In today’s Daily Data Discussion post let’s shift gears back the world of multifamily, and start a two day survey of the highest and lowest Class B multifamily cap rates around the nation. 

Cap rates, even with their obvious limitations in terms of what they can tell about a project and market, seem to be high on the list of multifamily metrics of interest among emerging market investors.  We agree whole heartedly with those who opine and argue that using cap rates to compare different properties in different markets is not a valid exercise, though cap rates are onf of the many multifamily metrics we track and it is interesting to use the data to compare and rank markets. 

For sake of discussion (and because we always get a few emails asking to clarify) we’re defining cap rate as the NOI – BDS divided by the current market value of the asset.  Multifamily cap rates were the topic of the multifamily feature article in a recent issue of The Emerging Market Report; email us if you’d like to order a back issue. 

Here are the markets in our database as of today with the lowest class B multifamily cap rates in the nation –

1.  Sarasota, FL  3.5%
2.  Dayton, OH   3.5%
3.  Naples, FL   4.0%
4.  Vallejo, CA   4.0%
5.  Riverside, CA  4.0%

Database Average:  6.0%
Database Median:  6.0%

Tomorrow we’ll take at look at the markets around the nation with the highest class B multifamily cap rates. 

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