CBRE Cap Rate Survey August 2011

CBRE Cap Rate SuRvey
A CBRE Publication
August 2011
In This Issue: Overview Office Multihousing Retail Industrial Hotels Appendix pg 2 pg 5 pg 12 pg 16 pg 20 pg 24 pg 28
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Cap Rate Survey

August 2011
In ThIs Issue: Overview
United States Overview
<< | >>
u.S. commercial real estate markets have been in recovery for well over a year now. Low interest rates and mounting global liquidity have attracted a disproportionate share of institutional capital flows to u.S. real estate. according to Real Capital analytics (RCa), transaction volume surged during the first half of 2011 with property sales totaling $90.6 billion. Strong institutional demand for office and multihousing assets has accounted for much of the sales activity. CBD office, in particular, has been a prime target of cross-border investors. Demand for multihousing has also been supported by a robust recovery in underlying fundamentals and the availability of still favorable financing by the GSes. More recently, a rising volume of large retail portfolio sales have been noted during the second quarter as investors become relatively bullish on retailers longer term. Despite the recent volatility in the broader equity and fixed income markets resulting from the downgrade of the u.S. from aaa to aa+, commercial
Office
Multihousing
Retail
real estate should continue to attract institutional capital given real estates critical role in a well-diversified multi-asset portfolio. private equity real estate returns as measured by the NCReIF property Index (NpI) have also outpaced other traditional and alternative asset classes. NpI annualized returns through the second quarter of 2011 totaled 16.7%, better than returns for stocks and bonds during the same period.
Industrial
Greater risk aversion resulting from the softening economic growth and increased market gyrations, however, should direct a greater share of capital to less risky, core real estate. the highest quality assets with credit tenants and staggered, longer-term leases, located in the primary markets will be favored targets. In this uncertain environment, investors have a greater appetite for core real estate assets that provide much more stable yields. Due to investor appetite for such assets, our expectation is that transaction volume should approach an estimated $200 billion this year. this is comparable to levels seen back in 2004 and almost double the levels seen in each of the past three years.
hotel
Appendix
In light of continued investor demand for higher-quality properties, pricing for core assets in primary markets continues to rise. this trend is reflected in the upward movement of the average cap rates as reported by RCa. In this edition of CBRes Cap Rate Survey, an overwhelming number of experts in the field also report continued downward pressure on cap rates across the main property sectors including: CBD office, suburban office, retail, industrial, apartments and hotels. Gateway markets continue to achieve rich pricing relative to second-tier markets. Rising values have also encouraged investors to list more properties for sale. the volume of new offerings jumped significantly in the second quarter of 2011 according to RCa.
Cap Rate Survey

August 2011
United States Overview (continued)
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the one risk facing commercial real estate capital markets is the trajectory of the u.S. economy and financial markets. the uS faces multiple challenges including a tepid economic recovery, a rising sovereign debt burden and policy gridlock in Washington. this led Standard & poors to downgrade u.S. sovereign credit from aaa to aa+. the downgrade centered on two factors: Anemic economic growth: The U.S. economy grew at a slow 0.9% annualized rate during the first half of 2011. Expectations for a stronger rebound in the second half have been adjusted downward. Economic growth should average closer to 3% in the second half of this year
Office
Multihousing
in comparison to 3.5% anticipated earlier on. In order to alleviate growing deficit and debt problems, the U.S. needs a much stronger economic rebound than currently realized.
Retail
Unsustainable Debt Trajectory: Public debt as a share of GDP has accelerated massively, rising from around 50% prior to the 2008-2009 recession to over 80% during the first quarter of this year. Weak economic growth and the inability for policy makers to make the hard decisions necessary to tackle the debt led S&P to downgrade U.S. longer-term treasury bonds.
Industrial
the initial impact of this downgrade has been to increase demand for safe-haven assets as investors unwound their risk positions. Ironically, this has led to greater demand for u.S. treasuries, driving yields of the 10 year note to below 2.5%. Spreads have increased for all risk-assets, including commercial real estate. But the all-in cost of capital has not changed materially given the decline in benchmark yields. Both debt and equity capital are available for real estate given the role that commercial real estate plays in a well-diversified multi-asset portfolio. the lower value of the u.S. dollar is also encouraging cross-border capital flows to the u.S.
hotel
Appendix
economic and financial market volatility, however, will impact business and consumer confidence. this may delay new consumption and business spending, weighing in on economic growth in the near-term. Our expectation, however, is that the u.S. economy will avoid another recession and continue to expand, averaging 2.5% this year and by another 2.5% in 2012. Monetary policy remains highly accommodative with the Fed anticipating holding interest at zero through the first half of 2013. Corporate earnings are also a bright spot during the current economic malaise. Corporations have reportedly $2 trillion of cash sitting on their balance sheets. as uncertainty subsides, we expect businesses to begin hiring and spending on much needed upgraded equipment. the projected economic recovery should continue to support improvements in real estate market fundamentals. all sectors, with the exception of retail, report falling vacancy rates. During the second quarter, office vacancy rates fell to 16.2%. Both CBD and Suburban office markets improved.
3
Cap Rate Survey

August 2011
United States Overview (continued)
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the office sector continues to enjoy strong transaction volume, with much of the focus on Washington DC and Manhattan which accounted for more than half of the sales. For the first half of 2011, the volume of office transactions totaled just under $25 billion, up 77% year over year.
Office
Similar to the office sector, industrial availability continued to decline in the second quarter of 2011. Large regional distribution centers and tech hubs improved the most, including Riverside, Boston, San Francisco, Seattle, and San Jose. the recent recovery in the manufacturing ISM survey is also reflected across the nations manufacturing markets. Detroit in particular is benefiting from the resurgence in the auto manufacturing activity.
Multihousing
During the first half of 2011, much of the new industrial sales were concentrated in warehouse/distribution centers as compared to flex. RCa reports that multiple trades of large distribution centers at major hubs such as Los angeles and Chicago have started to take place at sub-6.0% yields, rare so far during this tepid recovery. Our survey of stabilized industrial cap rates also report the same trend with some instances of cap rates below 5% in the best markets for the best industrial product. Retail has been the only property sector to report deteriorating fundamentals. During the second quarter of 2011, retail availability rates rose to
Retail
Industrial
13.3%, marking the second quarterly rise. uncertainty regarding consumer activity has led to retailers cutting back on space requirements. the demand recovery for neighborhood, community and strip centers has stalled. Retail transactions started to gain momentum only in the last quarter. according to RCa, sales volume ratcheted up to $17 billion. More strip centers reportedly changed hands last quarter than all of 2010. the Blackstone/Centro deal accounted for a large part of the upsurge in quarterly activity. Investor interest in retail properties continues to drive down cap rates despite softening market conditions.
hotel
Appendix
Multihousing has enjoyed the healthiest fundamentals as compared to the other property sectors. Data through the second quarter of 2011 indicate that u.S. apartment demand continues to rise with vacancy rates at 5.4%, very near market equilibrium rates. Landlords are achieving rent growth momentum and concessions continue to burn away. Sales of garden apartments surged during the first half of 2011 as investors allocated a large portion of their real estate portfolio to multihousing assets. Improving fundamentals and strong underlying net operating income from such assets continues to draw yield-hungry investor to this property type. hotel transaction activity has grown quickly in 2011. Compared to the pace of activity seen in the first half of 2010, sales volume was up nearly 150% in the first half of 2011. Cap rates for stabilized assets have been the lowest in markets like New york, Boston, San Francisco and Seattle where cap rates have dipped below 6% for the luxury segment.
4
Cap Rate Survey

August 2011
Office | Overview
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Office
The pace of office investment activity in the first half of 2011 is just over 90% greater than the pace set in the first half of 2010. Part of this growth is simply a function of a small number growing quickly with deal activity at $13 billion in the first half of 2010 according to figures from Real Capital Analytics. With transaction activity just under $25 billion deal activity in the first two quarters of this year exceeds the annual activity seen in the market in 2009. The CBRE Cap Rate Survey highlights a significant disparity in investor demand for office assets across different types of markets. There is a 450 basis point spread between the lowest and highest cap rates for stabilized Class A office assets in CBD submarkets and roughly a 340 basis point spread for assets in Suburban submarkets. The lowest cap rates are seen for assets in major gateway markets where investor activity is quite strong while assets in struggling industrial cities of the Midwest do not see the same interest. Select from the list below to access the current CBD office cap rates and forecast. Download a Complete Office CBD Current Cap Rates Chart (PDF)
Multihousing
Retail
Industrial
Download a Complete Office CBD Cap Rate Forecast Chart (PDF)
hotel
Select from the list below to access the current suburban office cap rates and forecast. Download a Complete Office suburban Current Cap Rates Chart (PDF)
Appendix
Download a Complete Office suburban Cap Rate Forecast Chart (PDF)
Cap Rate Survey

