Cap Rate Disparity Between Primary, Secondary Markets Shrinks - Cap Rates - Multifamily Executive Magazine

For the past two years, the apartment transaction market has been very black and white—it seemed like either everybody wanted an asset, or nobody did.

The best properties saw furious bidding wars, as a flight to quality among institutions intensified. And anything in a lower asset class, or far off from the major metros, was met with a somewhat lukewarm reaction.

But the cap rate disparity between primary and secondary markets is beginning to flatten, a trend that’s likely to grow in 2012.

Investors are increasingly balking at the pricetags on Class A assets in the nation’s largest markets, taking a step back and re-assessing their options. The cap rate compression found in the cream of the crop is finally halting, and even beginning to turn the other way.

Read more...Cap Rate Disparity Between Primary, Secondary Markets Shrinks - Cap Rates - Multifamily Executive Magazine