The capitalization rate of an investment may be calculated by dividing the investment’s net operating income (NOI) by the current market value of the property, where NOI is the annual return on the property less all operating costs. The formula for calculating the capitalization rate can be expressed in the following way: Net Operating Income / Current Market Value = Capitalization Rate
The capitalization rate is expressed as a percentage and is also often known as the “cap rate.”
There has been a huge increase in the mean retail cap rate since the last quarter of 2015, with a jump in 60 basis points since then. This is only the start of the rebuilding that has been occurring in the sector since the halfway point in 2014. View the complete details at Joseph Passerino’s Blog.
The office cap rate has seen a slight decline in the first quarter of 2016 by 20 basis points. However, it is still 30 points more than it was from last year, when the mean cap rate was at a post-recession low. For more information, check out Joseph Passerino’s Blog.