August 2011
Office CBD | eastern Region

Class A stabilized
Atlanta 6.90% - 7.10% 6.25% - 6.75% 4.50% - 5.00% 7.00% - 7.50% 7.25% - 7.50% 6.50% - 7.00% 7.75% - 8.25% 5.00% - 5.50% 6.75% - 7.00% 7.00% - 7.50% 7.50% - 8.00% 7.00% - 8.50% 6.75% - 7.75% 4.75% - 5.50% Baltimore Boston Charlotte Jacksonville Miami nashville new York City Orlando Philadelphia Pittsburgh Raleigh Tampa Washington, DC
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Class B Value Add Trend*
Class C Value Add Trend*

I I I I 8.00% - 8.50% 7.00% - 8.50% 8.50% - 9.00%
Trend*
I
stabilized
8.00% - 8.50% 8.00% - 8.50% 6.50% - 7.00% 7.75% - 8.25% 9.00% - 9.25% 7.25% - 8.50% 8.75% - 9.00% 5.50% - 6.50% 7.25% - 7.75% 8.00% - 8.50% 8.25% - 8.75% 8.00% - 9.50% 8.25% - 9.25% 5.50% - 6.00%
Trend*
I I
stabilized
10.00% - 12.00% 9.50% - 10.00% 8.00% - 9.00% 9.00% - 9.50% 12.00% - 13.00% 8.25% - 9.50% 9.50% - 9.75% N/a 8.50% - 9.00% 9.25% - 9.75% 10.00% - 11.00% 8.50% - 11.00% 9.50% - 10.50% 5.50% - 6.00%
Trend*
I N/a Decrease Increase I I I I I Remain Flat
Value Add Trend*

N/a I I I 9.50% - 10.00% 9.00% - 10.00% 10.00% - 10.50% 12.00% - 13.00% 10.00% - 12.00% 10.00% N/a 8.75% - 9.25% 10.00% - 11.00% 11.00% - 12.00% 8.75% - 9.75% 10.00% - 11.00% 6.00% - 6.75% 10.00% - 12.00%
Industrial
* Compared to 2nd Half 2010
hotel
stabilized
Atlanta Baltimore Boston Charlotte Jacksonville Miami nashville new York City Orlando Pittsburgh Philadelphia Raleigh Tampa Washington, DC
*
CAP RATe FOReCAsT* Class A Value Add stabilized Class B Value Add stabilized Class C Value Add
Appendix
Cap Rate Forecast represents the CBRe professionals opinion of where cap rates are likely to trend in 2nd half of 2011 in their local market.
4.75% - 5.50%
8.50% - 9.50%
7.75% - 8.50%
Retail
8.00% - 8.50%
7.50% - 8.00%
7.00% - 8.00%
5.00% - 6.00%
Multihousing
8.25% - 8.50%
7.25% - 8.00%
8.50% - 9.00%
7.50% - 8.00%
Office
7.50% - 8.00% 7.50% - 8.50%
8.50%
9.00% - 10.00%
9.50% - 10.00% 8.00% - 9.50% 9.00% - 9.50% 6.50% - 7.50% 7.50% - 8.00% 8.50% - 9.00% 9.00% - 9.50% 8.25% - 9.00% 9.00% - 10.00% 6.25% - 6.75%
Cap Rate Survey

August 2011
Office CBD | Central Region

Class A stabilized
Austin 5.75% - 7.75% 6.25% - 6.50% 8.25% - 9.25% 8.75% - 9.00% 8.00% - 9.00% 8.50% - 9.00% 8.50% - 10.00% 6.00% - 7.00% 8.00% - 8.50% 8.50% - 9.50% 6.75% - 7.50% 6.25% - 7.00% 8.75% - 9.75% Chicago Cincinnati Cleveland Columbus Dallas Detroit houston Indianapolis Kansas City Minneapolis san Antonio st. Louis
<< | >>

I

N/a I I 7.25% - 7.50% 7.50% - 9.00%
Trend*
I N/a I I
stabilized
7.25% - 8.50% 7.00% - 7.25% 9.50% - 10.50% 9.50% - 10.00% 10.00% - 11.00% 9.50% - 10.00% 9.00% - 12.00% 7.50% - 8.00% 9.75% - 10.25% 9.50% - 10.50% 8.00% - 8.75% 7.75% - 8.25% 9.75% - 10.75%
Trend*
N/a I I I I
stabilized
8.00% - 9.00% 8.50% - 9.50% 10.00% - 12.00% 11.00% 11.00% - 12.00% 10.00% - 12.00% 10.00% - 13.00% 9.50% - 10.00% N/a 12.00% - 14.00% 9.00% - 10.00% 10.00% - 12.00% 12.25% - 15.25%
Trend*
N/a I N/a Decrease Remain Flat Increase I I
Value Add Trend*

I N/a I I N/a I 9.50% - 11.50% 11.00% - 13.00% 11.00% - 12.00% 11.75% - 12.50% 12.00% - 14.00% 12.00% - 15.00% 11.50% - 12.00% N/a 12.50% - 14.50% 11.00% - 12.00% 11.00% - 12.50% 15.25% - 20.00% 8.50% - 9.50%
9.25% - 9.50% 9.00% - 10.00% 8.50% - 9.00% 9.00% - 11.00% 7.50% 10.50% - 11.25% 9.00% - 10.00% 8.25% - 9.00% 6.75% - 7.50% 9.25% - 10.25%
N/a
Industrial
CAP RATe FOReCAsT*
hotel
Class A stabilized Value Add

Austin Chicago Cincinnati Cleveland Columbus Dallas Detroit houston Indianapolis Kansas City Minneapolis san Antonio st. Louis
Appendix
* Cap Rate Forecast represents the CBRe professionals opinion of where cap rates are likely to trend in 2nd half of 2011 in their local market.
Retail
Multihousing
Office
6.50% - 6.75% 9.00% - 10.00%
6.00% - 8.00%
10.00% - 11.00% 10.50% - 11.00% 10.75% - 11.50% 10.00% - 11.00% 10.00% - 14.00% 8.50% - 8.50% 13.00% - 13.50% 10.00% - 11.00% 9.50% - 10.50% 8.25% - 8.75% 10.25% - 11.25%
Class B stabilized Value Add
Class C stabilized Value Add
Cap Rate Survey

August 2011
Office CBD | Western Region

Class A stabilized
Albuquerque N/a 5.50% - 6.00% 6.00% - 7.00% 5.50% - 6.00% 5.75% - 7.00% 6.50% - 7.00% 6.50% - 7.00% 7.50% - 8.00% 7.50% - 8.00% 6.00% - 7.00% 5.25% - 6.50% 5.00% - 5.50%
<< | >>

N/a 7.00% N/a N/a

N/a 8.25% - 8.50% 7.50% - 8.50% 6.50% - 8.00% 7.75% - 8.75% 8.50% - 9.00% 7.50% - 8.00% 9.00% - 9.50% 9.00% - 9.50% 7.00% - 8.00% 7.00% - 9.00% 7.00% - 8.00% N/a N/a
Trend*
N/a N/a I
stabilized
8.50% - 8.75% 7.00% 6.50% - 7.50% 6.00% - 7.00% 7.25% - 8.25% 7.50% - 8.00% 7.25% - 8.25% 8.00% - 8.50% 8.00% - 8.50% 6.50% - 7.50% 6.50% - 8.00% 6.50% - 7.00%
Trend*
N/a
stabilized
N/a 8.00% - 8.50% 8.00% - 10.00% 7.50% - 8.00% 8.50% - 9.25% 8.50% - 9.00% 8.50% - 9.50% 8.50% - 9.00% 9.50% - 11.00% 7.25% - 8.25% 8.00% - 10.00% 8.50% - 9.00%
Trend*
N/a N/a N/a Decrease Remain Flat Increase I I
Value Add Trend*

N/a 9.00% 9.00% - 12.00% 8.00% - 10.00% 9.00% - 10.25% 9.50% - 10.00% 7.50% - 10.00% 10.00% - 11.00% 10.00% - 13.00% 7.75% - 8.75% 9.00% - 11.00% 9.50% - 10.00% N/a N/a I N/a I
Office
Denver Las Vegas Los Angeles Orange County Phoenix Portland sacramento salt Lake City san Diego san Francisco seattle
7.00% - 8.00% 6.00% - 6.50% 6.75% - 7.75% 7.50% - 8.00% 7.00% - 7.50% 9.00% 8.00% - 8.70% 6.50% - 7.50% 6.00% - 7.00% 6.00% - 7.00%
Industrial
CAP RATe FOReCAsT* Class A stabilized Value Add Class B stabilized Value Add Class C stabilized Value Add
hotel
Albuquerque Denver Las Vegas Los Angeles Orange County Phoenix Portland sacramento salt Lake City san Diego san Francisco seattle * Cap Rate Forecast represents the CBRe professionals opinion of where cap rates are likely to trend in 2nd half of 2011 in their local market.
Appendix
Retail
Multihousing
Cap Rate Survey

