CoStar has a rundown of the latest Korpacz Real Estate Investor Survey and combines that with their own data to conclude that cap rates--already up--will continue to rise over the next 12 months.
More than 100 institutional and private investors surveyed for the Korpacz report predicted that cap rates will rise by an average of nearly 50 basis points over the next six months across virtually all property categories and most metro markets. The largest projected gainers are power centers (74.4 bp) suburban office (65.6 bp) and regional malls (65 bp), with their generally lower barriers to market entry. Although cap rates appear to have dropped in the Houston and Washington, D.C. office markets in the first quarter, Korpacz respondents expect them to rise a whopping 118 points and 25 points, respectively, over the next six months.
"The ongoing problems tied to both the U.S. economic recession and the financial crisis are making it very difficult for investors to sidestep value losses across all property types," said Susan Smith, director in the PricewaterhouseCoopers real estate sector services group and editor of the survey. "It's clear that many investors are more in survival mode than in acquisition mode, even though buying opportunities are expected to increase in the coming months."
The 100-page survey provides a window into the thought processes of the investors in REITs, pension funds, private equity firms and insurance and mortgage companies on the economy, property valuation, cap rates and property-level performance of national and local markets.