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REAL ESTATE REPORT 

The National Real Estate Authority 

WINTER 2012 | VOL 40 | NO 4 

As the World 

Turns from Fear 

to Caution 

RERC® | Addressing the research needs of real estate professionals since 1931.

RERC © REAL ESTATE REPORT - THE NATIONAL REAL ESTATE AUTHORITY 

Letter from the Chairman 

ii WWW.RERC.COM 

February 2012 

Dear Readers, 

WINTER 2012 | VOL 40 | NO 4 

Although much uncertainty remains in the economy and the investment environment, the overall view 

is that things are finally improving, and over time, the playing field for investments will eventually level 

out. In fact, as demonstrated in this issue of the RERC Real Estate Report, As the World Turns from Fear to 

Caution, the gap between the discipline and availability of capital is narrowing. Further, we are already 

seeing that our institutional investment survey respondents have increased their ratings for stocks and 

bonds while their ratings for commercial real estate and cash, which represent less risky investments in 

difficult times, are down a little. We expect that commercial real estate, as a relatively safe investment, 

may become slightly less attractive (or maybe less necessary), among investors, especially if stock market 

returns become more lucrative and volatility remains somewhat less pronounced. As such, investor 

behavior appears to be turning from fear to caution, as the cycle continues. 

As another important tool to understanding how commercial real estate fares in the investment world, 

we would also encourage you to take a look at our newly released annual forecast report, Expectations & 

Market Realities in Real Estate 2012—New Foundations in an Uncertain World, available free to research subscribers 

through your membership to the RERC DataCenter or through the RERC online store at www. 

rerc.com. This year RERC’s report partners were Deloitte and the National Association of REALTORS®, and 

we believe you will find the insight and analysis of interest, as you look to commercial real estate as a 

foundation for investing in this uncertain world. 

We would also like to thank our clients, colleagues, and the hundreds of commercial real estate professionals 

who share their knowledge, experience, and views via RERC’s investment surveys each quarter. 

As always, we appreciate your insights, along with the time you take to share your information, as we 

compile, analyze, interpret, and report the results in the RERC Real Estate Report. 

Sincerely, 

Kenneth P. Riggs, Jr. 

Chairman & President 

Real Estate Research Corporation 

riggs@rerc.com 

312.587.1900 

© 2012 REAL ESTATE RESEARCH CORPORATION. ALL RIGHTS RESERVED.


T H E N AT I O N A L R E A L E S TAT E AU T H O R I T Y | W I N T E R 2012 | V O L 40 | NO 4 

© 2012 Real Estate Research Corporation. All rights reserved. Data and analysis herein may not be copied or transmitted in any form without express written consent of RERC.


IN THIS VOLUME 

1 RERC’S NATIONAL OVERVIEW 

Investment Environment .....................................................................................................................2-4 

How Is Commercial Real Estate Affected? .................................................................................5-8 

Summary .........................................................................................................................................................11 

Risk-Adjusted Return Analysis ......................................................................................................14-15 

Snapshot of Real Estate Space and Market Performance ..................................................16 

Economic Trends Charts ................................................................................................................. 17-18 

19 PROPERTY TYPE OVERVIEW 

Office, Industrial, Retail, Apartment, and Hotel Sectors 

25 INSTITUTIONAL ANALYSIS & REGIONAL CRITERIA 

Institutional Pre-Tax Yield Analysis .................................................................................................. 25 

Institutional Going-In Capitalization Rate Analysis ............................................................... 26 

Institutional Terminal Capitalization Rate Analysis ................................................................ 26 

Regional Investment Criteria (Tiers 1-3) .................................................................................27-29 

30 REAL ESTATE EQUITY OVERVIEW 

Survey of Mortgage Quotes – John B. Levy & Company, Inc. .........................................31 

32 EXECUTIVE SUMMARY TO EXPECTATIONS AND MARKET REALITIES IN 

REAL ESTATE 2012 - New Foundations in an Uncertain World 

36 METROPOLITAN INVESTMENT CRITERIA 

Survey and RERC Investment Criteria for 48 Major U.S. Markets 

61 SURVEY RESPONDENTS - WINTER 2012 

66 RERC SCOPE AND METHODOLOGY 

iv WWW.RERC.COM 

WINTER 2012 | VOL 40 | NO 4 

RERC EDITORIAL STAFF 

Publisher 


CFA, CRE, FRICS, MAI, CCIM 

Lead Analyst 

Brian Velky, CFA 

Research Analysts 

Cliff Carlson Kyle Corcoran 

Charles Gohr Adam Klassen 

Lindsey Kuhlmann Greg Philipp 

Meredith Steffen Ye Thway 

Morgan Westpfahl 

Research Assistant 

Donald Guarino 

Editor-in-Chief 

Barb Bush 

Data Management 

Ben Neil 

Alan Iroff 

Michael Potratz 

Daniel Warner 

Layout & Design 

Jeff Carr 

Editorial and Production 

Terri Cotter 

Nicole Hardy 

RERC Senior Leadership 

Richard A. Hanson, Chief Executive Officer 

Del H. Kendall, CRE, MAI 

Donald A. Burns, CRE, FRICS, MAI 

Kent D. Steele, CRE, FRICS, MAI 

William L. Corbin, MAI 

Steven W. Thompson, MAI 

The RERC Real Estate Report is published four times a year by: Real Estate Research Corporation, 205 North Michigan Ave., Suite 2200, Chicago, IL 60601. Copyright © 2012 by Real Estate 

Research Corporation. All rights reserved. No part of this publication may be reproduced in any form, by microfilm, xerography, electronically, or otherwise, or incorporated into any information 

retrieval system, without the written permission of the copyright owner. 

Send subscription requests or address changes to Real Estate Research Corporation, Attention: Publications, 99 East Bremer Ave., Waverly, IA 50677, or call (319) 352-1500. Single copies 

and back issues, if available, are $225 regularly for hard copy and $200 for an electronic version (PDF). An annual subscription is $395 for the electronic version and $500 for a hard copy 

subscription. All are available at www.rerc.com. This publication is designed to provide accurate information in regard to the subject matter covered. It is sold with the understanding that 

the publisher is not engaged in rendering legal or accounting services. The publisher advises that no statement in this issue is to be construed as a recommendation to make any real estate 

investment or to buy or sell any security or as investment advice. The examples contained in the publication are intended for use as background on the real estate industry as a whole, not as 

support for any particular real estate investment or security. Although the RERC Real Estate Report uses only sources that it deems reliable and accurate, Real Estate Research Corporation 

does not warrant the accuracy of the information contained herein. 


WINTER 2012 | VOL 40 | NO 4 

RERC’S NATIONAL OVERVIEW 

AS THE WORLD TURNS FROM FEAR TO 

CAUTION 

As the year 2012 gets underway and we try to move beyond some of 

the major economic difficulties of the past year—the catastrophic 

tsunami and nuclear disaster in Japan, the first-ever downgrading 

of our nation’s credit rating to AA+, and the record high national 

debt level, to name a few—it is clear that significant challenges 

remain for our nation and the world. The sovereign debt situation 

in Europe has turned into a full-blown crisis with Standard & Poor’s 

(S&P) downgrading the credit ratings of multiple nations, including 

Italy, Spain, and France. The geopolitical issues in the Middle East 

seem to be intensifying. The U.S. is looking at another year with a 

deficit of more than $1 trillion, and our housing market appears to 

still be in decline. Job growth has started to pick up, but not fast 

enough for the 13.7 million people still unemployed. 

Even so, respondents to Real Estate Research Corporation’s (RERC’s) 

investment survey seem to be slightly more optimistic as they 

look to the future. Although it is an election year and most survey 

respondents expect the government to sit on its hands for most of 

the year, there are strong signs that the economic recovery in the 

U.S. continues. Gross domestic product (GDP) grew by 2.8 percent 

in fourth quarter 2011, the fastest pace in a year and a half. The 

unemployment rate began declining during the last few months 

of the year, and closed out December at 8.5 percent and at 8.9 percent 

for the year. Manufacturing growth continues, and although 

holiday sales were disappointing for many stores, at least retail 

sales growth was positive as the year came to an end. 

In addition, we are starting to see some stamina in the stock market 

as investors test the waters. Despite the tendency to sink every 

time a new economic release or earnings statement does not 

meet expectations, the volatility in the stock market is nowhere 

near what we experienced last summer, and recently the major 

index readings have been creeping upward. Although we have all 

been fooled before, it seems like there is some momentum behind 

the numbers this time. 

The question is, will we see the same momentum for commercial 

real estate, as investors move through the investment behavior 

cycle? Will strategies finally start to move beyond the core or coreplus 

variety as the investment world turns from fear to caution? 

© 2012 REAL ESTATE RESEARCH CORPORATION. ALL RIGHTS RESERVED. 


WWW.RERC.COM 1


INVESTMENT ENVIRONMENT 

Momentum Increases in Fourth Quarter 

While the economy grew only 1.7 percent overall in 2011, much 

slower than the 3.0-percent growth in 2010, the pace did pick up 

in fourth quarter 2011, growing at an annual rate of 2.8 percent, 

according to the Commerce Department. This was the highest 

quarterly growth rate in a year and a half. The fear is that the 

momentum will taper off, however, since $56 billion of the increase 

in fourth quarter was due to the increase in business inventories. 

The view that the increase was mostly due to the focus on rebuilding 

inventories was substantiated somewhat with the New Orders 

Index, which increased slightly to 57.6 in December 2011, and was 

the third consecutive month of growth after three months of contraction, 

according to the Institute for Supply Management’s (ISM’s) 

most recent Manufacturing ISM Report on Business. However, it is 

also important to note that the December 2011 Purchasing Managers’ 

Index (PMI) reading was 53.9 percent, up 1.2 percent from 

November’s reading of 52.7 percent, and was the 29th consecutive 

month of increases, indicating a longer-term trend of expansion in 

the manufacturing sector. 

The Commerce Department further reported that consumer 

spending rose 2.0 percent in fourth quarter 2011, compared with 

1.7 percent in third quarter. However, business spending declined 

greatly from the previous quarter, as business investment grew 

only 1.7 percent in fourth quarter compared to 15.7 percent in third 

quarter. Federal, state, and local government spending declined 

by 4.6 percent. 

At their Jan. 25, 2012 meeting, the Federal Reserve lowered their 

growth projections for the U.S. economy, estimating that GDP will 

expand between 2.2 percent to 2.7 percent in 2012, and noted that 

the economy still faces significant risks. Other organizations have 

offered lower projections for U.S. growth as well, with the Organisation 

for Economic Co-operation and Development (OECD) stating 

that the U.S. will grow only 2 percent in 2012. The International 

2 WWW.RERC.COM 

WINTER 2012 | VOL 40 | NO 4 

Monetary Fund (IMF) expects the U.S. to expand by only 1.5 percent 

on average in 2012 and 2013. 

“The national economy will continue to be volatile. 

2012 is an election year, which will continue to drive 

uncertainty. Europe’s situation will also drive volatility.” 

- A Leading State Pension System 

Federal Reserve Extends Duration of Low Short-Term Rates 

Citing the weakness in the economy, the Federal Reserve committed 

to keeping short-term interest rates at their present low rate “at 

least through late 2014.” Their goal in keeping short-term rates low 

for an extended period, and communicating their intent to do this, 

is to encourage long-term rates to fall, thereby spurring spending, 

investment, and growth. 

According to Chairman Ben Bernanke, although the economy has 

shown signs of recent improvement, the Federal Reserve is worried 

about strains in the global financial markets, still-elevated unemployment, 

and slowing business investment. In addition, “Operation 

Twist,” whereby the Federal Reserve has been increasing its 

share of long-maturing Treasurys, continues. As further evidence 

of the fragility of the economy, the Federal Reserve noted that “if 

the recovery continues to be modest,” it could institute another 

round of bond-buying, which would also help to drive down longterm 

rates to encourage investment. 

What Happens in Europe May Not Stay in Europe 

Christine Lagarde, managing director of the IMF, issued a dire warning 

in her Jan. 23, 2012 speech in Germany, when she urged European 

nations to act quickly to avoid returning to a “1930’s-like situation.” 