August 2011
Office Suburban | eastern Region

Class A stabilized
Atlanta 7.30% - 7.50% 6.50% - 7.00% 6.50% - 7.50% 7.50% - 8.00% 7.50% - 8.00% 6.50% - 7.50% 7.50% - 7.75% 7.25% - 7.50% 7.50% - 8.00% 7.50% - 8.00% 7.00% - 8.50% 7.00% - 8.00% 5.75% - 6.25%
<< | >>

I

I I I
Trend*
I I I
stabilized
8.25% - 9.00% 8.00% - 8.50% 7.50% - 8.50% 8.00% - 8.50% 9.00% - 10.00% 7.25% - 8.25% 9.00% - 9.50% 8.50% - 8.75% 9.50% - 10.00% 8.50% - 9.00% 8.00% - 9.00% 8.00% - 9.00% 6.50% - 7.50%
Trend*
I I
stabilized
10.00% - 12.00% 9.50% - 10.00% 9.00% - 10.00% 9.50% - 10.00% 12.00% - 13.00% 9.00% - 10.00% 10.00% 9.00% - 9.25% 10.50% - 11.00% 10.50% - 11.00% 8.50% - 12.00% 9.25% - 10.25% 8.00% - 9.00%
Trend*
I Decrease Remain Flat Increase I I I
Value Add Trend*

I I I I 10.50% - 11.00% 10.00% - 12.00% 10.00% - 10.50% 12.00% - 13.00% 10.00% - 12.00% 10.00% - 10.50% 9.25% - 9.50% 11.00% - 12.00% 11.00% - 12.00% 9.00% - 10.00% 10.00% - 11.00% 8.25% - 9.25% 10.00 - 12.00%
Multihousing
nashville Orlando Philadelphia Pittsburgh Raleigh Tampa Washington, DC
8.50% - 8.75% 8.00% - 8.25% 8.00% - 8.50% 8.00% - 8.50% 8.00% - 8.75% 8.00% - 9.00% 6.25% - 6.75%
Industrial
CAP RATe FOReCAsT*
hotel
Atlanta Baltimore Boston Charlotte Jacksonville Miami nashville Orlando Pittsburgh Philadelphia Raleigh Tampa Washington, DC
Class A stabilized Value Add stabilized
Appendix
Retail
Miami
7.50% - 8.50%
Jacksonville
9.00% - 10.00%
Charlotte
8.00% - 8.50%
Office
Baltimore Boston
8.75% - 9.25% 7.50% - 8.50%
9.75% - 10.25% 8.00% - 9.00% 8.75% - 9.25% 10.00% - 10.50% 8.50% - 9.75% 9.50% - 9.75% 8.75% - 9.00% 10.00% - 10.50% 9.00% - 10.00% 8.50% - 9.25% 8.75% - 9.75% 7.00% - 8.25%
Class B Value Add stabilized
Class C Value Add
8.50%
9.00% - 10.00%
Cap Rate Survey

August 2011
Office Suburban | Central Region

Class A stabilized
Austin 6.25% - 7.75% 7.50% - 8.50% 8.00% - 8.75% 8.75% - 9.00% 8.00% - 9.00% 7.25% - 8.50% 8.50% - 10.00% 6.25% - 7.00% 8.50% - 9.00% 8.50% - 9.50% 6.75% - 7.75% 6.50% - 7.25% 8.00% - 8.50% Chicago Cincinnati Cleveland Columbus Dallas Detroit houston Indianapolis Kansas City Minneapolis san Antonio st. Louis
<< | >>

I

I N/a I
Trend*
I N/a I I
stabilized Trend*
I N/a I I I 9.00% - 10.25% 9.00% - 10.00% 9.50% - 10.00% 10.00% - 11.00% 9.00% - 9.50% 9.00% - 12.00% 8.00% - 8.50% 9.50% - 10.00% 9.00% - 10.00% 8.75% - 9.75% 7.75% - 8.25% 8.75% - 9.50% 7.75% - 8.50%
stabilized
8.50% - 10.00% 11.00% - 12.50% 10.00% - 11.50% 10.50% - 11.00% 11.00% - 12.00% 10.00% - 10.50% 10.00% - 13.00% 9.50% - 10.00% N/a 11.00% - 13.00% 9.50% - 10.50% 10.00% -12.00% 10.50% - 12.00%
Trend*
I N/a I I N/a Decrease Remain Flat Increase I I
Value Add Trend*

I N/a I N/a I I 12.50% - 14.00% 11.00% - 13.00% 11.00% 11.00% - 12.00% 10.0% - 11.00% 12.00% - 15.00% 9.50% - 12.00% N/a 12.00% - 14.00% 11.50% - 12.50% 11.00% - 12.50% 11.00% - 13.00% 9.00% - 10.00%
9.25% - 9.50% 8.75% - 10.00% 8.25% - 8.50% 9.00% - 11.00% 7.50% 10.25% - 10.75% 9.00% - 10.00% 8.25% - 9.25% 6.75% - 7.50% 8.25% - 9.00%
N/a
Industrial
CAP RATe FOReCAsT* Class A stabilized Value Add Austin Chicago Cincinnati Cleveland Columbus Dallas Detroit houston Indianapolis Kansas City Minneapolis san Antonio st. Louis
hotel
Appendix
Retail
Multihousing
Office
8.50% - 10.00% 8.50% - 9.00%
10.00% - 11.00% 9.50% - 10.50% 9.75% - 10.00% 10.00% - 11.00% 9.00% - 10.00% 10.00% - 14.00% 9.00% 11.75% - 12.25% 9.50% - 11.00% 10.00% - 11.00% 8.25% - 8.75% 9.25% - 10.00%
7.00% - 8.50%
8.00% - 9.00%
10
Cap Rate Survey

August 2011
Office Suburban | Western Region

Class A stabilized
Albuquerque 7.00% - 7.25% 6.50% - 7.00% 6.00% - 7.00% 5.50% - 7.00% 6.00% - 7.25% 7.50% - 8.00% 7.75% - 8.50% 8.50% - 9.00% 7.50% - 8.00% 6.00% - 7.00% 5.75% - 6.75% 5.50% - 6.25%
<< | >>

N/a N/a

I I 9.00% - 9.50% 7.50% - 9.00% 7.00% - 8.00% 8.00% - 9.00% 9.00% - 9.50% I 8.50% - 9.00%
Trend*
I
stabilized
N/a 8.00% - 8.50% 6.50% - 7.50% 6.50% - 7.50% 7.50% - 8.50% 8.00% - 8.50% 8.75% - 9.50% 9.00% - 9.50% 8.00% - 8.50% 6.50% - 7.50% 7.00% - 8.50% 6.50% - 7.50%
Trend*
N/a I I
stabilized
N/a 9.00% - 10.00% 9.00% - 14.00% 7.50% - 9.00% 8.75% - 9.50% 9.50% - 10.00% 9.00% - 10.00% 10.00% - 10.50% 9.50% - 10.20% 7.25% - 8.25% 9.00% - 11.00% 7.50% - 9.00%
Trend*
N/a N/a Decrease Remain Flat Increase I I I I
Value Add Trend*

N/a N/a I I 10.50% - 11.00% N/a 8.50% - 10.00% 9.25% - 10.50% 10.50% - 11.00% 9.50% - 12.00% 11.00% - 11.50% 10.00% - 10.50% 7.75% - 8.75% 9.50% - 12.00% 8.50% - 9.50% 9.50 % - 10.50%
Office
Denver Las Vegas Los Angeles Orange County Phoenix Portland sacramento salt Lake City san Diego san Francisco seattle
7.75% - 8.00% 7.00% - 8.50% 6.00% - 7.50% 7.00% - 8.00% 8.50% - 9.00% 8.00% - 8.75% 9.00% 8.00% - 8.70% 6.50% - 7.50% 6.50% - 7.50% 6.00% - 7.60%
Industrial
hotel
Albuquerque Denver Las Vegas Los Angeles
Appendix
Orange County Phoenix Portland sacramento salt Lake City san Diego san Francisco seattle
Retail
Multihousing
9.50% - 10.50% 10.00% - 10.50% 9.00% - 9.50% 7.00% - 8.00% 7.50% - 9.50% 7.00% - 8.00%
11
Cap Rate Survey

August 2011
Multihousing | Overview
<< | >>
Office
Across all sectors of commercial real estate investment, multihousing is the closest to the previous peak level of transaction activity. The sector hit a peak of $90 billion in transaction activity in 2007 with activity over the last four quarters coming in at just under $42 billion according to figures from Real Capital Analytics. More so than any other sector, investors have bought into the recovery story presented in the multihousing sector and especially the shifting attitude of consumers to renting instead of owning. Across markets, the CBRE Cap Rate Survey paints a picture of healthy investor demand across a number of markets. In the 39 major markets surveyed, cap rates for Class A stabilized multihousing assets came in lower than 5.5% in 19 of these markets. This 5.5% level is interesting as this is the level at which our economists at CBRE Econometric Advisors are thinking that the Ten Year Treasury will peak once the economy is through this turbulent patch. These low levels relative to the Ten Year Treasury do not suggest that these assets are overpriced so much as they indicate the investor expectations for future income growth in these markets. Select from the list below to access the current multihousing cap rates and forecast.
Multihousing
Retail
Industrial
Download a Complete Multihousing Current Cap Rates Chart (PDF) Download a Complete Multihousing Cap Rate Forecast Chart (PDF)
hotel
Appendix
12
Cap Rate Survey

