% - 9.00%
6.00% - 6.50%
5.50% - 6.25%
6.50% - 7.50%
5.50% - 6.25%
5.25% - 5.50%
7.00% - 8.00%
6.50% - 7.25%
7.00% - 8.00%
6.50% - 7.00%
6.25% - 6.75%
5.50% - 6.25%
5.75% - 6.25%
↓
I
I
I
I
↓
I
I
↓
↓
↓
↓
↓
I
I
N/A
↓
8.50% - 9.00%
N/A
5.50% - 6.25%
6.50% - 8.00%
5.50% - 6.25%
6.50% - 7.00%
6.50% - 7.25%
7.00% - 8.00%
7.25% - 8.00%
6.50% - 7.00%
6.25% - 6.75%
5.75% - 6.50%
6.50% - 7.00%
↓
Retail
I
↓
↓
↓
↓
↓
Multifamily
7.75% - 8.25%
5.50% - 6.00%
4.50% - 5.25%
6.00% - 7.50%
4.50% - 5.25%
5.00% - 5.25%
6.00% - 6.50%
6.00% - 6.50%
6.50% - 7.25%
6.00% - 6.50%
5.75% - 6.25%
5.00% - 5.50%
5.00% - 5.50%
↓
↓
↓
↓
Office
Albuquerque
Denver
Inland Empire
Las Vegas
Los Angeles
Orange County
Phoenix
Portland
Sacramento
Salt Lake City
San Diego
San Francisco Bay Area
Seattle
Class C
Stabilized Compared
Cap Rates to 2H13
↓
↓
Class B
Stabilized Compared Return on Cost Compared
Cap Rates to 2H13
for Value-Add to 2H13
↓
Class A
Stabilized Compared Return on Cost Compared
Cap Rates to 2H13
for Value-Add to 2H13
↓
Overview
<< | >>
↓
In This Issue:
Albuquerque
Denver
Inland Empire
Las Vegas
Los Angeles
Orange County
Phoenix
Portland
Sacramento
Salt Lake City
San Diego
San Francisco Bay Area
Seattle
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class B
Stabilized
Cap Rates
Return on Cost
for Value-Add
Class C
Stabilized
Cap Rates
Return on Cost
for Value-Add
Decrease
Remain Flat
Increase
* Forecast trends represent the CBRE professionals’ opinion on where ratios are likely to trend in the 2nd half of 2014 in their local market.
40
Cap Rate Survey
First Half 2014
In This Issue:
Hotels | Overview
Overview
The CBRE Cap Rate Survey provides information on the hotels sector that is unavailable elsewhere. With transaction volume representing
roughly 10% of total activity across all commercial property types, the hotel sector often does not offer a sufficient number of transactions
to develop reliable benchmarks of sales comparables at the market level. For markets in which comparable sales are thin,
we combine the insights of CBRE Capital Markets and Valuation professionals to gauge the levels at which assets will trade.
Office
Multifamily
Retail
Industrial
Hotels
<< | >>
Hotel transaction activity through mid-year 2014 was up 18.3% from the year-earlier period. According to RCA, investment volume
in the past 12 months stood at $29.8 billion. This increased activity was heavily weighted in the full-service segment, which has seen
volume growth of 29.5% relative to the period a year earlier. The limited service segment has actually exhibited decreased volume,
down 3.2% to $8.3 billion, but in part, this decline is just a reflection of the outstanding period it had a year earlier when volume spiked
at 102% annual growth.
The Cap Rate Survey results for hotels point to somewhat divergent paths for CBD and suburban hotels. CBD hotel properties generally
registered meaningful declines in cap rates at the national level of about 20-35 bps while suburban hotel cap rates were little changed.
Going forward, CBRE Capital Markets and Valuation professionals anticipate that four of every five markets will see little to no change
in cap rates over the next six months. Of the markets expected to see contracting cap rates, the majority are CBD markets.
