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Buyers and Sellers Remain Apart on Pricing Expectations: CBRE
Recent reports of a disconnect in pricing expectations among buyers and sellers have been corroborated by CBRE’s new cap rate survey. Stemming from the COVID-19 pandemic, the bid-ask gap is taking a toll on investment activity, says CBRE.
The CBRE survey found that 61% of buyers are looking for discounts from pre-pandemic prices and only 9% of sellers willing to offer such discounts. Among buyers looking for discounts, nearly three-quarters were for office or retail properties. For suburban office, 95% of investors were looking for discounts.
“Buyers and sellers remain apart on many asset types, especially value-add where the bid-ask spread remains wide,” said Chris Ludeman, global president of capital markets for CBRE. “Uncertainty about how to underwrite NOI will remain until the pandemic is under control.”
Accordingly, global chief economist Richard Barkham said most of the current cap rate compression stems from underwriting assets with lower year-one income assumptions.
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- ◦Sale/Acquisition
- ◦Sale/Acquisition