A key part of the suggested solution is for European nations 

to increase the size of the debt-crisis firewall, which is needed 

to bail out increasing numbers of euro-zone countries besides 


WINTER 2012 | VOL 40 | NO 4 

Greece. With the high public and private debt hurting economic 

prospects in most European nations, the risk of recession remains 

high. In addition, recent euro-zone data indicate that consumer 

spending in Germany and France, the area’s strongest economies, 

dropped significantly in December 2011, while unemployment 

rose. All advanced economies have already been affected by having 

their growth forecasts reduced, but if the situation in Europe 

worsens, a recession in Europe may extend to the U.S. 

The U.S. debt continues to skyrocket as well, and is approaching 

$15.3 trillion, according to the Treasury Department (Congress 

recently raised the debt ceiling to $16.4 trillion, expected to be 

reached in late 2012). In addition, according to the Congressional 

Budget Office’s (CBO’s) semi-annual report issued on Jan. 31, 2012, 

the federal budget deficit is expected to top $1 trillion for the 

fourth consecutive year in 2012. Further, if the steep spending cuts, 

along with the higher taxes that are scheduled to go into effect 

at the end of 2012, go forward, the U.S. will usher in its own brand 

of austerity, with GDP expected to grow only 1.1 percent in 2013, 

according to CBO projections. 

“It will be a long time yet before the economy stabilizes. A 

resolution for the European debt crisis needs to be approved, 

the U.S. government needs to start providing solutions for 

its own debt and budget deficits, and the U.S. government 

needs to signal to the private markets that they can move 

forward by providing regulation solutions/answers.” 

- One of the Nation’s Top Property Management 

Companies 

Unemployment Inching Down 

To everyone’s relief, employment growth finally began to improve 

in fourth quarter 2011, and by December, the unemployment rate 

declined to 8.5 percent, according to the Bureau of Labor Statistics 

(BLS), with job gains in transportation and warehousing, retail 

trade, manufacturing, mining, healthcare, and leisure and hospitality 

services. Total nonfarm employment increased by 200,000 jobs 

in December, following increases of 100,000 jobs in November and 

112,000 jobs in October. 

For all of 2011, the unemployment rate was 8.9 percent, and over 

the past 12 months, nonfarm payroll employment rose by 1.6 million. 

However, according to the BLS, at year-end 2011, approximately 

13.7 million people remained unemployed and the employment/ 

population ratio declined to 58.5 percent. Further, the CBO’s recent 

report projected that the unemployment rate will remain above 8 

percent in 2012 and 2013. 

The jobless rate also fell in 37 states and Washington, D.C. in December 

2011. At 12.6 percent, Nevada had the highest unemployment 



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rate, followed by California at 11.1 percent. At 3.3 percent, North 

Dakota had the lowest unemployment rate, followed by Nebraska 

at 4.1 percent and South Dakota at 4.2 percent. The states with 

the biggest increases in nonfarm jobs were Texas with 20,200 new 

jobs, followed by Indiana with 15,000 new jobs and California with 

10,700 new jobs. 

“The biggest risk in 2012 is that slow job creation will 

continue to hold back economic growth. A falling 

unemployment rate can be mostly attributed to 

discouraged workers leaving the labor force.” 

- International Life, Pension, and Insurance 

Group 

Where Does This Leave Consumers? 

As 2012 got underway, consumers had a mixed view of the economy, 

and seemed more upbeat about employment but less optimistic 

about business conditions and their income prospects. 

According to the Thomson Reuters/University of Michigan Surveys 

of Consumers, the Index of Consumer Sentiment climbed to 75.0 

in January 2012 from 69.9 in December 2011, and the readings for 

the Index of Consumer Expectations and the Current Conditions 

Index also increased. However, according to the Conference Board, 

the Index of Consumer Confidence reading retreated to 61.1 in 

January 2012, down from 64.8 in December 2011. In addition, the 

Present Situation Index and the Expectations Index January readings 

both declined from December. 

This mixed outlook is due in part to the very real loss of consumers’ 

net asset value for the second consecutive quarter. According 

to the Federal Reserve’s most recent Flow of Funds report, households’ 

total net worth fell 4.1 percent to $57.3 trillion during third 

quarter 2011, while the value of U.S. households’ financial assets 

sank by 5.3 percent to $47.7 trillion. 

However, real median annual household income increased 

to $50,876 in November 2011, up 2.7 percent from $49,556 in 

August, according to Sentier Research. While this increase is 



significant—particularly in the individual households seeing the 

increase—it is still down significantly from the median annual 

household income of $55,962 of more than a decade ago in 2000. 

Further, according to the Commerce Department, personal income 

increased 0.5 percent in December 2011, but consumers elected 

to save versus spend. Advance estimates of U.S. retail and food 

service sales for December 2011 were $400.6 billion, an increase of 

only 0.1 percent from the previous month and 6.5 percent above 

December 2010 retail sales, according to the Census Bureau. 

Housing Market Searching for Stabilization 

For people trying to sell their home or maintain equity, the news 

that home prices are still declining is discouraging. According to 

the S&P/Case-Shiller Index, prices for existing homes in 20 major 

cities declined 1.3 percent in November 2011 from October, and 

3.7 percent from November 2010. 

Reports from the National Association of Realtors® (NAR) substantiate 

these figures, with the median price for an existing singlefamily 

home in the U.S. at $165,100 in December 2011, a 2.5-percent 

decline from the December 2010 median. This is not surprising, 

given the number of homes on the market, the abundance of foreclosures 

underway (and those yet to come), and the generally tight 

mortgage requirements. 

But for people in the market to buy a home, the news could not be 

better, and as a result, existing home sales were up slightly. According 

to NAR, total existing home sales (including single-family 

homes, townhomes, condominiums, and co-ops) rose 5.0 percent 

to a seasonally-adjusted annual rate of 4.61 million in December 

2011, up from 4.39 million in November and 3.6 percent higher 

than the 4.45 million level in December 2010. In addition, singlefamily 

home sales increased 4.6 percent to a seasonally-adjusted 

annual rate of 4.11 million in December 2011 from 3.93 million in 

November, and are 4.3 percent higher than the 3.94 million-home 

pace in December 2010. 

Interestingly, distressed homes—foreclosures and short sales— 

accounted for 32 percent of existing home sales in December 

2011, up from 29 percent in November, according to NAR. Investors 

purchased 21 percent of homes in December 2011, while first-time 

home buyers comprised 31 percent of home buyers. 

Building permits and housing starts were up in December 2011, 

but the weakness in the housing market (and of the home-buying 

ability of consumers in general) is particularly apparent with 

new home sales. An estimated 302,000 new homes were sold in 

2011, according to the Census Bureau, 6.2 percent fewer than in 

2010 and the fewest total since the government began keeping 

records in 1963. (This is particularly significant when one realizes 

that more new homes were sold in the 1980s when interest rates 

were sky-high versus today when interest rates are at record lows.) 


WINTER 2012 | VOL 40 | NO 4 

The median price of a new home was $210,300 in December 2011, 

a 12.8-percent decline from a year earlier. 

Still, it is encouraging that markets are working through their 

inventory of homes, and according to data compiled by 

Realtor.com, there were 1.89 million homes on the market at the 

end of December 2011, representing a 6-percent decline from 

November, and a 22.3-percent decline from a year ago. The concern 

is that the decline in inventory may be due primarily to sellers 

taking homes off the market for the present and banks moving 

slowly on foreclosures. The Home Affordable Modification Program 

(HAMP) was recently expanded to triple the incentive payments 

to investors who agree to cut the amount that borrowers 

owe, but it is questionable as to how much relief to the market this 

will provide. The Federal Reserve recently published a white paper 

calling for additional federal government intervention, including 

increasing lending to creditworthy buyers, more loan modifications, 

mortgage refinancing, and short sales. 

RERC Survey Respondents Speak Out 

RERC’s fourth quarter 2011 institutional investment survey respondents 

expect GDP growth for the U.S. to be relatively weak over the 

next year, giving economic growth a rating of 4.1 on a scale of 1 to 

10, with 10 being very strong, over the next four quarters. Interestingly, 

RERC’s institutional investment survey respondents estimate 

GDP growth at 2.4 percent over the next four quarters, which is 

within the range of 2.2 percent to 2.7 percent growth for 2012 that 

was recently forecast by the Federal Reserve. 

In addition, investment survey respondents commented that economic 

growth will remain weak amidst the European debt crisis 

and slow job growth. In fact, one respondent noted that “Eurozone 

uncertainty, continued housing market weakness, anemic 

job growth, and lackluster consumer confidence all cast a pall over 

the economy.” 

“The pressure to place capital is now being tempered by 

weak recovery of the fundamentals.” 

- Major Real Estate Trust Company 

Although the majority of fourth quarter 2011 institutional investment 

respondents do not expect the U.S. economy to show sustainable 

growth for another 9 months or more, the number of 

respondents who stated that the U.S. economy would see sustainable 

growth within 3 months increased significantly, with a few 

respondents noting that the economic improvements over the 

past quarter “do not seem to be temporary this time.” Others note 

that much more time is needed before the economy sees sustainable 

growth and that a global recession is likely. More specifically, 

the key economic weaknesses noted by respondents, in order of 


WINTER 2012 | VOL 40 | NO 4 

severity, were fiscal policy, the housing market, and lack of job 

growth. However, respondents also noted that consumer spending 

and monetary policy are expected to have a slightly positive 

influence on the economy over the next 12 months. 

For the first time in more than a year, RERC’s rating of the availability 

of capital declined. As shown in Exhibit 1, RERC’s institutional 

investment survey respondents lowered their rating for the availability 

of capital to 6.9 on a scale of 1 to 10, with 10 being high, during 

fourth quarter 2011. In contrast, the rating for the discipline of 

capital increased slightly to 6.4, thus narrowing the gap between 

the availability and discipline of capital, as demonstrated in Exhibit 

2. Investment survey respondents noted that the capital market is 

still split between more abundant debt and equity capital for core 

property deals, and less-available capital for value-add properties. 

HOW IS COMMERCIAL REAL ESTATE AFFECTED? 

Although the number of property transactions in every major 

property sector declined significantly during fourth quarter 2011 

(by nearly half, for some sectors) from the number of transactions 

in third quarter, according to Real Capital Analytics (RCA), the average 

price per square foot/unit increased for the industrial and 

retail sectors in fourth quarter. From a yearly standpoint, investors 

increased their holdings in commercial real estate in 2011 over the 

previous year, both in terms of the number of properties sold and 

total volume, according to RCA. Approximately $163 billion in commercial 

property and portfolio transactions ($5 million and greater) 

were conducted in 2011, about 30 percent more than in 2010. 

Lending Still Conservative 

Although the volume of lending for commercial property is a long 

way from the pre-credit crisis years, the amount of capital provided 

from private equity funds directed toward commercial real estate 

increased in fourth quarter 2011. In addition, both public and private 

investment in real estate investment trusts (REITs) continued 

to increase, along with returns, in fourth quarter. Most of RERC’s 

institutional investment survey respondents expect lending activity 

for commercial real estate to remain stable or to increase in 

2012, particularly for core or core-plus strategies in primary markets. 

However, as we have been seeing for the past couple years, 

lending for riskier commercial properties or those in secondary or 

tertiary markets remains strict. 

From a regional lending standpoint, according to the Federal 

Deposit Insurance Corporation (FDIC), there were fewer banks that 

failed in 2011 (92 banks) than the previous 2 years (140 in 2009 and 

157 in 2010). In addition, the list of “problem banks” (844 institutions) 

at year-end 2011 was down from previous years. According 

to a statement released by the FDIC, the profitability of banks is 

currently the highest it has been since before the recession, and 

this profitability can “help to stabilize a troubled bank’s capital— 



albeit at a lower level than needed—and provide additional time 

for the bank to raise capital or seek strategic options.” 

With respect to institutional investors, RERC’s fourth quarter 2011 

investment survey respondents state that the most active lenders 

continue to be life insurance companies, the government, and 

banks. The most active equity investors include pension funds, 

private REITs, private equity/opportunity/hedge funds, and foreign 

investors. 

