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Multifamily Cap Rates Hold Firm in First Half of the Year

Multifamily Cap Rates

Digested from “Millennials, baby boomers drive multifamily cap rates hike” in Real Estate Weekly (10/7/16) 

Although investment activity in the multifamily sector slowed in the first half of 2016, capitalization rates held firm, according to research from CBRE Group, Inc.

“Although modest, multifamily properties reported widespread cap rate decreases among the different categories and have the lowest overall cap rates of any major property type,” reports Real Estate Weekly. “Cap rates edged downward for tertiary markets, indicating that investors are still willing to accept higher levels of risk, in terms of both quality and location.”

Many California metro areas had strong cap rate averages in the first half of 2016: San Francisco and Los Angeles had the lowest cap rate averages, at about 3.75 percent, and San Jose, San Diego and Orange County had cap rate averages at or below 4 percent.

CBRE expects most primary multifamily markets—76 percent—to see no cap rate change in the second half of 2016, Real Estate Weekly reports.

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