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Cap rates and commercial property prices

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Listed:
  • Bart Hobijn
  • John Krainer
  • David Lang

Abstract

Commercial real estate capitalization rates have been found to be good indicators of expected returns in commercial properties. Recent declines in these cap rates appear to be signaling a commercial real estate rebound, indicating improved investor expectations of price growth in the market. Movements in national cap rates are the predominant drivers of changes in cap rates in local markets. Therefore, the anticipated commercial real estate rebound is likely to be widespread across many metropolitan areas.

Suggested Citation

  • Bart Hobijn & John Krainer & David Lang, 2011. "Cap rates and commercial property prices," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue sep19.
    • Handle: RePEc:fip:fedfel:y:2011:i:sep19:n:2011-29
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    References listed on IDEAS

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    2. John Y. Campbell, Robert J. Shiller, 1988. "The Dividend-Price Ratio and Expectations of Future Dividends and Discount Factors," The Review of Financial Studies, Society for Financial Studies, vol. 1(3), pages 195-228.
    3. Eric Ghysels & Alberto Plazzi & Rossen Valkanov, 2007. "Valuation in US Commercial Real Estate," European Financial Management, European Financial Management Association, vol. 13(3), pages 472-497, June.
    Full references (including those not matched with items on IDEAS)

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