THE SKID CONTINUES
Average retail capitalization rates in Southern California continue to rise in 2008, based on the CBRE Valuation & Advisory Services (VAS) database. Through 3Q 2008, the average cap rate was 6.13% in 2008, while the 2007 average was 5.95%, an increase of 18 b.p. The chart below contains the results from 2003 through Q3 2008.
The quarterly up-trend continues with increases that started in Q1 2008. The chart below summarizes the data.
SOUTHERN CALIFORNIA RETAIL
Avg. Cap Rate - Quarter
2006 Q4
2007 Q1
2007 Q2
2007 Q3
2007 Q4
2008 Q1
2008 Q2
2008 Q3
Cap Rate
5.96
5.90
6.11
5.93
5.77
5.90
6.31
6.38
Chg.
0.01
-0.06
0.21
-0.17
-0.16
0.13
0.41
0.07
Source: CBRE
The recent cap rate data (last few quarters) is based on a lower number of transactions and dollar volume as buyers and sellers try to wait out the market turmoil. Southern California retail listings over 50,000 SF have an average asking cap rate of 6.52%. We believe this indicates further potential for cap rate increases. The Inland Empire average was the highest, nearing 7%. The following chart summarizes the data.
| RETAIL CENTERS FOR SALE | |||
|
Market |
Average Cap Rate |
Total Asking |
# of Properties |
|
Los Angeles |
5.97 |
170.39 |
9 |
|
San Diego |
6.53 |
91.92 |
5 |
|
Orange |
6.68 |
100.23 |
3 |
|
Inland Empire |
6.93 |
334.62 |
11 |
|
Total |
6.52 |
697.15 |
28 |
| Properties over 50,000 SF | |||
Do you have an opinion on Southern California retail cap rates? Complete our survey here: So Cal Cap Rate Survey
