WHERE ARE PRICES GOING?
After showing signs of stabilization, pricing on retail properties jumped in the third quarter and cap rates fell. Average price per square foot on retail assets — which had stayed in a tight range of $142 to $156 per square foot for seven quarters — jumped to $168 in the third quarter. Meanwhile cap rates, which had hovered in the 7 percent range, dipped to 6.7 percent.
RETAIL RISES AGAIN
Retail REITs rode a late-year rally and ended 2006 on a high note. While total returns didn't match 2003 or 2004 levels, they were more than twice as high as 2005.
|Composite REIT Index||1994||1995||1996||1997||1998||1999||2000||2001||2002||2003||2004||2005||2006|
After years of record-low levels, interest rates are creeping back to pre-9/11 levels. Recently, an inverted yield curve has kicked in with long-term rates trading less than short-term rates.
|1-MO. LIBOR||3-MO. TREAS.||1-YR. TREAS.||3-YR. TREAS.||5-YR. TREAS.||10-YR. TREAS.|
|Source: Federal Reserve Board|