The commercial real estate market, like much of the economy, is in a holding pattern right now. But some pockets around the country are showing evidence of a rebound, and Seattle is one of the cities stirring up cautious optimism. Consider these metrics. Seattle’s nonfarm employment rate has risen more than 2 percent year-over-year in the first three months of 2012. In addition, Seattle-based Amazon.com is leading a boom in demand for downtown Seattle office space, and CBD apartment vacancy rates have fallen to 3.5 percent.
All of these events have contributed to Seattle’s falling cap rates for institutional investments, which stood at 5.75 percent for CBD office properties and 4.5 percent for CBD multifamily properties in the first quarter of 2012, which we’ve documented in IRR’s Viewpoint reports.
I further explored Seattle’s cap rate trends in a presentation for the Seattle Mortgage Bankers Association titled “Institutional Cap Rates: How Low Can They Go?” A lot of ground was covered in that presentation, so I wanted to share it with you on our blog for more insight. Take a look below at the video version I recorded for a snapshot of Seattle’s institutional cap rates.