Seattle is perhaps the best example of this trend, where office and residential development within and adjacent to the CBD
is driving expectations of improved CBD hotel fundamentals and rising interest in these properties for investors.
click to download
Select from the list below to access the current hotels key ratios, forecast and map.
Appendix
Complete Hotels Current Key Ratios Chart (PDF)
Complete Hotels Current Forecast Chart (PDF)
Complete Hotels Current Key Ratios Map (PDF)
41
Cap Rate Survey
First Half 2014
Hotels | National
Suburban
Stabilized Compared
Cap Rates to 2H13
I
8.50% - 9.00%
I
8.00% - 9.00%
I
7.25% - 8.25%
8.25% - 9.00%
↓
I
8.50% - 9.50%
I
8.00% - 9.00%
I
7.50% - 8.50%
I
8.50% - 9.50%
8.25% - 9.25%
I
8.50% - 9.50%
I
7.50% - 8.50%
I
7.75% - 8.25%
I
9.50% - 10.50%
I
7.75% - 8.75%
8.25% - 9.00%
↓
8.00% - 9.50%
I
7.50% - 8.50%
I
7.00% - 7.50%
7.00% - 8.25%
7.50% - 8.00%
8.50% - 9.00%
I
6.50% - 7.50%
I
7.00% - 7.50%
7.00% - 8.75%
I
7.50% - 8.50%
8.25% - 9.25%
↓
8.50% - 9.50%
↓
I
8.00% - 9.00%
8.50% - 9.00%
↓
I
9.00% - 10.00%
I
8.50% - 9.50%
I
7.75% - 8.75%
I
7.00% - 7.50%
I
7.50% - 8.50%
I
6.00% - 7.00%
I
8.00% - 9.00%
I
8.00% - 9.50%
7.25% - 8.75%
7.50% - 8.50%
↓
↓
↓
↓
↓
↓
CBD
Stabilized Compared
Cap Rates to 2H13
8.25% - 8.75%
I
7.50% - 8.50%
I
7.00% - 8.00%
8.00% - 8.50%
↓
I
6.00% - 7.00%
I
7.50% - 8.50%
I
7.00% - 9.00%
7.50% - 9.00%
7.50% - 9.00%
7.50% - 9.00%
I
7.50% - 8.50%
7.50% - 8.00%
↓
I
8.50% - 9.50%
I
7.25% - 8.25%
I
8.00% - 8.75%
8.00% - 9.50%
I
7.50% - 8.50%
I
6.50% - 7.00%
6.50% - 7.75%
6.50% - 7.00%
8.00% - 8.50%
I
5.50% - 6.50%
I
6.50% - 7.00%
6.75% - 8.50%
6.50% - 7.50%
8.25% - 9.25%
↓
I
7.50% - 8.50%
7.25% - 8.25%
8.00% - 8.50%
↓
I
8.00% - 9.00%
7.75% - 8.75%
I
7.75% - 8.75%
I
6.50% - 7.00%
I
6.00% - 7.00%
I
7.00% - 8.00%
7.00% - 8.00%
7.00% - 9.00%
7.00% - 8.50%
7.00% - 8.00%
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
I
I
↓
Appendix
↓
↓
Hotels
↓
↓
Industrial
Suburban
Stabilized Compared
Cap Rates to 2H13
8.00% - 8.50%
↓
I
7.00% - 8.00%
I
7.00% - 8.00%
8.00% - 9.00%
↓
N/A
N/A
7.00% - 8.00%
I
7.00% - 8.00%
8.00% - 9.00%
8.00% - 9.00%
I
8.50% - 9.00%
I
7.25% - 8.25%
7.75% - 8.25%
↓
I
8.50% - 9.50%
I
7.50% - 8.50%
7.25% - 8.50%
↓
I
7.50% - 9.00%
7.00% - 8.50%
↓
6.00% - 7.00%
5.75% - 7.00%
7.00% - 7.50%
8.00% - 8.50%
5.00% - 6.00%
6.00% - 7.00%
I
6.25% - 8.00%
6.50% - 7.50%
7.00% - 8.00%
I
8.00% - 8.50%
I
7.50% - 8.50%
8.00% - 8.50%
↓
N/A
N/A
I
6.50% - 8.50%
I
7.50% - 8.50%
6.00% - 7.00%
I
6.00% - 7.00%
I
6.50% - 7.50%
I
7.50% - 8.50%
I
8.00% - 9.00%
I
6.50% - 8.00%
6.00% - 7.50%
↓
↓
↓
↓
Retail
Full Service
↓
Multifamily
Albuquerque
Atlanta
Austin
Baltimore
Boston
Charlotte
Chicago
Cincinnati
Cleveland
Columbus
Dallas
Denver
Detroit
Houston
Jacksonville
Kansas City
Las Vegas
Los Angeles
Miami
Minneapolis
Nashville
New York
Orange County
Orlando
Philadelphia
Phoenix
Pittsburgh
Portland
Raleigh
Sacramento
Salt Lake City
San Antonio
San Diego
San Francisco
San Jose
Seattle
St. Louis
Tampa
Washington, D.C.