Lending is expected to increase in 2012, but an estimated $400 

billion of 5-year commercial real estate loans made by all lenders 

during the boom year of 2007 will also be coming due this year, 

according to Deutsche Bank. Sources indicate that only about $30 

billion in new commercial mortgage-backed securities (CMBS) 

loans are expected to be issued in 2012, about the same as in 2011. 

Exhibit 1. Current Availability & Discipline of Capital 

Exhibit 2. Historical Availability & Discipline of Capital 

Rating 

10 

8 

6 

4 

2 

0 

10 

8 

6 

4 

2 

0 

4Q 2002 

Discipline 

Availability 

4Q 2003 

6.9 6.4 

3Q11 = 7.6 3Q11 = 6.3 

Availability 

4Q 2004 

4Q 2005 

4Q 2006 

Discipline 

Source: RERC, 4Q 2011. 

Ratings are based on a scale of 1 to 10, with 10 being high. 

4Q 2007 

4Q 2008 



10 

8 

6 

4 

2 

0 

4Q 2009 

4Q 2010 

4Q 2011 

10 

WWW.RERC.COM 5 

8 

6 

4 

2 

0


RERC’s Investment Survey Results 

RERC’s institutional investment survey respondents once again 

gave commercial real estate their highest rating among investment 

alternatives during fourth quarter 2011. Commercial real 

estate received a rating of 6.3 on a scale of 1 to 10, with 10 being 

high, although this rating was slightly lower than the third quarter 

rating. As demonstrated in Exhibit 3, the rating for commercial real 

estate has varied only slightly throughout 2011, indicating the relative 

stability of this sector in comparison to the wider swings of 

stocks, bonds, and even cash during the same time period. The 

majority of institutional investment survey respondents also noted 

that commercial real estate offered many investment advantages, 

including the fact that it was a hard asset, served as an inflation 

hedge, offered income creation, was stable, and offered security, 

particularly in this volatile investment environment. Other 

respondents stated that the “risk of other investments is greater 

than the anticipated reward.” 

The rating for stocks increased to 5.4 during fourth quarter 2011. 

Besides receiving the most significant rating increase, stocks 

remained the second-highest rated investment alternative. While 

the investment rating for bonds increased to 4.4 from the previous 

quarter, the rating for cash decreased to 4.2. Some survey respondents 

stated that “cash is still king,” and that while the yield on cash 

is awful, “at least it won’t be negative!” Still other respondents— 

looking ahead to the opportunities available in 2012—noted that 

“the first quarter usually is good for stocks, because people have 

sold their losses at year end.” 

Investors remain cautious during this uncertain period, and their 

recommendation to hold commercial properties increased slightly 

to 6.6 on a scale of 1 to 10, with 10 being high, according to RERC’s 

fourth quarter 2011 institutional investment survey respondents. 

As shown in Exhibit 4, the recommendations to buy and sell commercial 

real estate investments declined to 6.4 and 5.8, respectively. 

Exhibit 5 shows that although the buy recommendation has 

declined slightly, it remains relatively high on a historical basis. 

RERC’s investment conditions rating (see middle of Page 12) for the 

apartment sector declined to 7.1 on a scale of 1 to 10, with 10 being 

high, during fourth quarter 2011. This was the first time this year 

that the rating for this sector declined. With ratings of 6.9 and 6.5, 

respectively, the industrial warehouse and central business district 

(CBD) office sectors received the next highest ratings. However, 

while the rating for the industrial warehouse sector increased from 

the previous quarter, the rating for the CBD office sector remained 

flat from the previous quarter. The investment conditions rating for 

the industrial research and development (R&D) sector remained 

unchanged at 5.5, while the rating for the industrial flex sector 

declined to 5.0. In contrast, the investment conditions ratings for 

all three retail property sectors improved during fourth quarter. 

The hotel sector investment conditions rating decreased to 6.0 

during fourth quarter. While the investment conditions rating 


WINTER 2012 | VOL 40 | NO 4 

for the suburban office sector increased to 4.7, the property type 

remained the lowest rated sector among the property types RERC 

routinely scores. 

Although RERC’s overall return versus risk rating for commercial real 

estate declined to 5.9 on a scale of 1 to 10, with 10 being high, during 

fourth quarter 2011, as shown in Exhibit 6, investors still believe 

Exhibit 5. RERC Historical Buy, Sell, Hold Recommendations 

Rating 

8 

6 

4 

2 

4Q 2002 

Exhibit 3. Economy and Investment Ratings 

Exhibit 4. Buy, Sell, Hold Recommendations. 

Is now a good time to buy, sell, or hold? 

8 

6 

4 

2 

0 

Hold 

Sell 

Buy 

4Q 2003 

Buy 

4Q 2004 

4Q 

2011 

4Q 2005 

3Q 

2011 

Sell 



4Q 2006 

4Q 2007 

2Q 

2011 

4Q 2008 



1Q 

2011 

6.4 5.8 6.6 

3Q11 = 6.7 3Q11 = 6.2 3Q11 = 6.5 

Hold 

4Q 2009 

4Q 

2010 

4Q 2010 

4Q 2011 


8 

6 

4 

2 

0 

3Q 

2010 

Stocks 5.4 4.7 5.2 6.0 6.0 5.2 

Bonds 4.4 3.8 3.6 3.6 3.7 4.1 

Commercial Real Estate 6.3 6.5 6.2 6.4 6.1 5.6 

Cash 4.2 4.5 3.8 3.7 3.6 4.0 



8 

6 

4 

2

WINTER 2012 | VOL 40 | NO 4 

that the overall return for commercial real estate outweighs the 

risk. 

“Avoid existing high-end apartments, “super core” office 

buildings in primary markets, and fortress malls in prime 

markets—they are all ‘over-bought.’” 

-Major Investment Management and Advisory 

Firm 

In addition, the return for each property type remained higher 

than the overall risk of this asset class. Although the apartment sector 

return versus risk rating declined to 6.5 during fourth quarter, it 

remained the highest scoring property sector. With a rating of 6.1 

compared to the last quarter, the industrial sector return versus risk 

rating managed to gain ground. As shown in Exhibit 7, the apartment 

and industrial sectors were the only property types with a 

score higher than the score for overall return versus risk. The retail 

sector’s return versus risk rating improved to 5.3, while the return 

versus risk rating for the hotel sector dropped to 5.4 and the office 

sector rating declined to 5.1. 



RERC’s institutional investment survey respondents noted that the 

value of commercial real estate is higher than the price, increasing 

their value versus price rating overall to 5.3 on a scale of 1 to 10, 

with 10 being high, during fourth quarter 2011, as shown in Exhibit 

6. 

In contrast to the previous quarter, the industrial sector was rated 

at 5.7 during fourth quarter, the highest value versus price rating. 

With ratings of 5.3 and 5.2, respectively, the apartment and retail 

sectors also showed improvement. However, at 4.9 each, the values 

of hotel and office properties have declined significantly, indicating 

possible overpricing in these sectors. Furthermore, as shown in 

Exhibit 8, since the previous quarter, the value versus price ratings 

for the hotel and office sectors dropped from the highest to the 

lowest rated among all the sectors. 

In addition, as shown on Page 9, RERC’s required pre-tax yield rates 

increased or remained stable for all of the property types RERC 

reports on each quarter, with the exception of the regional retail 

mall and apartment sectors, during fourth quarter 2011. RERC’s 

“Look for warehouse properties. They provide the 

highest yields, are less capital-intensive, and with limited 

new construction, they should have higher average rent 

growth as market fundamentals improve.” 

-One of the World’s Leading RE Investment 

Managers 

Exhibit 6. Historical Return/Risk and Value/Price Ratings 

4Q 2011 3Q 2011 2Q 2011 1Q 2011 4Q 2010 

Return vs. Risk 

Overall 5.9 6.2 6.1 5.1 5.6 

Office 5.1 5.2 5.5 5.1 4.8 

Industrial 6.1 5.8 5.8 6.0 5.4 

Retail 5.3 5.1 5.4 5.5 5.0 

Apartment 6.5 6.9 6.6 6.6 6.5 

Hotel 

Value vs. Price 

5.4 6.0 5.8 5.6 6.4 

Overall 5.3 5.2 4.9 4.8 5.1 

Office 4.9 5.4 4.5 5.2 4.7 

Industrial 5.7 5.2 5.0 5.2 5.3 

Retail 5.2 5.0 4.8 4.8 5.3 

Apartment 5.3 5.0 4.8 4.9 5.5 

Hotel 


4.9 5.6 5.3 5.4 6.1 




Exhibit 7. Return vs. Risk 

Rating 

7.0 

6.5 

6.0 

5.5 

5.0 

4.5 

4.0 

4Q 2010 


Ratings are based on a scale of 1 to 10 , with 10 being high. 


1Q 2011 

Exhibit 8. Value vs. Price 

Rating 

6.5 

6.0 

5.5 

5.0 

4.5 

4.0 

4Q 2010 

1Q 2011 

2Q 2011 

2Q 2011 

Industrial 

Office 

Overall 

3Q 2011 

Industrial 

Office 

Overall 

3Q 2011 



Hotel 

Apartment 

Retail 

4Q 2011 

Hotel 

Apartment 

Retail 

4Q 2011 

7.0 

6.5 

6.0 

5.5 

5.0 

4.5 

4.0 

6.5 

6.0 

5.5 

5.0 

4.5 

4.0 

Exhibit 9. What Do the Financial Markets Tell Us? 

WINTER 2012 | VOL 40 | NO 4 

required going-in capitalization rates were mixed, with the rates for 

the industrial warehouse, retail power center, apartment, and hotel 

sectors declining while the rates for the remaining property types 

increased or remained unchanged. In comparison, RERC’s required 

terminal capitalization rates increased or remained unchanged for 

all of the property types with the exception of all three retail property 

sectors and the apartment sector. 

RERC’s expected rental growth rate for the hotel sector increased 

to 3.5 percent and remained the highest rate during fourth quarter 

2011. At 3.2 percent, the expected rental growth rate in the CBD 

office and apartment sectors was second-highest, although the 

rental growth in the apartment sector rate remained unchanged 

while the CBD office sector rental growth increased significantly. In 

addition, the rental growth rates for the CBD and suburban office 

sectors showed the most significant jump during fourth quarter. 

In contrast, RERC’s expected expense growth rates for the hotel 

and apartment sectors remained unchanged from the previous 

quarter at 3.0 percent and 2.9 percent, respectively. The CBD office 

and industrial flex sectors were the only property sectors where 

the growth rates declined, also receiving the lowest expected 

expense growth rate of 2.7 percent during fourth quarter 2011. 

As noted in Exhibit 9, commercial real estate returns as reported by 

the National Council for Real Estate Investment Fiduciaries (NCREIF) 

Property Index, the NCREIF Open-End Diversified Core (ODCE), and 

the National Association of Real Estate Investment Trusts (NAREIT) 

were much higher than the index readings for stocks and 10-year 

Treasurys for the past year. 

Compounded Annual Rates of Return as of 12/31/2011 

Market Indices 1-Year 3-Year 5-Year 10-Year 15-Year 

Consumer Price Index1 2.95% 2.35% 2.21% 2.48% 2.39% 

10-Year Treasury Bond2 2.78% 3.05% 3.49% 3.94% 4.52% 

Dow Jones Industrial Avg. 8.38% 14.89% 2.37% 4.57% 6.68% 

NASDAQ Composite3 -1.80% 18.21% 1.52% 2.94% 4.79% 

NYSE Composite3 -6.11% 9.10% -3.93% 1.83% 4.01% 

S&P 500 2.11% 14.11% -0.25% 2.92% 5.45% 

NCREIF Property Index 14.26% 2.43% 3.09% 8.06% 9.42% 

NCREIF ODCE 15.99% -1.77% -0.21% 6.18% 8.36% 

NAREIT Index (Equity REITs) 8.28% 21.04% -1.42% 10.20% 8.91% 

1 Based on the published data from the Bureau of Labor Statistics (Seasonally Adjusted). 

2 Based on Average End of Day T-Bond Rates. 

3 Based on Price Index, and does not include the dividend yield. 

Sources: BLS, Federal Reserve Board, S&P, Dow Jones, NCREIF, NAREIT, compiled by RERC. 


