Overall Rate Sources

[Scott Lanz]

Amy,

Korpacz has a section where they have been doing the same analysis.

 

[Amy Grande]

Could you elaborate?

Perhaps, only 1/2 of a cup of java into the day, some of my brain has not woken up yet...

I was trying to convey that we would take (for instance) historical suburban office overall rates for the past 5 to 7 years from Korpacz and chart them. We then take sales of investment grade office buildings from the Rochester MSA (suburban, of course) and chart those next to the Korpacz so that both trends show up. Because we are familiar with each of the sales (ie the types of tenants there, the developer/owner) we are able to compare our subject to another local sale, then project semi-educatedly what overall rate to use based upon the current national rate.

Korpacz does this already? It's a big book...I haven't read the whole thing. I will look when I get to work...and thanks!

 

[PL1957]

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.

The Korpacz report is a very good source for what it is - an indicator of trends in the market as well as a compendium of commentary from market participants. It is NOT a good source for specific cap rates or discount rates for any individual property, regardless of the market that it is in.

As the report itself says - "Survey participants represent a cross section of major institutional equity real estate investors who invest primarily in institutional-grade property. As such, the information presented is not generally applicable to noninstitutional-grade investments."

If the report itself says it's not generally applicable, why would I believe otherwise?

 

[Michigan CG]

It is topics like this that make me want to work for a large commercial shop because of the learning, experience and information available.