Updated over 7 years ago on . Most recent reply
Cap rate compression
I invest in an area where it seems that cap rates are compressing. There are many commercial properties selling for cap rates around 5-6% which will simply not cash flow with debt. Typically, banks appraise these at 9% and most were selling at that prior to the past year. What are the implications of this for future rent and appreciation? Do you view cap rate compression as a bell weather for higher rents and thus even higher appreciation in the near term?