Overall Rate Sources

[PropertyEconomics]

I am appraising a small retail building, 4,800 sqft, which has a lease in place. No sales of similarly leased buildings in the community within the past two years, and the overall rates available to these sales are lower than I would anticipate in the current market.
Does anyone have a good source for national overall rates that I can compare with a built up rate with some confidence?

I thank you in advance for your suggestions.

PE

 

[Michigan CG]

Do these help you any?


http://www.realtyrates.com/commentaryg.html

http://www.realtyrates.com/allg.html

 

[PropertyEconomics]

Do these help you any?


http://www.realtyrates.com/commentaryg.html

http://www.realtyrates.com/allg.html

Thanks Tim.

 

[Kali the Boston Terrier]

I like
www.rerc.com
www.korpacz.com

 

[PL1957]

I'm not sure about RealtyRates, but both Korpacz and RERC focus on institutional grade real estate. Unless you have a NNN lease to a credit tenant, I wouldn't think they would have any relevance to a 4,800 sf building in New Mexico. IMO, a much better "reality check" would be discussions with local brokers familiar with the market and property type. As a whole, I think Investor Surveys are virtually worthless in developing a supportable OAR.

 

[PropertyEconomics]

PL ... thanks for your thoughts. I certinaly dont have an institutional grade tenant but I do have a NNN lease that has 10 years remaining and has been in place for the past 17 years. Unfortunately the brokers in this small market are not familular with commercial properties, however, I will interview some of the larger commercial brokerages in Albuquerque to get their thoughts.
Thanks for the input.

 

[PL1957]

PL ... thanks for your thoughts. I certinaly dont have an institutional grade tenant but I do have a NNN lease that has 10 years remaining and has been in place for the past 17 years. Unfortunately the brokers in this small market are not familular with commercial properties, however, I will interview some of the larger commercial brokerages in Albuquerque to get their thoughts.
Thanks for the input.

If you have a stable, NNN lease, you'd be surprised how "national" the market is. All of the national brokerage firms have NNN groups that would have a good handle on non-credit leases in secondary/tertiary markets.

 

[Caligirl]

Most of the larger, national firms have a 'research department' and are more than happy to share sale and rental data with appraisers.

Another good source are small, local brokers who handle the smaller properties.

 

[Scott Lanz]

Korpacz has a section at the end that discusses the difference in rates for the institutional vs. non-institutional for each category.

I don't think the national surveys are worthless in a market with limited data. Many participants in my market use this data as a benchmark for rates on commercial properties with a "location" adjustment.

PE,

You could do your own survey with local Brokers, owners, developers, etc. If you have to step into larger markets ask what rate they would be looking for on your property in your market. I have a section in my reports for verbal cap rate data.

 

[Amy Grande]

What we have been doing is taking historical overall rates and charting them. Then we take the overall rate of historical sales in our area and adding that to the chart to see a trend of our market versus the historical market. When you get to the current quarter/year, you then see the trending and make an educated (although not scientific) conclusion which is supported.

I should caveat this with the fact that we've been doing this for investment grade properties utilizing retail or suburban office cap rates from Korpacz (based upon the subject) and retail or office historical sales.

But as long as you're comparing apples to apples, I don't see why it couldn't be re-applied to non-investment grade properties.