Friday, March 9, 2012

Overheated Core: Multifamily Values Flatten in Top Markets - Cap Rates via Multifamily Executive Magazine

With the exception of Manhattan—a market that’s the exception to many rules—the nation’s core coastal markets saw little, if any, cap rate compression last year.

The data, below, reflects the fact that those markets were already pretty heated in 2010, so cap rates didn’t have far to fall, even during a year in which interest rates fell to historic lows. While cap rates fell 100 basis points in Manhattan last year, the average cap rate actually increased in Boston and San Francisco. And there isn’t expected to be much of a rise in values in the nation’s core markets this year.

“Frankly, I don’t know that you can squeeze any more out of those markets,” says Greg Willett, vice president of research for Carrollton, Texas-based MPF Research. “At this point, you’re certainly paying enough for those properties that you have to question the return. The next phase, after you’ve bought up the best product in the most desirable markets, is to take that capital and put it into development.”

Read more...Overheated Core: Multifamily Values Flatten in Top Markets - Cap Rates - Multifamily Executive Magazine

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