WINTER 2012 | VOL 40 | NO 4 


RERC Required Return Expectations 1 by Property Type – 4Q 2011 

Office Industrial Retail 

CBD Suburban 

Warehouse 

R&D Flex 

Regional 

Mall 

Power 

Center 


Neigh/ 

Comm 

Apartment Hotel 

Average 

All Types 

RERC 

Portfolio 

Index 

Pre-tax Yield (IRR) (%) 

Range 6.5 - 10.0 7.5 - 12.0 7.0 - 10.0 7.5 - 12.0 7.5 - 12.0 6.5 - 10.0 7.5 - 10.0 7.0 - 12.0 6.0 - 9.0 8.0 - 15.0 6.0 - 15.0 6.0 - 15.0 

Average2 8.1 9.3 8.6 9.3 9.6 7.9 8.7 8.7 

Weighted 

Average 

7.6 10.6 8.8 8.4 

3 8.7 8.7 8.3 

BPS Change 4 

0 20 0 20 10 -20 0 10 

0 0 -10 

-30 20 0 -10 

Going-In Cap Rate (%) 

Range 5.0 - 8.0 6.0 - 10.0 6.0 - 8.0 7.0 - 9.0 7.0 - 9.0 5.0 - 8.0 6.0 - 8.3 6.0 - 9.0 4.5 - 7.3 7.0 - 10.0 4.5 - 10.0 4.5 - 10.0 

Average2 6.6 7.6 7.0 7.7 8.0 6.4 7.1 7.1 

Weighted 

Average 

5.8 8.2 7.1 6.7 

3 7.1 7.1 6.8 

BPS Change 4 

20 20 -10 0 10 0 -30 0 

20 -10 0 

-10 -10 -10 0 

Terminal Cap Rate (%) 

Range 6.0 - 8.5 7.0 - 10.0 6.8 - 8.5 7.5 - 10.0 7.5 - 10.0 5.5 - 8.5 7.0 - 8.8 6.5 - 9.5 5.3 - 7.8 8.0 - 11.0 5.3 - 11.0 5.3 - 11.0 

Average2 7.2 8.1 7.6 8.2 8.5 6.9 7.7 7.7 

Weighted 

Average 

6.4 9.0 7.7 7.3 

3 7.7 7.7 7.3 

BPS Change 4 

20 10 0 0 10 -10 -10 -10 

20 0 -10 

-10 10 0 0 

Rental Growth (%) 

Range 0.0 - 5.0 0.0 - 4.5 0.0 - 5.0 0.0 - 4.0 0.0 - 3.0 -1.0 - 5.0 -1.0 - 4.0 -1.0 - 4.0 1.0 - 5.0 0.0 - 5.5 -1.0 - 5.5 -1.0 - 5.5 

Average2 3.2 2.4 2.7 2.3 2.0 2.3 2.1 2.3 3.2 3.5 2.6 2.8 

BPS Change4 40 40 20 -10 -30 0 -10 10 0 30 10 20 

Expense Growth (%) 

Range 1.0 - 3.0 2.0 - 3.0 2.0 - 3.0 2.0 - 3.0 2.0 - 3.0 2.0 - 3.0 2.0 - 3.0 2.0 - 3.0 2.0 - 3.5 2.0 - 4.0 1.0 - 4.0 1.0 - 4.0 

Average2 2.7 2.8 2.8 2.8 2.7 2.8 2.8 2.8 2.9 3.0 2.8 2.8 

BPS Change4 -20 0 0 0 -10 0 0 0 0 0 0 0 

1 This survey was conducted in October, November, and December 2011 and reflects expected returns for Fourth Quarter 2011 investments. 

2 Ranges and other data reflect the central tendencies of respondents: unusually high and low responses have been eliminated. 

3 Weighting based upon 4Q11 NCREIF Portfolio market values. 

4 Change (+/-) in basis points (BPS) from quarter immediately preceding current rate. 

Source: RERC Investment Survey. 

DID YOU KNOW... 

RERC has cap and yield rates going back to 1989. 

Contact us to expand your membership level or to purchase separate historical data for trends analysis. 

Call 319.352.1500 | Online at store.rerc.com 



RERC HISTORICAL CAPITALIZATION RATES AND YIELD RATES 

RERC Historical Required Pre-tax Yield Rates 

Percent 

10.5 

10.0 

9.5 

9.0 

8.5 

8.0 

4Q 2007 

1Q 2008 



2Q 2008 

3Q 2008 

4Q 2008 

1Q 2009 

2Q 2009 

3Q 2009 

4Q 2009 

1Q 2010 

2Q 2010 

3Q 2010 

4Q 2010 

1Q 2011 

2Q 2011 

3Q 2011 

4Q 2011 

RERC Historical Required Going-in Capitalization Rates 

Percent 

9.0 

8.5 

8.0 

7.5 

7.0 

6.5 

6.0 


4Q 2007 

1Q 2008 

2Q 2008 

3Q 2008 

4Q 2008 

1Q 2009 

2Q 2009 

3Q 2009 

4Q 2009 

1Q 2010 

2Q 2010 

3Q 2010 

4Q 2010 

1Q 2011 

2Q 2011 

3Q 2011 

4Q 2011 

10.5 

10.0 

9.5 

9.0 

8.5 

8.0 

9.0 

8.5 

8.0 

7.5 

7.0 

6.5 

6.0 

WINTER 2012 | VOL 40 | NO 4 

RERC Historical Spread Between Yield Rates and Cap Rates 

Basis Points 

185 

175 

165 

155 

145 

135 

125 

4Q 2007 

1Q 2008 


2Q 2008 

3Q 2008 

4Q 2008 

1Q 2009 

2Q 2009 

3Q 2009 

4Q 2009 

1Q 2010 

2Q 2010 

3Q 2010 

4Q 2010 

1Q 2011 

2Q 2011 

3Q 2011 

4Q 2011 

RERC Historical Spread Between Required Pre-tax Yield 

Rates and 10-Year Treasurys 

Basis Points 

800 

700 

600 

500 

400 

300 

Sources: RERC, Federal Reserve, 4Q 2011. 

4Q 2007 

1Q 2008 

2Q 2008 

3Q 2008 

4Q 2008 

1Q 2009 

2Q 2009 

3Q 2009 

4Q 2009 

1Q 2010 

2Q 2010 

3Q 2010 

4Q 2010 

1Q 2011 

2Q 2011 

3Q 2011 

4Q 2011 


185 

175 

165 

155 

145 

135 

125 

800 

700 

600 

500 

400 

300

WINTER 2012 | VOL 40 | NO 4 

SUMMARY 

Respondents to RERC’s investment survey seem to be slightly 

more optimistic as they look to the future. Despite the very real 

headwinds our economy still faces, there are strong signs that the 

economic recovery in the U.S. will continue in 2012, given that 

GDP grew 2.8 percent in fourth quarter 2011, the unemployment 

rate declined to 8.5 percent in December, and with manufacturing 

activity increasing. We are even seeing more stamina in the stock 

market. What can we expect in the commercial real estate market, 

as the world turns from fear to caution? 

n The overall picture for the economy and for investment in 

general is a little better, although risks remain, including the 

European debt crisis, the housing market, and the growing 

federal debt and deficit. Watch for positive economic growth 

to continue, but to remain modest in 2012. 

n Expect the Federal Reserve’s monetary policy to remain very 

accommodative and for short-term interest rates to remain 

low until late 2014. 

n Watch for consumer spending to remain relatively weak, as 

discretionary income is limited. 

n Do not expect to see much improvement in the housing market 

for the near term, and for foreclosures and distressed sales 

to continue. 



n Watch for government spending to continue to decline or to 

remain flat during this election year. 

n Watch for investment capital to increase, and the playing field 

for investments to start to level off. 

n Lending should increase in 2012, but an estimated $400 billion 

of 5-year commercial real estate loans taken out during the 

boom year of 2007 are coming due. 

n We expect at least 2 to 3 quarters of flat to low appreciation 

on commercial real estate, as transaction activity has slowed 

enough to make investors wary. 

n Although the apartment sector remains the strongest property 

sector overall from a risk perspective, the sector’s investment 

appeal is declining slightly due to possible overpricing. 

n The investment appeal of industrial warehouse properties is 

increasing because it is less capital-intensive than other sectors, 

is not overbuilt, and demand is growing. 

n Retail, office, and hotel property investments continue to be 

plagued with risk due to weak consumer spending and slow 

job growth. 




Expected Leasing Assumptions, Marketing & Holding, and Investment Recommendations – 4Q 2011 

Renewal 

Probability (%) 

Time to Re-lease 

(months) 

Vacancy Loss 1 

(%) 

Marketing Time 

(months) 

Holding 

Period (years) 

WINTER 2012 | VOL 40 | NO 4 

Buy (%) Sell (%) Hold (%) 

Office - CBD 68.4 7.0 6.5 6.1 9.0 44 16 40 

Office - Suburban 62.9 9.1 8.4 7.3 8.3 24 32 44 

Industrial - Warehouse 67.0 7.7 6.7 6.2 8.8 46 17 37 

Industrial - R&D 63.3 8.5 8.3 7.1 8.4 17 35 48 

Industrial - Flex 62.5 8.9 8.7 7.2 8.3 14 32 54 

Retail - Regional Mall 70.8 6.3 6.7 5.7 9.5 23 14 63 

Retail - Power Center 66.3 8.2 6.6 6.6 9.1 32 14 54 

Retail - Neighborhood 66.0 7.5 6.6 6.7 8.8 36 5 59 

Apartment 59.7 2.0 5.5 3.6 8.2 42 19 39 

Hotel N/A N/A N/A 5.5 7.5 53 24 23 

All Types 65.2 7.3 7.1 6.2 8.6 33 21 46 

1 Vacancy loss reflects a typical holding period, not the current level. 


Investment Conditions and Current Quarter Capitalization Techniques – 4Q 2011 

Investment Conditions 1 Income Approach 2 Cap Rate 3 

4Q 2011 3Q 2011 4Q 2010 4Q 2009 Direct Cap. DCF Before Reserves After Reserves 

Office - CBD 6.5 6.5 6.0 4.9 5.7 8.4 70% 30% 

Office - Suburban 4.7 4.3 4.1 3.6 5.7 8.0 70% 30% 

Industrial - Warehouse 6.9 6.6 6.2 4.5 6.5 7.6 64% 36% 

Industrial - R&D 5.5 5.5 4.4 3.7 6.0 7.7 62.5% 37.5% 

Industrial - Flex 5.0 5.2 4.4 3.9 5.9 8.0 62.5% 37.5% 

Retail - Regional Mall 5.8 5.2 5.1 4.0 5.5 7.9 61% 39% 

Retail - Power Center 5.8 5.1 4.4 3.3 5.6 8.1 61% 39% 

Retail - Neighborhood 6.0 5.8 5.6 4.1 6.1 7.5 67% 33% 

Apartment 7.1 7.5 6.8 5.6 6.8 7.0 13% 87% 

Hotel 6.0 6.3 5.6 2.6 6.1 7.8 12.5% 87.5% 

1 Investment Conditions rated on a scale of 1 = poor to 10 = excellent. 

2 Income Approach rated on a scale of 1 = least relevant to 10 = most relevant. 

3 Percent of respondents who apply the cap rate before or after reserves. 


Required Real Estate Yields vis-à-vis Capital Market Returns – 4Q 2011 

4Q 2011 3Q 2011 4Q 2010 4Q 2009 4Q 2008 4Q 2007 

Real Estate Yield (%) 8.8 8.8 9.0 10.1 8.9 8.2 

Moody’s Baa Corporate (%) 5.3 5.5 5.8 6.3 8.7 6.5 

Moody’s Aaa Corporate (%) 4.0 4.6 4.8 5.2 6.0 5.6 

10-Year Treasurys (%) 2.1 2.6 2.7 3.4 3.5 4.3 

Yield Spread (percentage points) 

Moody’s Baa Corporate (%) 3.5 3.3 3.2 3.8 0.2 1.7 

Moody’s Aaa Corporate (%) 4.8 4.2 4.2 4.9 2.9 2.6 

10-Year Treasurys (%) 

Sources: RERC Investment Survey, Federal Reserve. 

