CAP rates for Apartment Properties have fallen since 2002 as condo converters have driven prices up and inventory down. Median Apartment CAP's in the mid-8 range have fallen below 7.0 in 1st quater 2005.
Condo conversions are receiving at least partial credit for boosting occupanicies and rental rates in the apartment sector. One Florida Aapartment management firm reported revenue growth of 8% over May 2004.
Attractive Condo-conversion target properties are still to be found in certain markets but are not as numerous as in 2003-04. Apartment sales were strong in the first quarter with $15.4 billion in properties sold. Nearly 4 billion of these properties went to buyers planning condo conversions.
The Mortgage Bankers Association this week is projecting strong economic growth for the US economy -- 3.5%+ through 2007. MBA also predicts long term mortgage rates will remain "quite" low supporting both residential and commercai real estate investments.
Current investment property capitalization rates relfect these projections. Prices (CAP rates) for investment property are affected by multiple market forces. However, each investment real estate transaction is still unique. Each investment we consider stands by itself as a buy and sell transaction affected by its own special set of circumstances. Examples are location, property type, local economy, local governement, the tenant, the lease, the lease terms, the seller's personal and financial situation, the buyer's personal and financial situation, and so forth.
The CAP rate "provided" by a seller or their broker may or may not fit the investment. Just because the "market" suggests that the CAP rate for a commercial property should be 7.5%, does not mean this is correct for a given property investment.
Successful investors investigate many factors unique to a given investment property before accepting the CAP rate and price "provided" by others for the investment. Every real estate investment is finally "local" and "unique."
US companies are leasing more office space, a sign they expect to expand their work forces. Office vacancies are now at their lowest level in nearly three years.
US office vancancy rate dropped to 15.4% in the 2nd quarter. 19.5 million square feet were absorbed (net change in occupies space) in the second quarter.
The $1MM to $10MM office property investment market - single and multi-teanant properties - remained strong. Individual office investment markets varied but generally improved over the last quarter.
Google, Inc., recently launched a new 3-D mapping tool, "Google Earth." This is an imagery-based mapping product that combines three-dimensional buildings and terrain with mapping cability and Google search.
This technology is based on Keyhole Corp. technology and enables the user to move from space to street-level views to find geographic information.
Features include a free software download; 3-D buildings in major cities across the U.S., 3-D terrain and other view and search features. Just go to google.com and type in google earth.