CBD
Stabilized Compared
Cap Rates to 2H13
7.75% - 8.25%
I
6.50% - 7.50%
I
6.75% - 7.75%
7.50% - 8.00%
↓
I
5.00% - 6.00%
I
7.00% - 8.00%
I
6.00% - 6.50%
7.00% - 8.00%
7.00% - 8.00%
I
7.50% - 8.00%
I
7.25% - 8.25%
7.25% - 7.75%
↓
I
8.00% - 9.00%
I
7.00% - 8.00%
7.25% - 8.50%
↓
I
7.50% - 9.00%
7.00% - 8.50%
↓
6.00% - 7.00%
5.00% - 6.50%
6.00% - 6.50%
7.50% - 8.00%
I
4.00% - 5.00%
6.00% - 7.00%
I
6.00% - 8.00%
6.00% - 7.00%
7.50% - 8.00%
I
7.00% - 7.50%
6.75% - 7.75%
7.50% - 8.00%
↓
N/A
N/A
5.75% - 7.75%
I
7.50% - 8.50%
6.00% - 7.00%
5.00% - 6.00%
6.50% - 7.50%
6.25% - 7.25%
7.00% - 8.00%
6.25% - 8.00%
↓
5.50% - 7.00%
↓
Office
Luxury
↓
Overview
<< | >>
↓
In This Issue:
42
Cap Rate Survey
First Half 2014
Hotels | National
Suburban
Stabilized Compared
Cap Rates to 2H13
9.25% - 9.75%
↓
10.00% - 11.00%
↓
I
8.25% - 10.75%
9.25% - 9.75%
I
10.00% - 13.00%
10.00% - 11.00%
↓
I
8.50% - 10.50%
I
10.00% - 12.00%
I
10.00% - 12.00%
I
10.00% - 12.00%
I
8.25% - 10.25%
I
8.25% - 8.75%
I
10.50% - 12.00%
I
8.50% - 11.00%
10.00% - 11.75%
I
9.50% - 11.50%
I
8.75% - 10.00%
7.00% - 7.50%
I
8.50% - 9.50%
I
10.00% - 11.00%
9.50% - 10.00%
8.00% - 10.00%
7.00% - 7.50%
I
9.25% - 11.00%
I
9.00% - 10.50%
9.50% - 11.00%
↓
9.50% - 12.00%
↓
I
9.50% - 10.50%
9.50% - 10.00%
↓
I
9.00% - 11.00%
I
8.50% - 9.50%
I
8.50% - 11.00%
7.00% - 7.50%
I
9.00% - 11.00%
I
9.00% - 11.00%
I
9.50% - 10.50%
9.00% - 12.00%
I
9.50% - 11.00%
8.50% - 9.50%
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
↓
Appendix
↓
↓
Hotels
↓
↓
↓
Industrial
↓
↓
↓
Retail
Suburban
CBD
Stabilized Compared
Stabilized Compared
Cap Rates to 2H13
Cap Rates to 2H13
I
I
8.50% - 9.00%
