US Metropolitan Areas with Highest Cap Rate (real estate, brokers)

[bellafinzi]

https://reventureconsulting.com/

Source is revenue consulting app.

US Metropolitan Areas over 500,000 in population with the highest Cap Rate percentage.

1) Winston Salem 7.5
2) Toledo 7.3
3) Pittsburgh 7.2
4) Columbia SC 7.1
5) Augusta Georgia 7.0
6) Little Rock 6.9
7) El Paso 6.9
8) Scranton 6.9
9) Greensboro 6.9
10) Cape coral 6.8
11) Birmingham 6.7
12) McAllen Texas 6.6
13) Greenville SC 6.5
14) Chattanooga 6.5
15) Youngstown Ohio 6.5
16) Myrtle Beach 6.4
17) Oklahoma City 6.4
18) Tulsa Oklahoma 6.4
19) Pensacola 6.4
20) Tampa 6.3
21) Knoxville 6.3
22) Syracuse, NY 6.2
23) Cleveland 6.2
24) Indianapolis 6.2
25) Deltona 6.2
26) Huntsville 6.1
27) Chicago 6.1
28) North Port 5.9
29) Akron Ohio 5.9
30) Fresno 5.9
31) Atlanta 5.8
32) St Louis 5.8
33) Detroit 5.8
34) Louisville 5.8
35) Cincinnati 5.7
36) Bakersfield 5.6
37) Charlotte 5.5
38) Charleston SC 5.5
39) Lexington 5.4
40) Virginia Beach 5.4
41) Jacksonville FL 5.3
42) Fayetteville Arkansas 5.2
43) Allentown 5.2
44) Philadelphia 5.2
45) New York 5.1
46) Springfield Massachusetts 5.1
47) Albuquerque 5.1
48) Las Vegas 5.1
49) Lansing 5.1
50) Nashville 5.0
51) Houston 5.0
52) Tucson 5.0
53) Baltimore 5.0

[paytonc]

For those wondering, a "cap rate" (capitalization rate) is comparable to the yield on a stock or bond investment. It's the annual cash return on an investment into commercial real estate, typically expressed as a percentage.

So we can presume that someone who recently bought a $1,000,000 building in Indianapolis (cap rate of 6.2, per above) will receive 6.2% of that, or $62,000, in net income per year.

Perhaps counter-intuitively, a higher cap rate means that prices are relatively low in that market (and there are fewer buyers), whereas a lower cap rate means that prices are relatively high. The difference doesn't look like a lot, but consider that the same $62,000 in income you'd get from buying a $1M building in Indianapolis could be had by buying a $826,667 building in Winston-Salem, or a $1,240,000 building in Baltimore or Tucson -- a 50% spread between cities.

Lots of commercial real estate brokers do cap rate surveys; I've not heard of this company, but CBRE and RERC have long histories of such surveys.