Cap Rate Compression

[Spencer Gray]

What kind of cap rate compression are you seeing in your market?

We are seeing year over year .75-100 bps of cap rate compression (prices going up) in several Midwest and Southeast markets that we are active in or are monitoring. For example, last year a solid B class 100+ unit multifamily asset in Indianapolis was trading for around a 6% cap rate, today everything seems to be trading closer to a 5% cap rate. 

Markets like Charleston that were trading in the mid 5% cap rate range last year seem to be trading in the mid to high 4% cap rate range. 

Our team heard from a broker today that some A class deals in Atlanta are trading in the upper 3% cap rate range.  

For those who are actively pursing multifamily acquisitions, is this what you are seeing as well? How is this affecting your strategy?

[Evan Polaski]

@Spencer Gray, same throughout midwest deals I look at and larger passive offerings that come across my inbox from syndicators.  Low interest rates + high demand = higher prices