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Denver Cap Rates Falling

DENVER-Cap Rates for retail real estate sales are expected to keep falling, says a top executive with Frederick Ross Co.

By John Rebchook | Updated on January 04, 2006

DENVER-Investors paid about $1.8 billion for retail projects in the Denver since 2000, according to a recent report by Frank Griffin, a senior director at the Frederick Ross Co., a broker who represents both tenants and landlords, conducts sales, site acquisitions and surplus property disposition. Since 2000, average cap rates have declined in the Denver area from almost 10% to around 8%, and the average per sf price has increased from about $85 to $135, Griffin notes.

Of course, some properties sell for much more. “Remember, these numbers represent averages–location, property type and tenant mix can significantly impact these figures,” Griffin says. “Cherry Creek has buildings trading for $300 to $500 per sf with cap rates around 7%. Triple-net leased properties with quality credit tenants are selling for cap rates closer to 6%.”

Cap rate, Griffin notes, have fallen due to lower interest rates, investor’s lack of confidence in alternative investments, and a shortage of available properties and ample money to invest.

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