6.7 6.2 6.3 6.7 5.4 3.9 


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RISK-ADJUSTED RETURN ANALYSIS 

Today’s investors are being forced to grapple with the kind of uncertainty 

that many of us had never seen before and that the rest of 

us had hoped to never see again. For holders of large commercial 

real estate portfolios, what starts at an individual property level with 

concerns of tenant retention, works its way up to monitoring the 

status of international markets, with the current focus on the European 

debt crisis and the financial and currency concerns affecting 

many sovereign nations. While 2011 saw positive strides in terms of 

back-to-basics underwriting and stabilizing values and prices, 2012 

looks to be a year of sorting through the rest of the field. RERC foresees 

at least two to three quarters of flat to low appreciation across 

the board, as transaction activity has recently slowed just enough to 

make participants wary. On the plus side, new supply has been slow 

to arrive, and vacancy rates have generally been stable or declining 

slightly during the past year or more. As such, investors can concentrate 

on today’s recipe for success, which includes traversing the riskladen 

environment focused on maintaining or repairing propertylevel 

income and keeping fundamentals in check. 

As we examine the current performance figures for private real estate 

across the country, the National Council of Real Estate Investment 


WINTER 2012 | VOL 40 | NO 4 

Fiduciaries (NCREIF) Property Index (NPI), which tracks over 6,800 

properties, recorded another positive quarter of income and capital 

return, each at 1.5 percent for fourth quarter 2011. The one-year trailing 

capital return is lower this quarter at 7.8 percent, which helps to 

explain the decline in the one-year trailing total return of about 1.9 

percent from third to fourth quarter to 14.3 percent. The NPI income 

return has been resilient during the last two years of slow recovery, 

as well as throughout the recession. 

The property sectors break down a little differently than what we 

saw leading up to fourth quarter 2011, when apartment returns were 

far above the rest. As shown in the 1-Year Trailing Returns table, 

apartment returns are currently 15.5 percent, a 3.1-percent decline 

from the previous quarter. The industrial research and development 

(R&D) and central business district (CBD) office sectors have the 

highest returns apart from apartments, weighing in at 16.1 percent 

and 15.4 percent, respectively. The more level playing field among 

investments could be a combination of several factors. Apartments 

have performed well in recent years due to the weak single-family 

home market and the high number of troubled home mortgages 

and foreclosures, which have resulted in low vacancy and relatively 

high rents. At the same time, the weak economy has hurt consumers 

and has negatively affected retail property performance. Additionally, 

the suburban office sector has also felt the pain of high 

unemployment with increased vacancies. 

Now the climate is shifting. The federal government is helping some 

homeowners refinance troubled mortgages. We also just came off 

a holiday shopping season that was positive, though not as strong 

as many would have liked to see. As a result, the retail sector continues 

to see large-scale store closures, but some stores are re-defining 

themselves with some success in an effort to keep up with current 

trends. As the economy continues to slowly dig out of the recession, 

hiring may pick up slightly, which would help the office sector. 

Property Type 

1-Year Trailing Returns - 4Q 2011 

NCREIF 

Returns 

NCREIF 

St. Dev. 

RAR* 

Metric 


Returns 

NCREIF 

vs. 


Industrial - Whse 15.21% 11.56% 1.3 8.60% 6.61% 

Neigh/Comm 14.66% 11.24% 1.3 8.70% 5.96% 

Apartment 15.45% 12.00% 1.3 7.85% 7.60% 

Regional Mall 13.33% 10.60% 1.3 8.15% 5.18% 

Industrial - R&D 16.11% 12.84% 1.3 9.18% 6.93% 

All Property Types 14.26% 11.61% 1.2 8.83% 5.43% 

Office - CBD 15.37% 14.06% 1.1 8.15% 7.22% 

Power Center 12.68% 11.92% 1.1 8.68% 4.01% 

Office - Suburban 12.36% 12.15% 1.0 9.18% 3.19% 

Hotel 11.80% 14.03% 0.8 10.58% 1.22% 

*RAR = Risk-Adjusted Returns. 

Sources: RERC, NCREIF, 4Q 2011. 


WINTER 2012 | VOL 40 | NO 4 

The storage and transport of goods should pick up somewhat too, 

which is the backbone for the majority of industrial buildings. The 

year 2012 may be flat for most sectors from an investment perspective, 

but it may prove to be important as commercial real estate participants 

sort through the chaos and attempt to acquire clarity in 

a quickly-changing macroeconomic and geopolitical environment. 

Comparing RERC’s risk-adjusted return metric, based on 1-year trailing 

returns, with NCREIF’s standard deviation, indicates that many 

sectors are performing equally well from a risk-adjusted return 

perspective. The highest metric is noted in the regional retail mall, 

industrial warehouse, industrial R&D, apartment, and neighborhood 

and community retail sectors. There is no clear winner this quarter, 

which should encourage investors to maintain diversity with regard 

to acquisitions in their mix of properties in 2012. 

The current 1-year trailing NPI income return is 6.1 percent, and the 

10-year average is 6.8 percent. Consistently, good-quality real estate 

investments are able to achieve annual income yields above 6 percent. 

Regardless of capital return (appreciation) noted above, commercial 

real estate has demonstrated a history of solid cash returns. 

RERC’s fourth quarter 2011 required yield rate (for all property types 

average) is 8.8 percent. In relation to alternative investments, current 

returns on ‘Aaa’-rated corporate bonds are 4 percent, while 10-year 

U.S. Treasurys declined 50 basis points to 2.1 percent in fourth quarter. 

Thus, return spreads on the current real estate yield over the 

alternatives are among the highest since 2007 (see Required Real 

Estate yields vis-à-vis Capital Market Returns table on Page 12). For 

an investor to succeed, a healthy, diverse mix of commercial real 

estate holdings can and does contribute positively to an investment 

portfolio. The stability and solid performance of this asset class is 

worth noting going forward, and as pointed out, brings some level 

of steadiness to the table when viewed in relation to the volatility of 

the stock and bond markets. 

Property Type 

10-Year Average Returns - 4Q 2011 

NCREIF 

Returns 

NCREIF 

St. Dev. 

RAR* 

Metric 


Returns 


NCREIF 

vs. 


Regional Mall 11.74% 10.60% 1.1 9.21% 2.53% 

Neigh/Comm 9.59% 11.24% 0.9 9.31% 0.28% 

Power Center 8.85% 11.92% 0.7 9.51% -0.66% 

All Property Types 8.06% 11.61% 0.7 9.61% -1.55% 

Apartment 8.01% 12.00% 0.7 8.84% -0.83% 

Industrial - Whse 7.52% 11.56% 0.7 9.22% -1.70% 

Office - CBD 8.63% 14.06% 0.6 9.13% -0.49% 

Office - Suburban 6.09% 12.15% 0.5 9.73% -3.64% 

Industrial - R&D 6.44% 12.84% 0.5 9.86% -3.42% 

Hotel 6.73% 14.03% 0.5 11.48% -4.75% 







SNAPSHOT OF REAL ESTATE MARKET PERFORMANCE – 4Q 2011 

WINTER 2012 | VOL 40 | NO 4 

PERFORMANCE INDICATOR RECENT DATA IMPACT ON COMMERCIAL REAL ESTATE 

Vacancy Rates 

Rental Rates 

(RERC’s surveyed rent growth 

expectations) 

Real Estate Returns 

Capitalization Rates 

Percent 

12 

10 

8 

6 

4 

2 

0 

Going-In Cap Rates vs. Unemployment 

Sources: RERC, BLS, NBER, 4Q 2011. 

Office: 17.3% 

Industrial: 9.6% 

Retail: 11.0% 

Apartment: 5.2% 

Hotel: 49.0% (occupancy) 

Office: 2.4% to 3.2% 

Industrial: 2.0% to 2.7% 

Retail: 2.1% to 2.3% 


Hotel: 3.5% 

RERC Required Returns: 

Office: 8.1% to 9.3% 


Retail: 7.9% to 8.7% 


Hotel: 10.6% 

RERC Required Cap Rates: 

Office: 6.6% to 7.6% 


Retail: 6.4% to 7.1% 


Hotel: 8.2% 

Unemployment 

Going-In Cap Rate 

Recession 

4Q 1981 

4Q 1982 

4Q 1983 

4Q 1984 

4Q 1985 

4Q 1986 

4Q 1987 

4Q 1988 

4Q 1989 

4Q 1990 

4Q 1991 

4Q 1992 

4Q 1993 

4Q 1994 

4Q 1995 

4Q 1996 

4Q 1997 

4Q 1998 

4Q 1999 

4Q 2000 

4Q 2001 

4Q 2002 

4Q 2003 

4Q 2004 

4Q 2005 

4Q 2006 

4Q 2007 

4Q 2008 

4Q 2009 

4Q 2010 

4Q 2011 

NCREIF Realized Returns: 

Office: 12.4% to 15.4% 


Retail: 12.7% to 14.7% 


Hotel: 11.8% 

NCREIF Implied Cap Rates: 

Office: 5.5% to 6.5% 


Retail: 6.6% to 6.9% 


Hotel: 6.9% 

According to Reis, Inc., vacancy for the retail sector remained 

unchanged during fourth quarter 2011. In contrast, the office and 

apartment sectors’ vacancy rates decreased. The industrial warehouse 

sector vacancy rate declined during fourth quarter, according 

to the CoStar group. Smith Travel Research reported that hotel 

occupancy decreased compared to third quarter. 

RERC’s fourth quarter 2011 expected rental rate expectations 

were higher for the two office sectors, industrial warehouse sector, 

neighborhood/community retail sector, and hotel sector. In contrast, 

expected rental rates declined for the industrial R&D and flex sectors 

and retail power center sector. The expected rental rate for the 

regional retail mall and apartment sectors remained unchanged. 

RERC’s required returns for the office and industrial sectors were flat, 

while those for the apartment and retail sectors decreased during 

fourth quarter 2011. NCREIF’s realized returns for all of the property 

sectors declined during fourth quarter. 

RERC’s required going-in cap rate for the office sector increased, 

while the required going-in cap rates for the industrial, apartment, 

and hotel sectors declined during fourth quarter 2011. NCREIF’s 

implied cap rates for all of the property sectors declined during 

fourth quarter. 


12 

10 

8 

6 

4 

2 

0

WINTER 2012 | VOL 40 | NO 4 

GDP 

Percent Change Quarter Ago 

Unemployment 

Consumer Price Index 

Percent Change Month Ago 

9 

7 

5 

3 

1 

-1 

-3 

-5 

-7 

4Q 2003 

0.6 

0.5 

0.4 

0.3 

0.2 

0.1 

-0.0 

-0.1 

-0.2 

-0.3 

2Q 2004 

4Q 2004 

2Q 2005 

Source: Bureau of Economic Analysis. 

According to the Bureau of Economic Analysis (BEA), real gross domestic product (GDP) 

growth rose 2.8 percent on an annualized basis during fourth quarter 2011. For the year 

2011, the economy grew 1.7 percent, with growth restrained by the spike in commodity 

prices, disasters in Japan, European debt crisis, and political uncertainty in the U.S. 

Percent 

12 

10 

8 

6 

4 

Jul-06 

Nov-06 

Mar-07 

Source: Bureau of Labor Statistics. 

Dec-10 

Jan-11 

4Q 2005 

2Q 2006 

4Q 2006 

2Q 2007 

4Q 2007 

2Q 2008 

4Q 2008 

2Q 2009 

4Q 2009 

2Q 2010 

4Q 2010 

2Q 2011 

4Q 2011 

Jul-07 

Nov-07 

Mar-08 

Jul-08 

Nov-08 

Mar-09 

Jul-09 

Nov-09 

Mar-10 

July-10 

Nov-10 

Mar-11 

Jun-11 

Sep-11 

Dec-11 

The unemployment rate declined to 8.5 percent in December 2011, the lowest rate 

since March 2009. Compared to the previous month, approximately 200,000 new jobs 

were added. However, while employment growth continued to improve, the drop in the 

unemployment rate also reflected unusually weak labor force participation. 