9.00% - 9.50%
I
I
8.50% - 9.50%
9.00% - 10.00%
I
I
7.00% - 8.00%
8.00% - 10.50%
8.25% - 9.00%
8.50% - 9.00%
↓
I
7.50% - 8.75%
N/A
N/A
8.00% - 9.00%
10.00% - 11.00%
↓
I
I
7.50% - 8.50%
8.00% - 10.00%
I
8.50% - 9.50%
9.00% - 10.00%
I
8.50% - 9.50%
9.00% - 10.00%
I
8.50% - 9.50%
9.00% - 10.00%
I
I
7.25% - 8.25%
8.25% - 10.75%
8.25% - 8.75%
7.75% - 8.25%
↓
9.00% - 10.00%
10.00% - 11.00%
I
I
7.50% - 8.50%
8.25% - 11.00%
9.00% - 10.50%
10.00% - 11.75%
I
I
8.00% - 9.50%
9.50% - 11.50%
I
8.50% - 9.50%
8.75% - 10.00%
I
I
7.00% - 7.50%
7.00% - 7.50%
7.50% - 8.75%
8.00% - 9.25%
↓
↓
8.00% - 8.50%
9.00% - 10.00%
9.00% - 9.50%
9.00% - 9.50%
I
7.00% - 8.00%
8.00% - 9.00%
↓
I
I
7.00% - 7.50%
7.00% - 7.50%
I
I
8.25% - 10.00%
9.25% - 10.75%
8.00% - 9.00%
8.50% - 9.50%
↓
8.00% - 9.00%
9.50% - 11.00%
↓
↓
8.50% - 9.50%
8.50% - 10.00%
↓
↓
I
I
8.50% - 9.50%
9.00% - 10.00%
9.00% - 9.50%
9.00% - 9.50%
↓
↓
I
I
9.50% - 10.50%
9.00% - 11.00%
7.50% - 8.00%
7.75% - 8.75%
I
I
7.50% - 8.50%
8.50% - 11.00%
I
I
7.00% - 7.50%
7.00% - 7.50%
I
I
8.00% - 10.00%
8.00% - 10.00%
I
I
7.00% - 8.00%
9.00% - 11.00%
I
8.25% - 9.25%
9.00% - 10.00%
8.50% - 11.00%
N/A
9.00% - 11.00%
I
I
8.50% - 10.00%
9.25% - 10.75%
I
7.50% - 8.50%
8.00%
9.00%
↓
↓
Multifamily
Albuquerque
Atlanta
Austin
Baltimore
Boston
Charlotte
Chicago
Cincinnati
Cleveland
Columbus
Dallas
Denver
Detroit
Houston
Jacksonville
Kansas City
Las Vegas
Los Angeles
Miami
Minneapolis
Nashville
New York
Orange County
Orlando
Philadelphia
Phoenix
Pittsburgh
Portland
Raleigh
Sacramento
Salt Lake City
San Antonio
San Diego
San Francisco
San Jose
Seattle
St. Louis
Tampa
Washington, D.C.
