Cap Rate Trends for 2011

By Adam Lyons in : Commercial Real Estate // Jan 18 2011

Analysis from the PwC Real Estate Investor Survey indicate a downward trend for core assets, especially apartments. The cap rate trend for 2011 is expected to continue illustrating the relationship between interest rates and investor rate of return expectations. Cap rates, overall, have been moving in step with interest rates which are remaining low, as well as an investor’s property assessment and value expectation.

Trophy deals and heavily distressed assets are are expected to continue with a respectable level of momentum, as fierce competition still exists for core trophy office towers and high yield cash flows on any asset type.

Investors expect overall cap rates for core assets to either flat line or decline further through the remainder of this year, as they foresee interest rates staying low and the debt markets to continue facilitating property trades. In the near term, participants expect overall cap rates to decline in the national regional mall market (down as much as 150 basis points) and the San Francisco office market (down as much as 100 basis points). Conversely, overall cap rates could potentially increase in the office markets of suburban Maryland and Charlotte over the next six months.


  • Adam Lyons

    I’m still amazed looking at these cap rates. #cre appraisers and underwriters need to consider fair market values!

    • Tnichols80

      “Fair market value” is no longer used in Arizona. It is now “market value”

      • Adam Lyons

        So true…so very true. Willing seller and willing buyer? rarely!

  • Johny Anderson

    Real estate is one of the great way to earning the money. It is risky also. You have to have basic knowledge about the market and risk.

    Rental Management

  • Anonymous

    The cap amount trend for 2011 is accepted to continue illustrating relationship between the rates interest and investor of acknowledgement expectations. Keep posting such a great information.

    Community Association Management

  • Debts


  • Benboothe

    Do you have any current data on hospital cap rates for 2011?

  • Benboothe

    to Adam Lyons,  let me know. My email is I am particularly interested in cap rates for hospitals in 2011, as I am trying to do an article and need some data.  Thanks!  Ben

    • Adam Lyons

      Hi Ben,


      I reached out on your behalf to Steve Cook from Escee
      Commercial. The only transaction that might even resemble a hospital investment
      sale is the heart institute in phoenix, however it was sold to another operator
      and not an investor really. Not quite the nexus you are looking for in terms of
      comparison reporting I imagine.


      Hospital transactions are getting more and more complicated,
      as there are serious concerns with the current white house administration and
      the policies/billing disputes relating to Medicare and Medicaid. Many hospitals
      are simply refusing to even accommodate those programs at all, and will send
      patients away in taxi to avoid them. Mayo is one of those operations.


      Surgery centers do however have transactions, however they
      are also not a true comparable to a hospital.


      You are certainly in a challenging circumstance on this one,
      I’m sorry I can’t be of much more help!