August 2011
Multihousing | eastern Region

Class A stabilized
Atlanta 4.85% - 5.75% 4.75% - 5.75% 4.00% - 5.00% 4.75% - 5.00% 5.50% - 6.00% 4.75% - 5.75% 5.25% - 6.25% 4.00% - 4.75% 5.25% - 5.75% 5.00% - 5.25% 6.50% - 7.00% 4.50% - 5.75% 5.50% - 6.00% 4.25% - 5.25%
<< | >>

N/a N/a N/a N/a I N/a N/a I I

6.10% - 7.25% 6.00% - 7.00% 5.50% - 6.50% 6.50% - 7.25% 6.00% - 6.75% 6.25% - 7.25% I I I
Trend*
I I I I I I
stabilized
5.85% - 6.85% 6.00% - 6.75% 5.00% - 6.00% 6.00% - 6.75% 6.25% - 7.00% 5.50% - 6.50% 6.00% - 7.00% 4.25% - 5.25% 5.75% - 6.25% 6.25% - 6.75% 7.00% - 7.50% 5.75% - 7.00% 6.25% - 6.50% 5.75% - 6.25%
Trend*
I I I I I I I
stabilized
6.85% - 8.50% 7.00% - 7.75% 8.00% - 9.00% 7.50% - 8.25% 7.50% - 8.50% 7.00% - 8.50% 7.00% - 7.75% 5.75% - 6.75% 6.50% - 7.00% 7.00% - 7.50% 7.75% - 8.25% 7.50% - 9.50% 7.00% - 8.50% 6.50% - 7.25%
Trend*
I Decrease Remain Flat Increase I I I
Value Add Trend*

7.50% - 10.00% 7.50% 8.00% - 9.00% 8.00% 7.00% - 8.00% 8.50% - 12.00% 7.25% - 8.00% 5.50% - 6.50% 7.00% - 7.50% 7.00% - 7.50% 8.00% - 8.50% 7.50% 7.00% - 8.50% 7.00% I I I I I I I I
5.25% - 6.10%
Office
Baltimore Boston Charlotte Jacksonville Miami* nashville new York City Orlando Philadelphia Pittsburgh Raleigh Tampa Washington, DC
5.00% - 5.75% 5.25% - 6.00% 5.50% - 6.50% 5.50% - 6.50% 4.00% - 4.50% 5.50% - 6.00% 5.00% - 5.25% 7.00% - 7.50% N/a 5.25% - 5.75% N/a
Multihousing
6.250% - 7.25% 4.25% - 5.00% 6.00% - 6.50% 6.25% - 6.75% 7.50% - 8.00% 5.50% 6.00% - 6.50% 5.75% - 6.50%
Industrial
CAP RATe FOReCAsT*
hotel
stabilized Atlanta Baltimore
Class A Value Add stabilized
Class C Value Add
Appendix
Boston Charlotte Jacksonville Miami nashville new York City Orlando Philadelphia Pittsburgh Raleigh Tampa Washington, DC
Retail
I I I
13
Cap Rate Survey

August 2011
Multihousing | Central Region

Class A stabilized
Austin 4.75% - 5.25% 4.50% - 5.25% 6.50% - 7.00% 7.75% - 8.00% 6.25% - 6.75% 5.00% - 6.00% 7.35% - 8.25% 5.00% - 6.00% 6.00% - 6.50% 5.50% - 6.25% 5.00% - 5.50% 6.00% - 6.75% 5.50% - 6.50%
<< | >>

5.75% - 6.25% 7.00% - 8.50% N/a 8.50% - 9.00% 7.00% - 8.00% 8.25% - 9.25% 7.00% - 7.50% 6.50% - 7.00% 6.50% - 7.00% 6.25% - 7.00% 7.50% - 8.00% 8.50% - 9.50% I I N/a I I I 6.25% - 6.75%
Trend*
I N/a I I I I
stabilized
6.25% - 6.75% 6.00% - 6.50% 7.00% - 8.00% N/a 7.00% - 8.00% 6.50% - 7.50% 8.25% - 9.25% 6.50% - 7.50% 6.75% - 7.25% 7.00% - 7.50% 6.25% - 6.75% 7.00% - 7.25% 8.50% - 9.50%
Trend*
N/a I I
stabilized
6.75% - 7.25% 7.00% - 7.25% 9.00% - 11.00% 10.44% - 11.50% 9.50% - 10.50% 8.25% 9.50% - 11.50% 8.00% - 9.00% 8.00% - 9.00% 8.00% - 10.00% 7.00% - 8.00% 8.00% 9.00% - 10.50%
Trend*
I N/a Decrease Remain Flat Increase I I I
Value Add Trend*

N/a I I 7.00% - 7.25% 9.50% - 12.00% 13.25% - 14.00% 10.00% - 11.00% 9.00% 9.50% - 11.50% 8.00% - 9.50% 8.00% - 10.00% 7.50% - 8.50% 7.50% - 8.50% 8.50% - 10.00% 10.00% - 15.00% 6.75% -7.25%
Office
Chicago Cincinnati Cleveland Columbus Dallas Detroit houston Indianapolis Kansas City Minneapolis san Antonio st. Louis
4.25% - 4.75% 6.75% - 7.50% N/a 6.50% - 7.00% 5.50% - 6.00% 8.00% - 8.75% 5.00% - 6.00% 5.75% - 6.50% 5.50% - 6.25% 5.25% - 5.75% N/a 6.00% - 7.00%
N/a I
Multihousing
N/a
Industrial
CAP RATe FOReCAsT*
hotel
Class A stabilized Value Add

Austin Chicago Cincinnati Cleveland Columbus Dallas Detroit houston Indianapolis Kansas City Minneapolis san Antonio st. Louis
Appendix
Retail
4.50% - 5.00%
14
Cap Rate Survey

August 2011
Multihousing | Western Region

Class A stabilized
Albuquerque 5.75% - 6.00% 4.75% - 5.00% 5.25% - 5.75% 5.50% - 6.00% 3.75% - 4.25% 4.25% - 4.75% 4.50% - 5.25% 4.75% - 5.25% 5.25% - 5.75% 4.25% - 4.75% 4.00% - 4.50% 4.00% - 4.50%
<< | >>

I I 5.25% - 5.75% 5.50% - 6.00% 6.25% - 6.75% 4.25% - 4.75% 5.00% - 5.50% 5.50% - 6.00% 5.50% - 6.00% 6.25% - 6.75% 5.00% - 5.50% 5.50% - 6.00% 5.25% - 6.00% I 6.50% - 6.75%
Trend*
I I I
stabilized
6.25% - 6.50% 5.50% - 6.00% 5.75% - 6.25% 6.25% - 6.75% 4.25% - 4.75% 5.25% - 5.50% 5.50% - 6.00% 5.50% - 6.00% 6.00% - 6.50% 5.25% - 5.75% 5.00% - 5.50% 5.00% - 6.00%
Trend*
I I I
stabilized
7.25% - 7.75% 6.00% - 7.00% 6.50% - 7.25% 7.00% - 8.00% 4.75% - 5.50% 5.50% - 6.00% 6.00% - 7.00% 6.25% - 6.75% N/a 5.50% - 6.00% 5.50% - 6.00% 6.00% - 6.50%
Trend*
I N/a I Decrease Remain Flat Increase I I
Value Add Trend*

7.50% - 8.00% 6.00% - 7.00% 6.50% - 7.25% 7.00% - 8.00% 4.75% - 5.50% 5.25% - 6.00% 6.00% - 7.00% 6.25% - 6.75% N/a 5.00% - 6.00% 6.00% - 6.50% 6.00% - 6.50% N/a I
Industrial
hotel
Albuquerque Denver Inland empire Las Vegas Los Angeles
Appendix
Orange County Phoenix Portland sacramento san Diego san Francisco seattle * Cap Rate Forecast represents the CBRe professionals opinion of where cap rates are likely to trend in 2nd half of 2011 in their local market.
seattle
4.25% - 4.75%
Retail
san Francisco
4.50% - 5.00%
san Diego
4.00% - 4.50%
sacramento
5.75% - 6.25%
Portland
5.00% - 5.50%
Multihousing
Phoenix
4.50% - 5.25%
Orange County
4.00% - 4.50%
Los Angeles
3.75% - 4.25%
Las Vegas
5.50% - 6.00%
Office
Denver Inland empire
4.75% - 5.00% 5.00% - 5.50%
6.00% - 6.25%
15
Cap Rate Survey

