![]() “Investors largely believe there will be an end to the larger rate increases, of 50 basis points or more, in the near term.” “Investors will continue to follow the Federal Reserve’s monetary policy,” The Boulder Group writes. The spread rose to 30 basis points for retail, 40 for office, and 27 for industrial, according to the report. Furthermore, the spread between asking and closed cap rate increased for all three asset classes.” “In Q1 2023, cap rates for new construction 7-Eleven and McDonald’s properties increased by 35 and 15 basis points, respectively. “However, these tenants are not immune to upward cap rate pressure,” according to the report. New construction properties with recession-proof tenants including 7-Eleven and McDonald’s represent some of the lowest cap rates in the sector. MINNEAPOLIS, MINNESOTA (April 4, 2023) – Cap rates in Q1 2023 represented the highest levels since Q3 2020 for both the single-tenant retail and office sectors, according to a new report from The Boulder Group.ĭecreasing transaction volume for the greater real estate market continues to limit 1031 exchange buyers transitioning into net lease properties, it said, as cap rates in the single tenant net lease sector increased for the fourth consecutive quarter within all three sectors in Q1 2023. The depth of the 1031 buyer pool will be limited when compared to historical standards. The median sales price to this point in the year is $259,200 per unit, down 22% from last year’s figure. The number of deals in the last three months dropped 14% from levels recorded at the end of 2022. Multifamily sales activity continued to slow during the first quarter.Average rents throughout Southern California have risen 6.1% during the past 12 months. Despite the recent dip, the region maintains some of the most expensive rents in the country. Asking rents trended lower at the start of the year, dropping 1.5% during the first quarter to $2,342 per month.Vacancy in Southern California typically operates in a fairly tight range in the low-to-mid 3% range. Despite the recent uptick, the vacancy rate has tightened by 10 basis points year over year. Vacancy across Southern California increased 20 basis points during the first quarter to 3.6%.Developers remain active with projects totaling 38,255 units currently under construction throughout the region. Vacancies inched higher, while rents dipped. Multifamily fundamentals in Southern California cooled slightly at the opening of 2023.
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