A Pessimistic Belief Eviscerated
Before you accuse me of “drinking the Kool-Aid,” i.e., having a point of view about cap rates that doesn’t hold up under critical examination, let me assure you that by the time you finish reading this blog post you will at the very least understand my point of view. You might even be convinced I’m right! So here goes:
I recently attended the Sperry Van Ness Economic Forum in Salem, Oregon. One of the speakers was Jim Costello of Real Capital Analytics. As the name implies, Real Capital Analytics is a data and analytics firm that focuses exclusively on the investment market for commercial real estate.
About half way through Mr. Costello’s presentation he showed us a chart that made me almost get out of my chair with excitement. It was if a commonly held pessimistic belief was being eviscerated before my very eyes. Ask almost anyone in commercial real estate these days about cap rates and you will hear concern about cap rates being too low, blah, blah, blah… Am I right? Of course I’m right.
The chart he showed that got me all excited is shown below: (more…)