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Industrial Investors Drive Cap Rates Lower in Secondary and Tertiary Markets

Going into smaller markets in search of yield, industrial investors are starting to cause cap rate compression in those areas.

Investors don't like the high pricing and low cap rates on industrial assets, especially since cap rates continue to compress in some markets. But they still want to invest in this asset class, because continued rent growth and low interest rates should boosts net operating incomes (NOI), overcoming low yields during the first year or two of a 10-year investment horizon

Demand for industrial space is still outstripping supply, despite a record-high construction pipeline that delivered 126.8 million sq. ft. of new space in the first half of the year.


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