Cap Rates Expected to Stabilize in L.A. This Year
Updated: May 14, 2020
Cap rates are likely to stabilize this year in Los Angeles. According to a new report, moderate economic growth and investor demand will stabilize for apartments, retail, hotels, and office. Industrial cap rates, however, will continue to compress in the region. This trend follows a tightening of cap rates across asset classes in the second half of 2019.
Apartment cap rates are 4.8% for infill product and 5.4% for suburban product, and hotels are at 8.3%, according to the report, and office and retail both had minimal changes in 2019. Industrial, on the other hand, continued to compress last year and will likely continue to decrease this year. “Over the last decade, investor activity in the industrial sector has surged and prices have followed,” “We have seen unprecedented investor demand for well-located logistics facilities in Los Angeles with proximity to the nation’s largest port facilities and the region’s large and affluent population. As the market for class-A product becomes ever more competitive, in 2019 demand for lower quality assets grew, and Los Angeles class-C industrial cap rates dropped 25 basis points in the second half of the year.”
The article has been edited for content applicable to our readers and website. For the full article, read more here https://www.globest.com/2020/03/09/cap-rates-expected-to-stabilize-in-l-a-this-year/