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Just saw a 7.5% cap rate on a strip mall deal, which felt way too low.
Some guys at my firm say it's the new normal for stable retail, but I think it's a sign we're pushing pricing too far. Where do you all stand on acceptable cap rates right now?
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miabennett5d ago
Cap rates are getting crazy low across the board lately.
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kelly.parker5d ago
Honestly, the 7.5% itself isn't the full story. You have to look at the lease lengths and the tenant credits. A center with long term leases to national chains is a totally different risk than one with local mom and pop shops. That "stable retail" label gets thrown around for both, but the cap rate should reflect the real risk. I'd take a 6% on a rock solid property over an 8% on a shaky one any day.
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susan4882d ago
Kelly's right about looking past the headline number... got burned on that years ago with a little strip mall. The anchor tenant was a local diner, seemed fine, but they folded six months in and the whole place went downhill. Totally get what MiaBennett is saying about low rates everywhere now, makes finding a truly solid deal feel impossible. Feels like you're just chasing yield into riskier spots without even meaning to.
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