1 post tagged “retail cap rate update”
We reviewed over 1,500 retail transactions totaling $17.6 billion from 2003 to June 2008 maintained in the CBRE Valuation & Advisory Services (VAS) database. Average retail capitalization rates in Southern California are up since last year.
So far in 2008, the average cap rate was 6.11%, while the 2007 average was 5.95%, a modest increase of 16 b.p. The chart below contains the results from 2003 through Q2 2008.
The picture becomes rather murky when we examine the quarterly trend. Rates hovered below 6% through Q1 2007, then spiked over 6% in 2007 Q2, only to revert below 6% again through 2008 Q1. Due to this volatility, it makes more sense to put more weight on the longer term average. The chart below summarizes the data.
| SOUTHERN CALIFORNIA RETAIL | ||||||||
| 2006 Q3 | 2006 Q4 | 2007 Q1 | 2007 Q2 | 2007 Q3 | 2007 Q4 | 2008 Q1 | 2008 Q2 | |
| Rate | 5.95 | 5.96 | 5.90 | 6.11 | 5.93 | 5.77 | 5.99 | 6.28 |
| Chg. | 0.01 | -0.06 | 0.21 | -0.17 | -0.16 | 0.22 | 0.29 | |
| Source: CBRE | ||||||||
We won't go into the reasons here, but sales volume is down as well. Based on our records, Southern California Retail sales transactions in Q1 2008 were down nearly 70% compared to Q1 2007. We estimate that Q4 2007 volume is down over 50% compared to Q4 2006. 2008 Q2 is too early to call, but early indications are at most 60% from Q2 2007.
We are considering making this a regular publication. If this is useful to you, please let us know.
Posted by: Richard