Feb-11 

Mar-11 

Apr-11 

May-11 

Jun-11 

Jul-11 

Aug-11 

Sep-11 

Oct-11 

Nov-11 

Dec-11 

The Consumer Price Index (CPI) remained largely unchanged at 226.75 in December 

2011, while core CPI increased 0.1 percent. The main factors weighing down headline 

inflation included subdued investor sentiment and the partial easing of supply constraints 

in commodities markets. 


9 

7 

5 

3 

1 

-1 

-3 

-5 

-7 

12 

10 

8 

6 

4 

0.6 

0.5 

0.4 

0.3 

0.2 

0.1 

-0.0 

-0.1 

-0.2 

-0.3 

Retail Sales 

Percent Change Year Ago 

10 

8 

6 

4 

2 

0 

-2 

-4 

-6 

-8 

-10 

-12 


FOMC Policy Decisions 

Percent 

7 

6 

5 

4 

3 

2 

1 

0 

Nov-01 

May-02 

Nov-02 

May-03 

Source: Federal Reserve. 

As of December 2011, the federal funds rate remained in the 0.0-percent to 0.25-percent 

range, and the discount rate remained at 0.75 percent. The Federal Open Market 

Committee (FOMC) has committed to leaving the target rate unchanged until at least 

late 2014. In addition, the Federal Reserve plans to provide clearer guidance on monetary 

policy. 

Nov-08 

Jan-09 

Discount Rate 

Fed Funds Rate 

Durable Goods New Orders 


-2 

-4 

-6 

Source: Census Bureau. 

Source: Bureau of Labor Statistics. Source: Census Bureau. 

8 

6 

4 

2 

0 

Oct-03 

May-04 

Nov-04 

Apr-05 

Nov-05 

May-06 

Oct-06 

May-07 

Oct-07 

Apr-08 

Dec-08 

Jun-09 

Oct-09 

Mar-10 

Sep-10 

Jan-11 

Aug-11 

Dec-11 

Feb-10 

Apr-10 

Jun-10 

Aug-10 

Oct-10 

Dec-10 

Feb-11 

Apr-11 

Jun-11 

Aug-11 

Oct-11 

Dec-11 

New orders for durable goods increased a healthy 3.0 percent in December 2011. 

Excluding nondefense aircraft orders, which showed the largest gain, orders were up 

3.5 percent, indicating that private sector demand may be stronger than anticipated. 

Core capital goods orders rose 2.9 percent. 

Mar-09 

May-09 

Jul-09 

Sep-09 

Nov-09 

Jan-10 

Mar-10 

May-10 

Jul-10 

Sep-10 

Nov-10 

Jan-11 

Mar-11 

May-11 

Jul-11 

Sep-11 

Dec-11 

Retail sales were modest leading up to the 2011 holiday season, increasing only 0.1 

percent in December. Compared to the previous year, December 2011 retail sales were 

6.5 percent higher. 

10 

8 

-2 

-4 

-6 

-8 

-10 

-12 


6 

4 

2 

0 

8 

6 

4 

2 

0 

7 

6 

5 

4 

3 

2 

1 

0 

-2 

-4 

-6


Consumer Confidence 

Index 

Consumer confidence improved during fourth quarter 2011, although it declined to 61.1 

points in January 2012. This drop was a reminder of the uncertainty regarding the sustainability 

of the economy. Consumers were particularly concerned about their future 

income. 

S&P 500 

120 

100 

80 

60 

40 

20 

Jan-03 

Jun-03 

Nov-03 

Source: The Conference Board. 

Beginning of Month Adjusted Closing Price 

1600 

1500 

1400 

1300 

1200 

1100 

1000 

900 

800 

700 

600 

Source: S&P. 

Index of Leading Indicators 


Apr-04 

Sep-04 

Feb-05 

Jul-05 

Dec-05 

May-06 

Oct-06 

Mar-07 

Aug-07 

Jan-08 

Jun-08 

Nov-08 

Apr-09 

Sep-09 

Feb-10 

Jul-10 

Dec-10 

Jul-11 

Jan-12 

The S&P 500 increased slightly before leveling off during fourth quarter 2011, ending 

the year at 1,244.58, about where it closed in 2010. Utilities, consumer staples, and 

health care were the S&P’s top performers in 2011, while financial and material stocks 

declined. 


Apr-06 

1.2 

1.0 

0.8 

0.6 

0.4 

0.2 

0.0 

-0.2 

-0.4 

-0.6 

-0.8 

Aug-06 

Dec-06 

Source: The Conference Board. 

Apr-07 

Aug-07 

Dec-07 

Apr-08 

Aug-08 

Dec-08 

Apr-09 

Aug-09 

Dec-09 

Apr-10 

Aug-10 

Nov-10 

Mar-11 

Jul-11 

Dec-11 

Jan-11 

Feb-11 

Mar-11 

Apr-11 

May-11 

Jun-11 

Jul-11 

Aug-11 

Sep-11 

Oct-11 

Nov-11 

Dec-11 

The Conference Board’s Index of Leading Indicators rose 0.4 percent to 94.3 in December 

2011. The rising interest rate spread was the biggest contributor to this month’s 

gain, but improving jobless claims was the second largest. *Please note that some 

components of the Conference Board Index were updated. Due to these changes, the 

old and new indices are not comparable. 

120 

100 

80 

60 

40 

20 

1600 

1500 

1400 

1300 

1200 

1100 

1000 

900 

800 

700 

600 

1.2 

1.0 

0.8 

0.6 

0.4 

0.2 

0.0 

-0.2 

-0.4 

-0.6 

-0.8 

Pending Home Sales Index 

Index 

120 

110 

100 

90 

80 

70 

60 

Existing Home Sales 

New Home Sales 

WINTER 2012 | VOL 40 | NO 4 

Feb-10 

Apr-10 

Jun-10 

Aug-10 

Oct-10 

Dec-10 

Feb-11 

Apr-11 

Jun-11 

Aug-11 

Oct-11 

Dec-11 

Source: NAR. 

The Pending Home Sales Index is still up 5.6 percent from a year ago, despite declining 

3.5 percent to 96.6 in December 2011. Sales are expected to gain momentum during 

the second half of 2012 as the number of foreclosures decreases and excess inventory 

is cleared away. 

Millions 

8.0 

7.0 

6.0 

5.0 

4.0 

3.0 

Source: NAR. 

Jul-05 

Nov-05 

Mar-06 

Jul-06 

Nov-06 

Mar-07 

Jul-07 

Nov-07 

Mar-08 

Jul-08 

Nov-08 

Mar-09 

Jul-09 

Nov-09 

Mar-10 

Jul-10 

Nov-10 

Mar-11 

Jun-11 

Sep-11 

Dec-11 

Existing home sales increased to an annualized rate of 4.61 million units in December 

2011. In addition, sales are up 3.6 percent compared to a year ago, and as a result, 

housing inventory dropped to 6.2 months, the lowest reading since early 2006. Despite 

large downside risks for housing, fundamentals are looking more positive. 

Thousands 

450 

400 

350 

300 

250 

Source: NAR. 

Feb-10 

Apr-10 

Jun-10 

Aug-10 

Oct-10 

Dec-10 

Feb-11 

Apr-11 

Jun-11 

Aug-11 

Oct-11 

Dec-11 

Sales of new homes decreased in December 2011 to 307,000. Compared to a year ago, 

home sales dropped 7.3 percent, for the largest year-over-year decline since April 2011. 

Despite this, sales are expected to improve in 2012 as the economy generates more jobs 

and confidence increases. 


120 

110 

100 

90 

80 

70 

60 

8.0 

7.0 

6.0 

5.0 

4.0 

3.0 

450 

400 

350 

300 

250

WINTER 2012 | VOL 40 | NO 4 

PROPERTY TYPES MARKET RECAP 

ALL PROPERTY TYPE AVERAGE 

Percent 

12 

10 

8 

6 


Historical IRRs, Going-In Cap Rates, and Terminal Cap Rates 2001 - 2011 

4Q 2001 

4Q 2002 


4Q 2003 

4Q 2004 

4Q 2005 

4Q 2006 

4Q 2007 


4Q 2008 

Terminal Cap Rate 


Pre-Tax Yield 

4Q 2009 

4Q 2010 

4Q 2011 

12 

10 

8 

6 



OFFICE 

n Some of RERC’s fourth quarter 2011 institutional investment 

survey respondents stated that office properties would provide 

good opportunities for investors, depending on the market, 

and especially in the central business district (CBD). However, 

the same cannot be said for the suburban office sector, 

which is experiencing weak demand and rental rates in most 

markets. Concern about the office sector remains due to high 

unemployment and weak demand. 

n RERC’s fourth quarter 2011 investment conditions rating for 

the CBD office sector remained unchanged at 6.5 on a scale of 

1 to 10, with 10 being high. The rating for the suburban office 

sector increased to 4.7, but remained the lowest rating among 

the various property types. 

n During fourth quarter 2011, RERC’s required pre-tax yield rate 

for the CBD office sector remained unchanged at 8.1 percent, 

while the required pre-tax yield rate for the suburban office 

sector increased 20 basis points to 9.3 percent. In comparison, 

the weighted average for the required going-in and terminal 

cap rates for the office sector overall increased 20 basis points 

to 7.1 percent and 7.7 percent, respectively. 

n RERC’s expected rental growth for the CBD and suburban 

office sectors increased 40 basis points to 3.2 percent and 2.4 

percent, respectively, during fourth quarter 2011. This was the 

most significant increase among the property sectors. In contrast, 

the expected expense growth for the CBD office sector 

declined to 2.7 percent, while the expected expense growth 

for the suburban office sector remained unchanged at 2.8 

percent. 

n After steadily decreasing throughout 2011, office sector 

vacancy declined 10 basis points to 17.3 percent during fourth 

quarter 2011, according to Reis, Inc. Furthermore, the office 

sector absorbed 5.3 million square feet, while asking and 

effective rents continued to improve with gains of 1.6 percent 

and 1.9 percent, respectively. 


RERC Risk & Return Analysis - 4Q 2011 

10-Year Average Returns 4-Quarter Rolling Returns 

CBD Suburban CBD Suburban 

NCREIF Returns 8.63% 6.09% 15.37% 12.36% 

NCREIF St. Dev. 14.06% 12.15% 14.06% 12.15% 

RAR* Metric 0.6 0.5 1.1 1.0 

RERC Returns 9.13% 9.73% 8.15% 9.18% 

NCREIF vs. 



Sources: RERC, NCREIF. 

-0.49% -3.64% 7.22% 3.19% 

RERC Office Performance Cycle 

Real Difference* (Percent) 

25 

20 

15 

10 

5 

0 

-5 

-10 

-15 

-20 

-25 

-30 

-35 

-40 

4Q 2001 

4Q 2002 

Market Equilibrium 

All Office 

Suburban Office 

CBD Office 

4Q 2003 

4Q 2004 

4Q 2005 

4Q 2006 

4Q 2007 


*Difference between NCREIF realized and RERC required returns. 

CBD Investment Criteria Trends 

Percent 

12 

10 

8 

6 

4 


Suburban Investment Criteria Trends 

Percent 

12 

10 

8 

6 


WINTER 2012 | VOL 40 | NO 4 

4Q 2008 

4Q 2009 

4Q 2010 

4Q 2011 



Pre-Tax Yield 

4Q 2001 

4Q 2002 

4Q 2003 

4Q 2004 

4Q 2005 

4Q 2006 

4Q 2007 

4Q 2008 

4Q 2009 

4Q 2010 

4Q 2011 



Pre-Tax Yield 

4Q 2001 

4Q 2002 

4Q 2003 

4Q 2004 

4Q 2005 

4Q 2006 

4Q 2007 

4Q 2008 

4Q 2009 

4Q 2010 

4Q 2011 

25 

20 

15 

10 

5 

0 

-5 

-10 

-15 

-20 

-25 

-30 

-35 

-40 


12 

10 

8 

6 

4 

12 

10 

8 

6

WINTER 2012 | VOL 40 | NO 4 

INDUSTRIAL 

n As a result of increasing demand, many of RERC’s fourth quarter 

2011 institutional investment survey respondents said 

that the industrial sector is a good investment opportunity. 