August 2011
Retail | Overview
<< | >>
Office
The retail sector had been the laggard into the early stages of the recovery with investor interest in this sector comparatively muted into 2010 with a low pace of investment activity early in the year. With a bit of a rebound in retail sales and an end in the erosion to property-level performance, the investment activity in the sector has rebounded strongly into the first half of 2011. At just over $17 billion, total investment activity is up just over 190% from a year earlier according to figures from Real Capital Analytics, the strongest turnaround for all sectors of commercial real estate CBRE has surveyed for this report. Across markets, the CBRE Cap Rate Survey shows a fairly consistent story with regards to the pricing of grocery anchored shopping centers versus the Power Center format. Whether investors are active in the Class A, B or C segments of the market, Power Center cap rates are coming in higher than their grocery-anchored equivalents. Regardless of asset class, investors see less risk of ongoing shocks to grocery related retail and are willing to pay premiums for these assets. Select from the list below to access the current retail cap rates and forecast.
Multihousing
Retail
Industrial
Download a Complete Retail Current Cap Rates Chart (PDF) Download a Complete Retail Cap Rate Forecast Chart (PDF)
hotel
Appendix
16
Cap Rate Survey

August 2011
Retail | eastern Region

Class A neighborhood/ Community (Grocery Anchored)
Atlanta Baltimore Boston 6.00% - 7.00% 5.75% - 6.50% 5.75% - 6.75% 6.50% - 7.00% 6.50% - 7.00% 6.25% - 6.75% 6.50% - 7.00% 6.50% - 7.50% 6.50% - 7.00% 6.50% - 7.00% 5.50% - 6.25%
<< | >>
Class B neighborhood/ Community Power (Grocery Centers Trend* Anchored)
Class C neighborhood/ Community Power (Grocery Centers Trend* Anchored)

I I I I I 8.00% - 8.75% 7.50% - 8.00% 8.00% - 8.50% 7.50% - 8.25% 7.25% - 8.00% 7.50% - 8.25% 7.50% - 8.50% 8.00% - 10.00% 9.00% - 10.00% 8.75% - 9.50% 9.00% - 10.00% 8.00% - 11.00% 8.00% - 11.00% 8.00% - 11.00% 9.50% - 10.50% 9.00% - 10.00% 8.00% - 11.00% 9.00% - 10.00%
I I
I I
I I
Industrial
CAP RATe FOReCAsT* Class A Class B Power Centers neighborhood/ Community (Grocery Anchored) Power Centers Class C neighborhood/ Community (Grocery Anchored)
Decrease Remain Flat
hotel
Atlanta
neighborhood/ Community (Grocery Anchored)

Baltimore Boston Charlotte Jacksonville Miami Orlando Philadelphia Raleigh Tampa Washington, DC
Power Centers
Increase
Appendix
Washington, DC
6.00% - 6.50%
7.50% - 8.00%
7.50% - 8.25%
9.25% - 10.25%
Tampa
7.00% - 7.50%
7.25% - 7.75%
7.50% - 8.25%
8.00% - 11.00%
Raleigh
7.00% - 7.50%
7.50% - 8.50%
8.00% - 8.50%
9.50% - 10.00%
Retail
Philadelphia
7.50% - 8.00%
8.25% - 9.25%
9.50% - 10.25%
10.00% - 10.75%
Orlando
7.00% - 7.50%
7.25% - 7.75%
8.00% - 11.00%
Miami
6.75% - 7.25%
6.75% - 7.25%
8.00% - 11.00%
Jacksonville
7.00% - 7.50%
7.25% - 7.75%
8.00% - 11.00%
Multihousing
Charlotte
7.00% - 7.50%
7.50% - 8.50%
9.50% - 10.00%
6.75% - 7.25%
7.25% - 8.00%
9.50% - 10.50%
6.25% - 6.75%
8.00% - 8.50%
9.25% - 10.25%
Office
Trend*
Trend*
Trend*
Power Centers Trend*

8.50% - 12.00%
7.00% - 7.50%
7.00% - 8.00%
17
Cap Rate Survey

August 2011
Retail | Central Region

Austin Chicago Cincinnati Cleveland Columbus Dallas Detroit houston Indianapolis Kansas City Minneapolis san Antonio st. Louis 6.00% - 7.25% 6.25% - 6.75% 6.75% - 7.25% 7.00% - 7.50% 6.75% - 7.25% 6.00% - 7.00% 7.50% - 8.00% 6.00% - 7.00% 6.75% - 7.25% 6.75% - 7.25% 6.25% - 6.75% 6.00% - 7.25% 6.75% - 7.25%
<< | >>
Class B neighborhood/ Community Power (Grocery Centers Trend* Anchored) neighborhood/ Community Power (Grocery Centers Trend* Anchored)
8.25% - 9.50% 8.00% - 8.50% 8.50% - 9.00% 8.75% - 9.25% 8.50% - 9.00% 7.50% - 8.50% 9.00% - 9.50% 7.50% - 8.50% 8.50% - 9.00% 8.50% - 9.00% 8.00% - 8.50% 7.75% - 9.00% 8.50% - 9.00% N/a I 9.25% - 10.25% 9.00% - 10.00% 9.50% - 10.50% 10.00% - 11.00% 9.50% - 10.50% 9.00% - 10.00% 10.50% - 12.00% 9.00% - 10.00% 9.50% - 10.50% 9.50% - 10.50% 9.00% - 10.00% 9.25% - 10.25% 9.50% - 10.50%
Class C
Office
Trend*
N/a N/a N/a N/a
Trend*
N/a N/a N/a N/a
Trend*
N/a I N/a N/a I I N/a I I

10.25% - 11.50% 9.50% - 11.00% 10.00% - 11.00% 10.00% - 12.00% 10.00% - 11.00% 9.50% - 11.00% 11.00% - 13.00% 9.50% - 11.00% 10.00% - 11.00% 10.00% - 11.00% 9.50% - 11.00% 10.25% - 11.50% 10.00% - 11.00% N/a I N/a N/a I I N/a I I
6.75% - 7.75% 6.75% - 7.25% 7.25% - 7.75% 7.50% - 8.00% 7.25% - 7.75% 6.50% - 7.25% 8.00% - 8.50% 6.50% - 7.25% 7.25% - 7.75% 7.25% - 7.75% 6.75% - 7.25% 7.00% - 7.75% 7.25% - 7.75%
N/a N/a N/a N/a I
8.00% - 9.25% 7.50% - 8.00% 8.00% - 8.50% 8.25% - 8.75% 8.00% - 8.50% 7.00% - 8.00% 8.50% - 9.00% 7.25% - 8.00% 8.00% - 8.50% 8.00% - 8.50% 7.50% - 8.00% 7.50% - 8.50% 8.00% - 8.50%
Multihousing
N/a N/a N/a I I
hotel
CAP RATe FOReCAsT* Class A neighborhood/ Community (Grocery Anchored)

Austin Chicago Cincinnati Cleveland Columbus Dallas Detroit houston Indianapolis Kansas City Minneapolis san Antonio st. Louis * Cap Rate Forecast represents the CBRe professionals opinion of where cap rates are likely to trend in 2nd half of 2011 in their local market.
Appendix
Power Centers
Class B neighborhood/ Community (Grocery Anchored)
Power Centers
Industrial
Retail
Class C neighborhood/ Community (Grocery Anchored)
Decrease Remain Flat Increase
Power Centers
18
Cap Rate Survey

August 2011
Retail | Western Region

Albuquerque Denver Las Vegas Los Angeles Orange County Phoenix Portland sacramento salt Lake City san Diego san Francisco seattle 6.50% - 7.00% 6.50% - 6.75% 6.50% - 7.00% 4.75% - 5.75% 4.75% - 5.75% 6.25% - 7.00% 5.75% - 6.50% 6.25% - 7.00% 6.50% - 7.00% 4.75% - 5.75% 4.75% - 5.75% 5.75% - 6.50%
<< | >>
Class B neighborhood/ Community Power (Grocery Centers Trend* Anchored) neighborhood/ Community Power (Grocery Centers Trend* Anchored)
8.00% - 10.00% 8.00% - 8.75% 8.00% - 10.00% 7.00% - 8.00% 7.00% - 8.00% 8.00% - 9.50% 7.25% - 8.50% 7.75% - 9.00% 8.00% - 10.00% 7.00% - 8.00% 7.00% - 8.00% 7.25% - 8.50% N/a N/a I 8.00% - 11.00% 9.00% - 10.00% 8.00% - 11.00% 7.00% - 8.50% 7.00% - 8.50% 9.00% - 11.50% 8.00% - 9.50% 8.00% - 11.00% 8.00% - 11.00% 7.00% - 8.50% 7.00% - 8.50% 8.00% - 9.50%
Class C
Office
Trend*
N/a N/a
Trend*
N/a N/a I
Trend*
N/a N/a

