Actual Not Pro Forma - Industrial Capitalization Rates for Southern California

Just completed an Actual Not Pro Forma - Leased Fee Industrial Capitalization Rate Market Sale Study for Very Recently Sold Sale Comparables in 2012 only throughout Southern California, approximate ranges:

# of Sales Comparables: 10+

4 County Locations: Orange, Los Angeles, Riverside & San Bernardino 

Specific Uses: Light Manufacturing, Warehouse, Flex & Distribution

Building Size: 10,000 SF to low 600,000 SF

Year Built: 1970’s to 2006

Credit: Local, Regional & National

Overall Actual Capitalization Rate Range: low 5% to mid to upper 7%, Actual Average of 6.6%

There is less than a 300 basis point spread, variance is due to many factors, here are the major ones:

Strength of the National vs. Local Credit Tenancy/Single vs. Multiple Tenants

# of Years Remaining on the Lease/Annual Base Rent Increases

Is Contract Rent Below, At or Above Market Rent Levels

A detailed Income Approach with a Current Market Rent study that includes the most recent Signed/Leased Rent Comparables should always be done as a test to the Sales Comparison Approach Owner User vs. Fee Simple Income Approach Investor Value as Industrial Sale Price Premium spreads are typically 30%+ for Industrial, much higher relative to general Commercial (Retail, Office, etc.) differentials.

I am a Southern California Commercial Real Estate FMR (Fair Market Rent) and FMV (Fair Market Value) Sale Pricing Valuation/Appraisal Consultant for Landlords, Tenant, Buyers & Sellers of Commercial Properties, Mortgage Note Holders and Nationwide Lenders. 

Additional Advisory/Consulting Services include Litigation Support for Attorneys, MAI’s (Members of the Appraisal Institute) Appraisers and CRE’s (Counselors of Real Estate) for Eminent Domain/Condemnation, Arbitration/Mediation and Expert Witness Testimony.