Historically garden apartments, usually found in the suburbs, have traded at a higher cap rate than mid/high-rise buildings, which typically can be found in urban areas.
The spread between the two categories began narrowing throughout 2022 and by March 2023, it became official: the two had converged at 5.1%.
For real estate investors this represents a buying opportunity if they are bold enough to make a bet on U.S. cities, says Aaron Jodka, Colliers' Research Director of Capital Markets. So far, investors haven't made this pivot yet, he tells GlobeSt.com, "but it is something we are closely monitoring."
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