10.00% - 12.00% 9.00% - 10.00% 10.00% - 12.00% 8.50% - 9.50% 8.50% - 9.50% 10.00% - 12.00% 9.50% - 10.50% 10.00% - 12.00% 10.00% - 12.00% 8.50% - 9.50% 8.50% - 9.50% 9.50% - 10.50% N/a N/a N/a
7.00% - 8.00% 6.80% - 7.00% 7.00% - 8.00% 5.75% - 6.50% 5.75% - 6.50% 6.75% - 7.50% 6.25% - 7.00% 6.75% - 7.50% 7.00% - 8.00% 5.75% - 6.50% 5.75% - 6.50% 6.25% - 7.00%
N/a N/a N/a I I I
7.50% - 9.00% 7.75% - 8.25% 7.50% - 9.00% 6.75% - 7.50% 6.75% - 7.50% 7.50% - 8.50% 7.00% - 8.00% 7.00% - 8.50% 7.50% - 9.00% 6.75% - 7.50% 6.75% - 7.50% 7.00% - 7.50%
Retail
N/a
N/a
N/a
N/a
Industrial
CAP RATe FOReCAsT*
hotel

Albuquerque Denver Las Vegas Los Angeles Orange County Phoenix Portland sacramento salt Lake City san Diego san Francisco seattle
Power Centers
Class B neighborhood/ Community (Grocery Anchored)
Power Centers
Class C neighborhood/ Community (Grocery Anchored)
Power Centers
Appendix
Multihousing
Decrease Remain Flat Increase
19
Cap Rate Survey

August 2011
Industrial | Overview
<< | >>
Office
In the first half of 2011, transaction activity in the industrial sector was up 43% from a year earlier according to figures from Real Capital Analytics. Remarkably, this pace of growth is the slowest across all sectors of commercial property. The industrial sector was also bringing up the year at this time last year. Total transaction activity is still roughly only a third the level hit at the peak in 2007 while other sectors such as multihousing and retail are now at levels roughly half of that seen in 2007. These levels are not reflective of a lack of investor interest in the sector, instead reflecting a narrowing on interest towards particular types of industrial assets; modern distribution assets suitable for modern logistics support. This move towards investor demand for modern distribution assets can be seen in relative pricing across markets. There are a handful of markets where these types of assets are clustered with markets like Dallas, Chicago, New York / New Jersey and Los Angeles (Inland Empire) showing cap rates below 7% for the highest quality assets in the first half of 2011 according to the CBRE Cap Rate Survey. By contrast, major manufacturing markets in the Midwest that still face economic struggles saw cap rates for class A assets in excess of 8%. Select from the list below to access the current industrial cap rates and forecast.
Multihousing
Retail
Industrial Download a Complete Industrial Current Cap Rates Chart (PDF) Download a Complete Industrial Cap Rate Forecast Chart (PDF) hotel
Appendix
20
Cap Rate Survey

August 2011
Industrial | eastern Region

Class A stabilized Atlanta 6.50% - 7.00% 6.75% - 7.25% 6.50% - 7.00% 7.00% - 7.50% 7.00% - 7.50% 5.75% - 6.25% 7.75% - 8.25% 6.00% - 7.00% 7.50% - 8.00% 7.00% - 7.50% 7.50% - 8.00% 6.50% - 8.25% 6.50% - 7.25% 6.00% - 6.50% Baltimore Boston Charlotte Jacksonville Miami nashville new York/northern nJ** Orlando Philadelphia Pittsburgh Raleigh Tampa Washington, DC Trend* Value Add 7.00% - 7.50% 7.75% - 8.25% 7.00% - 8.00% 7.50% - 8.00% 8.50% - 9.00% 6.25% - 7.00% 8.25% - 8.50% 7.00% - 8.00% 8.50% - 9.00% 8.00% - 8.50% 8.00% - 8.50% 7.50% 7.00% - 7.50% 6.50% - 7.00% Trend* I stabilized 7.50% - 8.00% 7.50% - 8.25% 8.00% - 9.00% 8.00% - 8.50% 9.50% - 10.00% 6.25% - 7.00% 8.75% - 9.50% 7.00% - 7.75% 8.00% - 8.75% 7.75% - 8.50% 8.50% - 9.00% 7.50% - 9.00% 7.25% - 8.00% 7.25% - 7.50% Class B Trend* Value Add 8.00% - 8.50% 8.75% - 9.50% 8.50% - 9.50% 8.75% - 9.25% 10.00% - 11.00% 7.00% - 8.00% 9.50% - 10.00% 8.00% - 8.75% 10.00% 9.00% - 9.75% 9.00% - 9.50% 8.00% 8.00% - 8.50% 8.00% - 8.50% Trend* stabilized 9.00% - 10.00% 8.75% - 9.75% 9.00% - 10.00% 9.00% - 10.00% 12.00% - 13.00% 7.00% - 8.00% 9.50% - 10.00% 8.50% - 9.50% 9.00% - 9.75% 9.00% - 10.00% 10.00% - 10.50% N/a 9.00% - 9.50% 8.50% - 9.00% Class C Trend* I
<< | >>
Value Add 9.00% - 9.50% 9.75% - 10.75% 10.00% - 12.00% 9.50% - 10.50% 12.00% - 13.00% 8.00% - 9.50% 10.00% 9.50% - 10.50% 11.00% - 12.00% 10.00% - 11.00% 10.50% - 11.00% N/a 9.00% - 10.00% 9.50% - 10.00%
Trend* I N/a N/a
N/a N/a
Industrial
N/a
N/a
N/a
N/a
* Compared to 2nd half 2010 ** Compared to 2nd half 2010 New Jersey (central/north)
hotel
stabilized Atlanta
Class C Value Add

Remain Flat Increase
Appendix
Baltimore Boston Charlotte Jacksonville Miami nashville Orlando Philadelphia Pittsburgh Raleigh Tampa Washington, DC
*
N/a
N/a
Cap Rate Forecast represents the CBRe professionals opinion of where cap rates are likely to trend in 2nd half of 2011 in their local market.
Retail
Multihousing
Office
Decrease
21
Cap Rate Survey

August 2011
Industrial | Central Region

Class A stabilized Austin 7.25% - 8.25% 6.50% - 6.75% 7.00% - 8.00% 8.00% - 8.50% 7.25% - 8.00% 6.25% - 7.25% 8.00% - 8.25% 6.75% - 7.50% 7.50% 7.00% - 7.50% 6.50% - 7.25% 7.25% - 7.75% 7.75% - 8.25% Chicago Cincinnati Cleveland Columbus Dallas Detroit houston Indianapolis Kansas City Minneapolis san Antonio st. Louis Trend* I I N/a I Value Add 8.00% - 8.75% 6.75% - 7.00% 8.00% - 9.00% 8.50% - 9.00% 9.00% - 10.00% 7.00% - 8.00% N/a 7.50% - 8.50% 8.50% 7.50% - 7.75% 8.00% - 8.75% 7.75% - 8.25% 8.25% - 9.00% Trend* stabilized 7.75% - 8.75% 7.00% - 7.50% 8.00% - 9.00% 9.50% - 10.00% 9.00% - 11.00% 7.00% - 8.00% N/a 8.00% - 9.00% 9.00% 8.00% - 8.50% 7.75% - 8.50% 7.75% - 8.25% 8.25% - 9.00% Class B Trend* Value Add 8.50% - 9.25% 7.50% - 8.00% 9.00% - 10.00% 9.50% - 10.00% 10.00% - 12.00% 8.00% - 9.25% N/a 8.50% - 9.50% 10.00% 8.50% - 8.75% 9.25% - 10.00% 8.50 - 8.75% 9.00% - 9.75% Trend* stabilized 8.50% - 9.50% 9.00% - 9.50% 10.00% - 12.00% 8.75% - 9.25% 12.00% - 13.00% 8.00% - 9.50% N/a 9.00% - 10.50% 10.50% 9.00% - 10.00% 9.00% - 10.00% 9.25% - 10.00% 10.00% - 11.00% Class C Trend*
<< | >>
Value Add 8.75% - 10.00% 10.00% - 11.00% 10.50% - 12.50% 11.50% - 12.00% 12.00% - 13.00% 9.00% - 11.00% N/a 10.00% - 15.00% 11.00% 10.00% - 11.00% 11.00% - 12.00% 11.00% - 12.00% 11.00% - 15.00%
Trend* I N/a I I N/a I N/a I
N/a
N/a
N/a I
N/a
N/a
N/a
N/a
N/a
Industrial
CAP RATe FOReCAsT*
hotel
stabilized Austin Chicago Cincinnati Cleveland Columbus Dallas Detroit houston Indianapolis Kansas City Minneapolis san Antonio st. Louis
Decrease
Class C Value Add

Remain Flat Increase
Appendix
Retail
Multihousing
N/a
N/a
N/a
N/a
Office
N/a
22
Cap Rate Survey