CBD
Stabilized Compared
Cap Rates to 2H13
8.25% - 8.75%
I
8.00% - 9.00%
I
6.75% - 7.75%
8.00% - 8.50%
↓
I
7.00% - 7.75%
I
8.00% - 9.00%
I
7.50% - 8.50%
8.00% - 9.00%
8.00% - 9.00%
8.00% - 9.00%
I
7.25% - 8.25%
7.75% - 8.25%
↓
8.50% - 9.50%
I
7.00% - 8.00%
I
9.00% - 10.50%
7.50% - 9.00%
8.50% - 9.50%
I
6.50% - 7.00%
7.00% - 8.50%
7.00% - 7.50%
8.50% - 9.00%
I
7.00% - 8.00%
I
6.50% - 7.00%
8.00% - 9.50%
I
7.00% - 8.00%
8.00% - 9.00%
↓
I
8.00% - 8.50%
7.75% - 8.75%
8.50% - 9.00%
↓
I
8.00% - 9.00%
6.75% - 7.75%
I
7.50% - 8.50%
I
6.50% - 7.00%
I
7.00% - 8.00%
I
7.50% - 9.50%
7.50% - 8.50%
8.00% - 9.00%
N/A
8.00% - 9.50%
I
7.00% - 8.00%
Economy
↓
Office
Select Service
↓
Overview
<< | >>
↓
In This Issue:
43
Cap Rate Survey
First Half 2014
In This Issue:
Hotels | National
FORECAST TRENDS*
Overview
Luxury
Office
Multifamily
Retail
Industrial
Hotels
Appendix
<< | >>
CBD Stabilized
Cap Rates
Full Service
Suburban Stabilized
Cap Rates
CBD Stabilized
Cap Rates
Suburban Stabilized
Cap Rates
Select Service
CBD Stabilized
Cap Rates
Suburban Stabilized
Cap Rates
Economy
CBD Stabilized
Cap Rates
Suburban Stabilized
Cap Rates
Albuquerque
Atlanta
Austin
Baltimore
Boston
Charlotte
Chicago
Cincinnati
Cleveland
Columbus
Dallas
Denver
Detroit
Houston
Jacksonville
Kansas City
Las Vegas
Los Angeles
Miami
Minneapolis
Nashville
New York
Orange County
Orlando
Philadelphia
Phoenix
Pittsburgh
Portland
Raleigh
Sacramento
Salt Lake City
San Antonio
San Diego
San Francisco
San Jose
Seattle
St. Louis
Tampa
Washington, D.C.
Decrease
Remain Flat
Increase
* Forecast trends represent the CBRE professionals’ opinion on where ratios are likely to trend in the 2nd half of 2014 in their local market.
44
Cap Rate Survey
First Half 2014
In This Issue:
Appendix | Definitions
Overview
Stabilized Cap Rates (Office, Industrial, Retail, and Hotel)
Cap rate ranges are best estimates provided by CBRE professionals based on recent trades in their respective markets as well as recent
communication with investors. The ranges represent those cap rates that a given property will trade at in the current market assuming that the
asset is leased at current market rents with typical market lease terms.
Office
Multifamily
Retail
<< | >>
Use this assumption of leasing to current market rents to calculate gross rent potential, then subtract the standard economic loss factors,
including vacancy, that would be considered representative of a stable property in your market to achieve the effective gross income estimate.
Reduce the effective gross income by the projected stabilized expenses to derive the NOI. The cap rate is then calculated as the NOI divided
by the purchase price.
The going-in cap rate refers to the initial yield and is calculated as the ratio of the projected net income in the first year of the holding period
over the acquisition price of the property. This measure also represents the investor’s income return in the first year. Cap rates within each
subtype will vary, occasionally falling outside of the stated ranges, based on asset location/quality and property-specific opportunities for
NOI enhancement.
Industrial
Equation - 1st year proforma NOI divided by purchase price.
Hotels
Stabilized Cap Rates (Multifamily only)
Cap rate ranges are based on an estimated NOI derived by annualizing the last 90 days of revenue and subtracting buyer’s estimated
stabilized year-one expenses after adjustments for real estate taxes and reserves. Cap rates within each subtype will vary, occasionally falling
outside of the stated ranges, based on asset location/quality and property-specific opportunities for NOI enhancement.
Appendix
Equation - NOI includes the 90-day trailing gross revenue annualized less stabilized first-year expenses divided by the purchase price.
