Snapshot Update On Commercial Real Estate

At a recent commercial brokers meeting filled with industry experts…apartment house cap rates in the Bay Area are averaging 4.3%, even though apartment vacancy rates have almost doubled since the pre-pandemic, going from 4% two years ago to 7.6% currently. The eviction moratorium is about to expire in many regions and this might cause a surge in evictions. In the retail arena, one retail leasing expert commented that a year ago the market was flooded with vacant retail store space, but now in some of the more desirable sub-regions quality-located retail space is becoming harder to find. Retail rates have started to go back up. In the triple-net investment arena, there is a huge amount of money chasing a limited supply of credit-NNN tenancies and whereas cap rates a year ago might have been 5 ½% they are now 5%, and long-term credit NNN tenants with upside in the leased are going in the mid-4%.