August 2011
Industrial | Western Region

Class A stabilized Albuquerque N/a 7.00% - 7.50% 6.00% - 8.00% 4.75% - 5.75% 5.00% - 5.50% 6.50% - 7.00% 7.25% - 8.00% 7.50% 7.50% - 8.00% 6.00% - 6.50% 5.50% - 6.75% 6.25% - 7.00% Denver Las Vegas Los Angeles Orange County Phoenix Portland sacramento salt Lake City san Diego san Francisco seattle Trend* N/a Value Add N/a 7.50% - 8.25% 7.50% - 9.50% 5.25% - 6.25% 5.75% - 6.75% 7.00% - 7.50% 7.50% - 9.00% 9.00% 8.00% - 8.50% 6.50% - 7.00% 6.00% - 7.00% 6.75% - 7.25% Trend* N/a I stabilized 9.00% - 10.00% 8.00% - 8.50% 6.50% - 8.50% 6.50% - 7.00% 6.00% - 7.00% 7.00% - 7.50% 7.75% - 8.25% 8.50% 8.00% - 8.50% 6.50% - 7.00% 6.25% - 7.50% 6.50% - 7.25% Class B Trend* N/a Value Add N/a 8.25% - 8.75% 8.00% - 10.00% 6.50% - 7.50% 6.50% - 7.25% 7.50% - 8.00% 8.00% - 10.00% 9.50% 8.50% - 9.00% 7.00% - 7.50% 7.00% - 8.50% 7.75% - 8.25% Trend* N/a stabilized 9.50% - 10.00% 8.75% - 9.50% 9.00% - 12.00% 7.25% - 8.25% 7.00% - 8.00% 9.00% - 10.00% 8.50% - 9.50% 9.00% 9.00% - 9.50% 7.50% - 8.00% 8.00% - 10.00% 7.75% - 8.25% Class C Trend* N/a
<< | >>
Value Add N/a 9.00% - 10.00% 9.00% - 12.00% 8.00% - 8.50% 7.50% - 8.50% 10.00% - 12.00% 8.50% - 10.50% 11.00% 10.00% 8.00% - 8.50% 8.50% - 11.00% 8.25% - 9.00%
Trend* N/a I I I
Office
Industrial
Class A
CAP RATe FOReCAsT* Class B stabilized Value Add

N/a
Decrease

N/a Remain Flat Increase
hotel
stabilized
Albuquerque Denver Las Vegas Los Angeles
Value Add
N/a
Appendix
Orange County Phoenix Portland sacramento salt Lake City san Diego san Francisco seattle * Cap Rate Forecast represents the CBRe professionals opinion of where cap rates are likely to trend in 2nd half of 2011 in their local market.
Retail
Multihousing
23
Cap Rate Survey

August 2011
Hotels | Overview
<< | >>
The CBRE Cap Rate Survey provides information on the Hotel sector that is not really available elsewhere. With total transaction activity in the sector representing roughly 9% of annual activity across all commercial property sectors, there simply often are not enough transactions to develop reliable benchmarks of sales comparables. Still, transaction activity has grown quickly in 2011. Compared to the pace of activity seen in the first half of 2010, sales volume was up 147% in the first half of 2011 as the fundamental driver of hotel room demand was rising. While fears of a double-dip recession have become more present into the 3rd quarter of 2011, in the first half of the year the pace of business investment was rising and business travel was growing. The markets where investors are likely to face the lowest going-in cap rates today are those major centers of business activity which are also attractive to investors in the office sector. Stabilized hotel cap rates are lowest in markets like New York, Boston, San Francisco and Seattle with cap rate levels lower than 6% for the luxury segment. Select from the list below to access the current hotels cap rates and forecast.
Office
Multihousing
Retail
Industrial Download a Complete hotels Current Cap Rates Chart (PDF) Download a Complete hotels Cap Rate Forecast Chart (PDF) hotel
Appendix
24
Cap Rate Survey

August 2011
Hotels | National
Luxury
stabilized
Albuquerque 8.00% - 8.50% 7.00% - 7.50% 7.00% - 8.00% 7.75% - 8.75% 4.00% - 5.00% 8.00% - 9.00% 7.50% - 8.50% N/a 7.00% - 7.50% 7.00% - 7.50% 8.50% - 9.00% 7.50% - 9.00% N/a 6.00% - 8.50% 7.50% - 8.50% 5.50% - 6.00% 6.00% - 8.50% 8.00% - 9.00% 6.50% - 7.50% 5.50% - 7.00% N/a 6.50% - 7.50% 8.50% - 9.50% 7.00% - 8.00% 6.00% - 8.50% 5.00% - 6.00% 5.00% - 6.00% 7.50% - 9.00% 7.00% - 8.00%
<< | >>
Full service
Value Add** Trend*
8.25% - 8.75% 7.50% - 8.00% 7.50% - 8.50% 8.25% - 9.25% N/a 8.50% - 9.50% 7.75% - 8.75% N/a 7.25% - 7.75% 7.25% - 7.75% 9.25% - 10.00% N/A N/A I N/A N/A N/A I N/A N/A N/A N/A N/A N/A N/A N/A N/A I N/A
Trend*
N/A N/A N/A N/A I N/A N/A N/A I I N/A N/A N/A N/A N/A N/A N/A
stabilized Trend*
8.25% - 8.75% 7.50% - 8.00% 8.50% - 9.00% 8.00% - 9.00% 6.00% - 7.00% 8.50% - 9.50% 8.00% - 9.00% 9.00% - 10.00% 9.50% - 10.00% 7.25% - 7.75% 9.00% - 9.50% 8.50% - 11.00% 7.00% - 8.00% 7.00% - 9.00% 8.50% - 9.50% 6.00% - 6.75% 7.00% - 9.00% 8.50% - 9.50% 8.00% - 9.00% 7.50% - 8.00% 9.00% 11.00% 6.50% - 7.50% 9.00% - 10.00% 8.00% - 9.00% 7.00% - 9.00% 6.00% - 7.00% 5.50% - 6.50% 8.50% - 11.00% 7.50% - 8.50% N/A I N/A I N/A N/A N/A N/A
Value Add** Trend*

9.25% - 9.75% 8.00% - 8.50% 9.00% - 9.50% 8.50% - 9.50% 6.50% - 7.50% 9.00% - 10.00% 8.25% - 9.25% 9.50% - 10.50% 9.75% - 10.25% 8.25% - 8.75% 9.75% - 10.50% 12.00% 9.00% 7.00% - 10.00% 9.50% - 10.50% 10.00% 7.00% - 10.00% 9.00% - 10.50% 10.00% 8.25% - 9.00% 9.50% - 11.50% 7.00% - 8.50% 9.50% - 10.50% 8.00% - 10.00% 7.00% - 10.00% 8.00% - 10.00% 5.50% - 7.00% 12.00% 7.75% - 8.75% N/A I N/A I N/A I N/A I I N/A N/A N/A I N/A N/A N/A N/A N/A N/A N/A N/A
Office
Atlanta Austin Baltimore Boston
Multihousing
Charlotte Chicago Columbus Dallas Denver Jacksonville Kansas City Las Vegas Los Angeles Miami new York City Orange County Orlando Philadelphia Phoenix Pittsburgh Portland Raleigh san Antonio san Diego san Francisco seattle st. Louis Washington, DC
Retail
10.00% - 13.00% N/a 7.00% - 9.00% 9.00% - 10.00% 10.00% 7.00% - 9.00% 8.50% - 10.00% 10.00% 7.00% - 8.00% 8.00% - 11.00% 6.75% - 8.00% 9.00% - 10.00% 7.00% - 9.00% 7.00% - 9.00% 8.00% - 10.00% 6.00% - 7.00% 10.00% - 13.00% 7.25% - 8.25%
Industrial
hotel
I N/A N/A N/A N/A N/A N/A
Appendix
N/A
* Compared to 2nd Half 2010 ** value-add cap rates are based on a year 3 stabilized NOI divided by total cost
25
Cap Rate Survey

August 2011
Hotels | National
select service
stabilized
Albuquerque 8.50% - 9.00% 8.00% - 8.50% 8.75% - 9.25% 8.25% - 9.25% 6.00% - 7.00% 9.00% - 10.00% 8.00% - 9.00% 9.00% - 10.00% 8.50% - 9.00% 7.50% - 8.00% 9.50% - 10.00% 8.50% - 11.00% N/a 7.00% - 9.00% 9.00% - 10.00% 6.75% - 8.00% 7.00% - 9.00% 9.00% - 10.00% 7.50% - 8.50% 8.00% - 9.50% 10.00% - 14.00% 8.00% - 9.00% 9.50% - 10.50% 8.00% - 9.00% 7.00% - 9.00% 7.00% - 9.00% 6.25% - 7.25% 8.50% - 11.00% 7.50% - 8.50%
<< | >>
economy
stabilized Trend*
10.50% - 11.00% 9.00% - 10.00% 9.00% - 10.00% 10.75% 7.00% - 8.00% 10.50% N/a 10.50% - 12.00% 10.00% - 10.50% 9.50% - 10.00% 10.00% - 10.50% 10.00% - 12.00% N/a 8.00% - 10.00% 9.50% - 10.50% 8.00% - 9.00% 8.00% - 10.00% 9.50% - 10.50% 9.00% - 10.00% 10.00% - 11.00% 12.00% - 15.00% 9.75% - 11.50% 11.00% 9.50% - 11.00% 8.00% - 10.00% 8.00% - 10.00% 9.50% - 10.50% 10.00% - 12.00% 10.00% N/A I N/A I N/A N/A N/A N/A N/A N/A N/A I I I N/A N/A N/A N/A N/A N/A I I
Trend*
N/A I N/A N/A N/A I N/A I N/A N/A N/A
Value Add** Trend*

