Below is our estimate of the Cap Rate for different property types (Single-Family, Multi-Family, Retail, Industrial, Office, and Specialty) for the 100 largest cities in the United States. The cities are ranked by population size from largest to smallest. We estimate the Cap Rate based on properties available for sale during a specific period. The cap rate can vary depending on properties being offered at the market during that period and the sample of properties considered.
Capitalization rate (Cap Rate) is a formula used to estimate the potential return an investor will have on a real estate property. The formula calculates the ratio of the properties Net Operating Income (NOI) to property asset value. The NOI value is usually the actual NOI of the property over the period of one year. The amount used for the property’s asset value is often the asking sales price for the property or the purchase price the investor is expecting to pay for the property. To learn more visit, What is Cap Rate?
We classified the properties into three Classes, Class A, B, and C. There is no one specific definition of what qualifies a property as Class A, B or C. But for our cap rate table you can think of property Cass A as being properties with the highest quality, in the best location, or the newest conditions (recently renovated). Properties Class C are older properties, in less desirable locations, that can potentially require extensive renovation. Properties in Class B are between Class A and C, where the properties are not the newest, don't have the highest quality, or are in a desirable location compared to Class A properties. There can be different combinations of these scenarios where a lower quality property may be located in a highly desirable area, or where a property is in a new condition or has high quality and infrastructure but is in a less desirable location.
Below are the types of properties we include in each of the categories of real estate assets.
Multi-Family real estate assets are residential properties comprised of multiple separate housing units within the same building or a complex. Although duplex, triplex and fourplex are multifamily units, for our multi-family category, we include properties with more than four residential units.
Retail real estate assets include grocery stores, pharmacy stores, drug stores, supermarket stores, convenience stores, corner stores, restaurants, service stations, gas stations, retail gallery, free-standing retail buildings, freestanding restaurants and fast-food restaurants, bars, bank buildings, coffee shops, showrooms, storefront, daycare facility, and other retail establishments.
Industrial real estate assets include distribution centers, light industry, heavy industry, manufacturing facilities, office and industrial building, R&D facilities, flex facilities, warehouses, distribution and bulk-distribution centers, and other industrial type properties.
Office real estate assets include single and multi-tenant office buildings, corporate office buildings, office malls, industrial and campus office parks, medical and healthcare offices, office and storefront retail, loft, and creative office space, live and work unit and other office type properties.
Specialty real estate assets include amusement park, assisted living, baseball field and other sport centers, car wash, casino, congregate senior housing, continuing care, golf range, horse stables, hospital, rehabilitation center, marina, parking, religious facility, schools and university, self-storage, skilled nursing facility, racetrack, retirement community, skating rink, swimming pool, theater, and concert hall.
The table below is updated frequently; last update happened on 2024-03-31
Last updated: 2024-03-31 - v1.1