45
Cap Rate Survey
First Half 2014
In This Issue:
Appendix | Definitions (continued)
Overview
Return-on-Costs for Value-Add Properties – Return-on-Cost Calculation
The return-on-cost calculation is based upon the investor’s projected gross revenue assumption at stabilization, less the standard economic
loss factors, including vacancy, to achieve the effective gross income estimate. Reduce the effective gross income by the projected stabilized
expenses to derive the NOI. The NOI becomes the numerator for the Return-on-Cost calculation. The denominator is the investor’s purchase
price plus all capital improvements incurred to reach the stabilized NOI (tenant improvement cash outlay, commissions and property upgrades).
Typically, for a value-add investment, capital expenditures will be approximately 10% to 20% of the purchase price of the asset.
Office
<< | >>
Multifamily
The return on these costs once leased at market rents is a measure investors can use to estimate the arbitrage opportunity that exists in stabilizing
a value-add property. The measure is directly comparable to the market cap rate of comparable stabilized assets with the spread between
the two indicating the arbitrage opportunity.
Retail
Equation - Projected NOI at stabilization divided by the sum of the purchase price plus all capital costs incurred to achieve the stabilized NOI.
Industrial
Stabilized Property
A property that has an occupancy level at or above the local average and is leased at market rents.
CBD
The Central Business District of a major city.
Hotels
Appendix
Suburban
Mainly residential area proximate to a major city.
Class A
The most prestigious buildings competing for higher-quality tenants with above-average rental rates for the area, along with high-quality
finishes, state-of-the-art systems, exceptional accessibility and a definite market presence.
Class B
Buildings competing for a wide range of tenants with rents in the average range for the area. Building finishes are fair to good for the area
and the systems are adequate, but the building does not compete with Class A at the same price point.
Class C
Buildings competing for tenants requiring functional space at rents below the average for the area.
46
Cap Rate Survey
First Half 2014
In This Issue:
Appendix | Definitions (continued)
Overview
Hotel-Specific Definitions
Office
<< | >>
Full Service
A hotel property with more than 150 rooms, room service, an on-site restaurant and a concierge service.
Luxury
Hotel chains that are priced in the top 15.0% in terms of average annual room rates, according to Smith Travel Research.
Multifamily
Retail
Select Service
A hotel property with less than 150 rooms, no room service and no on-site restaurant or concierge service.
Economy
Hotel chains that are priced within the 20.0% to 40.0% range in terms of average annual room rates, according to Smith Travel Research.
Retail-Specific Definitions
Industrial
Hotels
Appendix
Neighborhood/Community Center (Grocery Anchored)
Open-air retail center that is anchored by a grocery store and, in the case of community centers, a second major retail anchor.
Can range from 75,000 to 350,000 square feet.
Power Center
Open-air retail center typically occupied by large-format, big-box and value-oriented retailers, with very limited small-shop tenant space.
Can range in size from 100,000 square feet to over 600,000 square feet.
High Street
The primary retail shopping thoroughfare in the premiere location of an urban submarket, serving as a focal point for high-end shops
and luxury retailers.
47
Cap Rate Survey
First Half 2014
In This Issue:
Appendix | Definitions (continued)
Overview
Multifamily-Specific Definitions
Office
Multifamily
<< | >>
Infill/Urban
Area considered inner-city plus built up environs, characterized by high population density and vast human features in comparison
to surrounding areas.
Suburban
Surrounding residential areas of a larger city. Outer edge of a large city, or several aggregates of distant residential area.
Retail
Industrial
Hotels
Appendix
48
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Chris Ludeman
Brian Stoffers
Thomas McDonnell
Global President
Chief Operating Officer, Capital Markets
President
CBRE Capital Markets
President, Debt & Structured Finance
CBRE Valuation and Advisory Services
CBRE Capital Markets
spencer levy
Ray Wong
christopher d. boehm
Head of Americas Research
Managing Director, Americas Research
U.S. Director of Research Operations
CBRE Global Research & Consulting
CBRE Global Research & Consulting
CBRE Global Research & Consulting
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