Respondents also noted that rental growth is expected to 

increase as market fundamentals improve. 

n While RERC’s fourth quarter 2011 investment conditions rating 

for the industrial warehouse sector increased to 6.9 on a 

scale of 1 to 10, with 10 being high, the industrial research and 

development (R&D) sector rating remained unchanged at 5.5 

and the industrial flex sector rating declined to 5.0. 

n RERC’s fourth quarter 2011 required pre-tax yield rate for 

the industrial warehouse sector remained unchanged at 8.6 

percent, while the rates for the industrial R&D and flex sectors 

increased to 9.3 percent and 9.6 percent, respectively. 

The required going-in weighted average cap rate for the 

three industrial property sectors overall declined to 7.1 percent, 

while the required terminal weighted average cap rate 

remained unchanged at 7.7 percent. 

n RERC’s expected rental growth for the industrial warehouse 

sector increased to 2.7 percent, while the growth for the 

industrial R&D and flex sectors declined to 2.3 percent and 

2.0 percent, respectively, during fourth quarter 2011. In comparison, 

the expected expense growth for the industrial warehouse 

and R&D sectors remained unchanged, while expense 

growth for the industrial flex sector rate declined. 

n According to the CoStar Group, the national industrial warehouse 

vacancy rate declined to 9.6 percent during fourth quarter 

2011. At 40 million square feet, net absorption increased 

from the previous quarter. Net asking prices are stabilizing, 

although rents remain dormant for the industrial warehouse 

sector. 

RERC Risk & Return Analysis – 4Q 2011 


Warehouse R&D Warehouse R&D 

NCREIF Returns 7.52% 6.44% 15.21% 16.11% 

NCREIF St. Dev. 11.56% 12.84% 11.56% 12.84% 

RAR* Metric 0.7 0.5 1.3 1.3 

RERC Returns 9.22% 9.86% 8.60% 9.18% 

NCREIF vs. 


*RAR = Risk-Adjusted Return. 


-1.70% -3.42% 6.61% 6.93% 




RERC Industrial Performance Cycle 

20 

15 

10 

5 

0 

-5 

-10 

-15 

-20 

-25 

-30 

-35 

-40 

4Q 2001 

4Q 2002 


All Industrial 

R & D 

Warehouse 

4Q 2003 

4Q 2004 

4Q 2005 

4Q 2006 

4Q 2007 

4Q 2008 



Warehouse Investment Criteria Trends 

Perecnt 

12 

10 

8 

6 


R&D Investment Criteria Trends 

Percent 

12 

10 

8 

6 


4Q 2009 

4Q 2010 

4Q 2011 



Pre-Tax Yield 

4Q 2001 

4Q 2002 

4Q 2003 

4Q 2004 

4Q 2005 

4Q 2006 

4Q 2007 

4Q 2008 

4Q 2009 

4Q 2010 

4Q 2011 



Pre-Tax Yield 

4Q 2001 

4Q 2002 

4Q 2003 

4Q 2004 

4Q 2005 

4Q 2006 

4Q 2007 

4Q 2008 

4Q 2009 

4Q 2010 

4Q 2011 

20 

15 

10 

5 

0 

-5 

-10 

-15 

-20 

-25 

-30 

-35 

-40 

12 

10 


8 

6 

12 

10 

8 

6


RETAIL 

n During fourth quarter 2011, some of RERC’s institutional investment 

survey respondents reiterated that the retail sector did 

not offer good investment opportunity because of the lack of 

job growth and weak income growth. However, investment 

conditions ratings increased. 

n RERC’s investment conditions ratings increased for the three 

retail sectors during fourth quarter 2011. The rating for the 

neighborhood/community retail sector rose to 6.0 on a scale 

of 1 to 10, with 10 being high, while the ratings for the regional 

retail mall and retail power center sectors increased to 5.8. 

n RERC’s required pre-tax yield rate for the regional retail mall 

sector declined to 7.9 percent during fourth quarter 2011. With 

required pre-tax yield rates of 8.7 percent, the retail power 

center sector rate remained unchanged while the neighborhood/community 

retail sector rate increased. RERC’s required 

going-in weighted average cap rate for the three retail sectors 

overall remained unchanged at 6.8 percent, while the 

required terminal weighted average cap rate overall declined 

to 7.3 percent. 

n While RERC’s expected rental growth for the regional retail 

mall sector remained unchanged, the rental growth for the 

retail power center sector decreased and for the neighborhood/community 

sector increased during fourth quarter 

2011. In contrast, RERC’s expected expense growth for the 

three retail sectors remained unchanged. 

n The retail sector vacancy rate remained unchanged at 11.0 

percent during fourth quarter 2011, according to Reis, Inc. 

However, there are positive signs in the neighborhood/community 

sector as net absorption rose by 3.18 million square 

feet – the largest positive value since first quarter 2008. Asking 

and effective rents increased by 0.1 percent. 

NCREIF 

Returns 

NCREIF 

St. Dev. 

RAR* 

Metric 


Returns 

NCREIF 

vs. RERC 


RERC Risk & Return Analysis – 4Q 2011 


Regional 

Mall 

Power 

Center 



Neigh/ 

Comm 

Regional 

Mall 

Power 

Center 

Neigh/ 

Comm 

11.74% 8.85% 9.59% 13.33% 12.68% 14.66% 

10.60% 11.92% 11.24% 10.60% 11.92% 11.24% 

1.1 0.7 0.9 1.3 1.1 1.3 

9.21% 9.51% 9.31% 8.15% 8.68% 8.70% 

2.53% -0.66% 0.28% 5.18% 4.01% 5.96% 

RERC Retail Performance Cycle 


20 

15 

10 

5 

0 

-5 

-10 

-15 

-20 

-25 

-30 


All Retail 



Regional Mall Investment Criteria Trends 

Percent 

12 

10 

8 

6 


Power Center Investment Criteria Trends 

Percent 

12 

10 

8 

6 


WINTER 2012 | VOL 40 | NO 4 

4Q 2001 

4Q 2002 

4Q 2003 

4Q 2004 

4Q 2005 

4Q 2006 

4Q 2007 

4Q 2008 

4Q 2009 

4Q 2010 

4Q 2011 



Pre-Tax Yield 

4Q 2001 

4Q 2002 

4Q 2003 

4Q 2004 

4Q 2005 

4Q 2006 

4Q 2007 

4Q 2008 

4Q 2009 

4Q 2010 

4Q 2011 



Pre-Tax Yield 

4Q 2001 

4Q 2002 

4Q 2003 

4Q 2004 

4Q 2005 

4Q 2006 

4Q 2007 

4Q 2008 

4Q 2009 

4Q 2010 

4Q 2011 

Neighborhood/Community Investment Criteria Trends 

Percent 

12 

10 

8 

6 




Pre-Tax Yield 

4Q 2001 

4Q 2002 

4Q 2003 

4Q 2004 

4Q 2005 

4Q 2006 

4Q 2007 

4Q 2008 

4Q 2009 

4Q 2010 

4Q 2011 


20 

15 

10 

5 

0 

-5 

-10 

-15 

-20 

-25 

-30 

12 

10 

8 

6 

12 

10 

8 

6 

12 

10 

8 

6

WINTER 2012 | VOL 40 | NO 4 

APARTMENT 

n RERC’s institutional investment survey respondents said that 

as a result of strong demand, cheap financing, and improving 

fundamentals, the apartment sector continues to provide 

good investment opportunity during fourth quarter 2011. 

In addition, the lack of creditworthiness and the inability of 

consumers to purchase single-family homes are helping to 

increase the demand for apartments. However, a few respondents 

cautioned investors to avoid high-end apartments and to 

beware of overpriced apartment properties. 

n At 7.1 on a scale of 1 to 10, with 10 being high, RERC’s investment 

conditions rating for the apartment sector remained the 

highest among the ratings for the various property sectors 

during fourth quarter 2011. However, the rating for the apartment 

sector declined for the first time in 2011, indicating that 

investment conditions are slightly weaker (from the previous 

two quarters’ ratings) for this sector. 

n RERC’s required pre-tax yield rate for the apartment sector 

declined to 7.6 percent during fourth quarter 2011. Likewise, 

the required going-in and terminal capitalization rates for the 

apartment sector declined to 5.8 percent and 6.4 percent, 

respectively. 

n In comparison, RERC’s expected rental and expense growth 

rates for the apartment sector remained unchanged at 3.2 percent 

and 2.9 percent, respectively, during fourth quarter 2011. 

The apartment sector received the second-highest expected 

rental and expense growth rates among the sectors. 

n According to Reis, Inc., the apartment sector vacancy rate fell 

40 basis points to 5.2 percent during fourth quarter 2011. In 

addition, the apartment sector showed positive net absorption 

of roughly 50,559 units and exceeded expectations. However, 

asking and effective rents did not meet expectations 

during the year 2011. 



NCREIF Returns 8.01% 15.45% 

NCREIF St. Dev. 12.00% 12.00% 

RAR* Metric 0.7 1.3 

RERC Returns 8.84% 7.85% 

NCREIF vs. RERC -0.83% 7.60% 





RERC Apartment Performance Cycle 


15 

10 

5 

0 

-5 

-10 

-15 

-20 

-25 

-30 

-35 

-40 


Apartment 

4Q 2001 

4Q 2002 

4Q 2003 

4Q 2004 

4Q 2005 

4Q 2006 

4Q 2007 

4Q 2008 

4Q 2009 

4Q 2010 

4Q 2011 



Apartment Investment Criteria Trends 

Percent 

12 

10 

8 

6 

4 




Pre-Tax Yield 

4Q 2001 

4Q 2002 

4Q 2003 

4Q 2004 

4Q 2005 

4Q 2006 

4Q 2007 

4Q 2008 

4Q 2009 

4Q 2010 

4Q 2011 

15 

10 

-5 

-10 

-15 

-20 

-25 

-30 

-35 

-40 


5 

0 

12 

10 

8 

6 

4


HOTEL 

n According to RERC’s fourth quarter 2011 institutional investment 

survey respondents, the hotel sector remains the riskiest 

option when compared to the other property sectors. Nevertheless, 

some respondents noted that hotel properties are 

undercapitalized and that the sector will track GDP growth for 

business travel and conference bookings. 

n RERC’s investment conditions rating for the hotel sector 

declined to 6.0 on a scale of 1 to 10, with 10 being high, during 

fourth quarter 2011. Although the rating was still above the 

midpoint of the rating scale, the further decline of the hotel 

sector indicates that the investment potential of this sector 

has diminished. 

n After declining the previous quarter, RERC’s required pre-tax 

yield rate for the hotel sector increased to 10.6 percent and 

remained the highest rating among the property sectors 

during fourth quarter 2011. In addition, the required going-in 

capitalization rate for the hotel sector declined to 8.2 percent, 

while the required terminal capitalization rate for the hotel 

sector increased to 9.0 percent. 

n RERC’s expected rental growth for the hotel sector increased 

to 3.5 percent during fourth quarter 2011. In contrast, the 

expected expense growth for the hotel sector remained 

unchanged at 3.0 percent. The hotel sector continued to 

receive the highest expected rental and expense growth rates 

compared to the other property sectors. 

n Although hotel sector occupancy and revenue per available 

room (RevPAR) declined significantly during fourth quarter 

2011 compared to the previous quarter, according to Smith 

Travel Research, occupancy rose 3.4 percent to 49.0 percent 

compared to a year ago. Likewise, the average daily rate (ADR) 

increased 1.3 percent to $107.14, and RevPAR rose 7.8 percent 

to $51.69 during fourth quarter 2011. 