9.00% - 9.50% 8.50% - 9.00% 9.00% - 9.50% 8.75% - 9.75% 6.50% - 7.50% 9.50% - 10.50% 8.25% - 9.25% 9.50% - 10.50% 9.00% - 9.50% 8.00% - 8.50% 9.75% - 11.00% 12.00% N/a 7.00% - 10.00% 9.50% - 11.00% 10.00% 7.00% - 10.00% 9.50% - 11.00% 10.00% 9.50% - 10.50% 11.00% - 14.00% 8.50% - 10.00% 10.00% - 11.00% 8.00% - 10.00% 7.00% - 10.00% N/a 6.50% - 7.50% 12.00% 7.75% - 8.75% N/A N/A I N/A N/A N/A N/A N/A N/A I N/A N/A N/A N/A N/A N/A I N/A N/A I
Value Add** Trend*

11.50% - 11.75% 10.00% - 12.00% 9.00% - 10.00% 11.25% 8.00% - 9.00% 12.00% - 13.00% N/a 11.00% - 12.50% 10.50% - 11.50% 10.50% - 10.75% 11.00% - 12.00% 15.00% N/a 9.50% - 11.50% 10.00% - 12.00% 10.00% 9.50% - 11.50% 10.00% - 12.00% 10.00% 10.00% - 13.00% N/a 10.50% - 12.50% 12.50% - 13.50% 10.00% - 13.00% 9.50% - 11.50% N/a 11.00% - 13.00% 15.00% 10.25% N/A N/A I N/A N/A N/A N/A I I N/A N/A N/A I I N/A N/A N/A N/A N/A N/A N/A I N/A I
Office
Atlanta Austin Baltimore Boston
Multihousing
Charlotte Chicago Columbus Dallas Denver Jacksonville Kansas City Las Vegas Los Angeles Miami new York City Orange County Orlando Philadelphia Phoenix Pittsburgh Portland Raleigh san Antonio san Diego san Francisco seattle st. Louis Washington, DC
Retail
Industrial
hotel
I N/A N/A N/A N/A N/A N/A I N/A
Appendix
N/A I
* Compared to 2nd Half 2010 ** value-add cap rates are based on a year 3 stabilized NOI divided by total cost
26
Cap Rate Survey

August 2011
Hotels | National
<< | >>
Luxury stabilized Value Add
Full service stabilized Value Add
select service stabilized Value Add stabilized
economy Value Add
Office
Albuquerque Atlanta Austin Baltimore
Multihousing
Boston Charlotte Chicago Columbus Dallas Denver Jacksonville Kansas City Las Vegas
Retail
Industrial
Los Angeles Miami new York City Orange County Orlando Philadelphia Phoenix Pittsburgh Portland Raleigh san Antonio san Diego san Francisco seattle st. Louis Washington, DC Decrease Remain Flat Increase * Cap Rate Forecast represents the CBRe professionals opinion of where cap rates are likely to trend in 2nd half of 2011 in their local market.
hotel
Appendix
27
Cap Rate Survey

August 2011
Appendix | Definitions
Cap Rates (Office, Industrial, Retail, and hotel)
<< | >>
Cap rate ranges were best estimates provided by CBRe professionals based on recent trades in their local market as well as recent interaction Office with investors. the ranges represent those cap rates that a given property will trade at in this current market. Stabilized cap rates were based on in-place NOI for the latest year before adjusted for reserves. value-add cap rates were based on projected stabilized NOI. actual cap rates within each asset class will vary, occasionally outside of the stated ranges, based on asset/location quality and property-specific opportunities for Multihousing NOI enhancement. Cap Rates (Multihousing only) Retail Cap rate ranges are based on an estimated NOI derived by annualizing the last 90-days of revenue and subtracting what buyers would estimate as stabilized, year one expenses after adjustments for real estate taxes and reserves. actual cap rates within each asset class will vary, occasionally outside of the stated ranges, based on asset/location quality and property-specific opportunities for NOI enhancement. Industrial CBD the Central Business District of a major city hotel Class A Best-of-class product, attract larger, top quality tenants with 5- and 10-year leases, often newer construction Appendix Class B Older product, mostly 5-year leases, typically previously owned Class C typically an older building that offers space without amenities. attracts moderate to low income tenants.
28
Cap Rate Survey

August 2011
Appendix | Definitions (continued)

economy Hotel chains that are priced within the 20.0-40.0% percentile in terms of average annual room rates according to Smith travel Research
<< | >>
Office
Full service a hotel property with more than 150 rooms, room service, an on-site restaurant and a concierge service.
Multihousing
Luxury Hotel chains that are priced in the top 15.0% percentile in terms of average annual room rates according to Smith travel Research
Retail
neighborhood/Commercial Center (Grocery Anchored) enclosed retail center that is anchored by a supermarket or other type of grocery store. Can range from 150K SF-350K SF
Industrial
Power Center Open-air retail center comprised of larger, brand name tenants. Limited CRu space and typically 400K+ SF or in a node of that size
hotel
select service a hotel property with less than 150 rooms, no room service and no on-site restaurant or concierge service.
Appendix
stabilized Property a property that has an occupancy level at or above the local average under typical market conditions suburban Mainly residential area located within close proximity to a major city Value-Add Property an underperforming property that has an occupancy level below the local average under typical market conditions
29
888.707.3908 www.cbre.com/capitalmarkets
www.cbre.com/research www.cbre.com/valuation
CHRIS LUDEMAN
President CBRE Capital Markets
BRIAN SToFFERS
President CBRE Capital Markets
THoMAS MCDoNNELL
President CBRE Valulation and Advisory Services
ASIEH MANSoUR
Head of Research, Americas CBRE Research
JIM CoSTELLo
Vice President, Investment Strategy Services CBRE Econometric Advisors
RAY WoNG
Executive Director, Americas CBRE Research
2011 CB Richard Ellis, Inc. The information above has been obtained from sources believed reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy and completeness. Any projections, opinions, assumptions or estimates used are for example only a and do not represent the current or future performance of the property. The value of this transaction to you depends on tax and other factors which should be evaluated by your tax, financial and legal advisors. You and your advisors should conduct a careful, independent investigation of the property to determine to your satisfaction the suitability of the property for your needs.

CBRE Cap Rate Survey August 2011

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CBRE Cap Rate Survey August 2011

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CBRE Cap Rate SuRvey

Cap Rate Survey

In ThIs Issue: Overview

United States Overview

Cap Rate Survey

In ThIs Issue: Overview

United States Overview (continued)

Cap Rate Survey

In ThIs Issue: Overview

United States Overview (continued)

Cap Rate Survey

In ThIs Issue: Overview

Download a Complete Office CBD Cap Rate Forecast Chart (PDF)

Download a Complete Office suburban Cap Rate Forecast Chart (PDF)

Cap Rate Survey

In ThIs Issue: Overview

Office CBD | eastern Region

Class B Value Add Trend*

Class C Value Add Trend*

Value Add Trend*

* Compared to 2nd Half 2010

7.50% - 8.00% 7.50% - 8.50%

Cap Rate Survey

In ThIs Issue: Overview

Office CBD | Central Region

Class B Value Add Trend*

Class C Value Add Trend*

Value Add Trend*

* Compared to 2nd Half 2010

CAP RATe FOReCAsT*

Class A stabilized Value Add

6.50% - 6.75% 9.00% - 10.00%

Class B stabilized Value Add

Class C stabilized Value Add

Cap Rate Survey

In ThIs Issue: Overview

Office CBD | Western Region

Class B Value Add Trend*

Class C Value Add Trend*

Value Add Trend*

* Compared to 2nd Half 2010

Cap Rate Survey

In ThIs Issue: Overview

Office Suburban | eastern Region

Class B Value Add Trend*

Class C Value Add Trend*

Value Add Trend*

nashville Orlando Philadelphia Pittsburgh Raleigh Tampa Washington, DC

* Compared to 2nd Half 2010

CAP RATe FOReCAsT*

Class A stabilized Value Add stabilized

8.75% - 9.25% 7.50% - 8.50%

Class B Value Add stabilized

Class C Value Add

Cap Rate Survey

In ThIs Issue: Overview

Office Suburban | Central Region

Class B Value Add Trend*

Class C Value Add Trend*

Value Add Trend*

* Compared to 2nd Half 2010

8.50% - 10.00% 8.50% - 9.00%

Class B stabilized Value Add