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Reis: A Jump in Retail Cap Rates
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Retail has been on the minds of many in the commercial real estate industry. It seems as though every week, some major chain is announcing store closures and/or right-sizing activities to help the balance sheet.
Reis Inc., which tracks CRE statistics on most product types, indicated that the average cap rate for retail in Q4 2016 was 
8.1%, a jump from the previous quarter, when it hovered at around 7.5%. What is interesting about the report is that the Reis analysts weren’t too surprised, pointing out that the “upward slope of the 12-month rolling average since mid-2015 is a clear indication that investors have adjusted their valuations of retail properties, and grown more cautious with pricing.”
The analysts also address the question of why cap rates continue somewhat low, given the somewhat volatile industry. The reason is that pricing trends in the cap rate data might not reflect average trends in pricing metrics.
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