10-Year Average Returns 

4-Quarter Rolling 

Returns 

NCREIF Returns 6.73% 11.80% 

NCREIF St. Dev. 14.03% 14.03% 

RAR* Metric 0.5 0.8 

RERC Returns 11.48% 10.58% 

NCREIF vs. RERC -4.75% 1.22% 



RERC Hotel Performance Cycle 


15 

10 

5 

0 

-5 

-10 

-15 

-20 

-25 

-30 

-35 

-40 

-45 

4Q 2001 

4Q 2002 


Hotel 

4Q 2003 

4Q 2004 

4Q 2005 

4Q 2006 

4Q 2007 



Hotel Investment Criteria Trends 

Percent 

15 

12 

9 

6 


WINTER 2012 | VOL 40 | NO 4 

4Q 2008 

4Q 2009 

4Q 2010 

4Q 2011 



Pre-Tax Yield 

4Q 2001 

4Q 2002 

4Q 2003 

4Q 2004 

4Q 2005 

4Q 2006 

4Q 2007 

4Q 2008 

4Q 2009 

4Q 2010 

4Q 2011 


15 

10 

5 

0 

-5 

-10 

-15 

-20 

-25 

-30 

-35 

-40 

-45 

15 

12 

9 

6

WINTER 2012 | VOL 40 | NO 4 

INSTITUTIONAL ANALYSIS & REGIONAL CRITERIA 


Institutional Pre-Tax Yield (IRR) Analysis - 4Q 2011 


CBD Suburban Warehouse R&D Flex 


Regional 

Mall 

Power 

Center 

Neigh/ 

Comm 


Institutional Investors 

Range 6.5 - 10.0 7.5 - 12.0 7.0 - 10.0 7.5 - 12.0 7.5 - 12.0 6.5 - 10.0 7.5 - 10.0 7.0 - 12.0 6.0 - 9.0 8.0 - 15.0 

Average 8.1 9.3 8.6 9.3 9.6 7.9 8.7 8.7 7.6 10.6 

National Results from Regional Survey (First-Tier) 

Range 5.0 - 12.0 6.0 - 12.5 5.0 - 12.5 5.0 - 13.0 5.0 - 13.0 5.0 - 13.0 5.0 - 12.0 5.0 - 12.5 5.0 - 12.0 6.0 - 15.0 

Average 9.3 9.6 9.4 9.7 9.8 9.3 9.4 9.6 8.4 10.7 

Realized Returns Five-Year Averages (NCREIF) 

Range -19.1 - 20.5 -17.9 - 14.9 -10.9 - 13.8 -17.5 - 18.2 -20.4 - 18.1 

Average 

Alternative Investments 

3.9 3.1 5.0 4.0 1.8 

The table Required Real Estate vis-a-vis Capital Market Returns shows historic spreads between the average targeted yield for real estate and actual yields for alternative investments. 

The current capital market returns range from 2.1% to 5.3%, broader than last quarter. The normative spread over the last several years ranges from 325 to 550 basis points. The current 

range is from 670 basis points on 10-year Treasurys to 350 basis points on Moody’s Baa Corporate. The gap only serves to underline the relative attractiveness of current returns on 

real estate as compared to other asset classes. Adding in the normative spread for real estate of 325 basis points for Moody’s Baa Corporate and using 550 basis points from 10-year 

Treasurys, for example, the alternative market analysis indicates a discount range of 7.6% to 8.6% 

Pre-tax Yield (IRR) Conclusion 

The criteria outlined in this section served as the basis in the selection of an appropriate capitalization rate for commercial properties. 

The capitalization rate is to be applied to the first year or stabilized cash flow of the property for the determination of value for the direct 

capitalization approach and must reflect the quality and durability of the income projections, as well as the likelihood of real long-term 

gain in asset value. The rate to the investor must be at a level commensurate with alternative investment vehicles. The most comparable 

rates for commercial properties, as previously discussed, are listed to the right: 

Institutional Investors: 7.6 - 10.6 

Regional Respondents: 8.4 - 10.7 

Real Estate Indices: 1.8 - 5.0 

Alternative Investments: 7.6 - 8.6 

*The NCREIF Property Index Return Survey presents the total returns for all the properties surveyed. Total returns, also called overall returns, include three qualifying factors: appreciation (or depreciation), realized 

capital gains (or loss) and income. Total return is computed by adding the capital appreciation return and the income return on a quarterly basis. 




Institutional Going-In Capitalization Rate Analysis - 4Q 2011 


CBD Suburban Warehouse R&D Flex Regional Mall Power Center Neigh/Comm 

WINTER 2012 | VOL 40 | NO 4 



Range 5.0 - 8.0 6.0 - 10.0 6.0 - 8.0 7.0 - 9.0 7.0 - 9.0 5.0 - 8.0 6.0 - 8.3 6.0 - 9.0 4.5 - 7.3 7.0 - 10.0 

Average 6.6 7.6 7.0 7.7 8.0 6.4 7.1 7.1 5.8 8.2 


Range 5.0 - 12.0 5.5 - 12.0 5.5 - 10.0 5.0 - 12.0 5.0 - 12.0 5.0 - 10.0 5.0 - 10.0 5.0 - 12.0 4.0 - 12.0 5.0 - 13.0 

Average 7.6 8.1 7.9 8.2 8.3 7.7 7.9 8.0 6.7 8.8 

Realized Returns Five-Year Averages (NCREIF) 

Range 4.9 - 6.9 5.9 - 7.3 5.7 - 7.1 4.5 - 5.9 4.4 - 7.6 

Average 

Alternative Investments 

5.9 6.6 6.4 5.2 6.3 

The table Required Real Estate vis-a-vis Capital Market Returns shows historic spreads between the average targeted capitalization rates for real estate and actual yields for alternative investments. 

The current capital market returns range from 2.1% to 5.3%, broader than last quarter The normative spread over the last several years ranges from 125 to 350 basis points. 

The current range is from 180 basis points on Moody’s Baa Corporate to 500 basis points on 10-year Treasurys. The gap only serves to underline the relative attractiveness of current 

returns on real estate as compared to other asset classes. Adding in the normative spread for real estate of 125 basis points for Moody’s Baa Corporate and using 350 basis points from 

10-year Treasurys, for example, the alternative market analysis indicates a going-in capitalization rate range of 5.6% to 6.6%. 

Going-In Capitalization Rate Conclusion 

The criteria outlined in this section served as the basis in the selection of an appropriate capitalization rate for commercial properties. 

The capitalization rate is to be applied to the first year or stabilized cash flow of the property for the determination of value for the direct 

capitalization approach and must reflect the quality and durability of the income projections, as well as the likelihood of real long-term 

gain in asset value. The rate to the investor must be at a level commensurate with alternative investment vehicles. The most comparable 

rates for commercial properties, as previously discussed, are listed to the right: 



Real Estate Indices: 5.2 - 6.6 

Alternative Investments: 5.6 - 6.6 

*The NCREIF Property Index Return Survey presents the total returns for all the properties surveyed. Income returns include only the income of the property and do not take into account the appreciation and/or 

depreciation of the property. 

Institutional Terminal Capitalization Rate Analysis - 4Q 2011 


CBD Suburban Warehouse R&D Flex Regional Mall Power Center Neigh/Comm 



Range 6.0 - 8.5 7.0 - 10.0 6.8 - 8.5 7.5 - 10.0 7.5 - 10.0 5.5 - 8.5 7.0 - 8.8 6.5 - 9.5 5.3 - 7.8 8.0 - 11.0 

Average 7.2 8.1 7.6 8.2 8.5 6.9 7.7 7.7 6.4 9.0 

Spread Basis Points Range 50 - 100 0 - 100 50 - 80 50 - 100 50 - 100 50 - 50 50 - 100 50 - 50 50 - 80 100 - 100 

Spread Basis Points Average 60 50 60 50 50 50 60 60 60 80 


Range 5.5 - 12.0 6.0 - 11.0 5.5 - 11.5 6.5 - 13.0 6.5 - 12.0 5.0 - 12.0 5.0 - 12.0 5.0 - 12.0 5.0 - 11.0 7.0 - 14.0 

Average 8.3 8.6 8.5 8.8 8.9 8.4 8.5 8.7 7.3 9.5 

Spread Basis Points Range 0 - 50 -100 - 50 0 - 150 100 - 150 0 - 150 0 - 200 0 - 200 0 - 0 -100 - 100 100 - 200 

Spread Basis Points Average 70 50 60 60 60 70 60 70 60 70 

Terminal Capitalization Rate Conclusion 

The terminal (reversion) capitalization rate is calculated by adjusting a typical stabilized overall capitalization rate for the 

loss in the competitive market standing realized by properties over the holding period due to the nominal aging of the 

property. Taking into account information in the previous sections, specifically the capitalization rates by property type, a 

determination can be made using the spread between the terminal and the going-in capitalization rates. Typically, this has 

ranged between 40 to 100 basis points, with the average around 60 basis points. After adjusting the data for the time 

horizon and relative earning rates for different properties, the indicated terminal ranges have been deemed appropriate for 

the different property types. 



Institutional Average Going-In/Terminal Spread: 50 - 80 bps. 

Regional Average Going-In/Terminal Spread: 50 - 70 bps. 


WINTER 2012 | VOL 40 | NO 4 

West Investment Criteria 


Regional Investment Criteria - 4Q 2011 | First-Tier 1 Investment Properties 



Regional 

Mall 


Power 

Center 

Neigh/Comm 



Range 5.0 - 12.0 6.0 - 12.0 5.0 - 12.0 7.0 - 13.0 5.0 - 13.0 5.0 - 13.0 5.0 - 12.0 7.0 - 12.0 5.0 - 12.0 7.0 - 14.3 

Average 9.2 9.7 9.1 9.6 9.8 9.4 9.6 9.6 8.2 10.6 


Range 5.5 - 10.0 6.0 - 10.0 5.5 - 10.0 6.0 - 10.0 6.3 - 10.0 5.5 - 10.0 6.0 - 9.0 5.5 - 10.0 4.0 - 8.0 6.5 - 12.0 

Average 7.3 7.9 7.5 7.8 8.0 7.6 7.7 7.8 6.2 8.7 


Range 5.5 - 12.0 6.0 - 11.0 5.5 - 10.0 6.5 - 10.0 6.5 - 11.0 6.3 - 12.0 5.0 - 10.0 5.0 - 10.1 5.0 - 9.0 7.0 - 12.0 

Average 8.1 8.5 8.1 8.4 8.6 8.2 8.3 8.3 6.9 9.2 

Midwest Investment Criteria 


Range 6.0 - 12.0 6.0 - 12.0 6.0 - 11.5 7.0 - 13.0 7.0 - 13.0 5.0 - 12.0 5.0 - 12.0 5.0 - 12.0 5.0 - 12.0 8.0 - 13.0 

Average 9.6 9.7 9.4 9.8 9.7 9.0 9.0 9.5 8.6 10.6 


Range 5.0 - 12.0 6.5 - 12.0 6.0 - 10.0 6.0 - 12.0 6.0 - 12.0 5.5 - 10.0 5.8 - 9.0 5.0 - 11.0 4.5 - 12.0 6.0 - 13.0 

Average 8.2 8.5 8.3 8.6 8.6 8.2 8.1 8.4 7.3 9.4 


Range 6.0 - 11.5 7.0 - 11.0 6.5 - 11.5 7.3 - 13.0 7.9 - 12.0 5.0 - 12.0 5.0 - 10.8 6.5 - 12.0 5.5 - 10.0 7.0 - 14.0 

Average 8.8 8.9 8.9 9.2 9.1 8.6 8.5 9.0 7.7 9.8 

South Investment Criteria 


Range 6.0 - 12.0 7.0 - 12.5 6.0 - 12.5 8.0 - 12.5 8.0 - 12.5 7.5 - 12.0 8.0 - 12.0 8.0 - 12.5 7.5 - 11.0 8.5 - 13.0 

Average 9.8 9.9 9.8 10.0 10.2 9.8 9.9 10.0 9.1 10.7 


Range 6.0 - 9.5 6.0 - 9.0 6.5 - 10.0 6.5 - 10.0 6.5 - 10.0 5.5 - 10.0 6.5 - 10.0 6.3 - 10.0 5.0 - 9.0 6.5 - 10.0 

Average 7.9 8.1 8.2 8.4 8.5 8.0 8.2 8.3 7.2 8.8 


Range 6.5 - 11.0 7.0 - 11.0 6.5 - 11.0 6.5 - 10.5 7.0 - 10.5 5.8 - 11.0 7.0 - 10.5 7.0 - 10.3 5.5 - 10.0 7.0 - 12.0 

Average 8.5 8.7 8.9 9.0 9.2 8.7 8.8 8.9 7.8 9.5 

East Investment Criteria 


Range 5.0 - 12.0 7.0 - 12.0 6.0 - 12.0 5.0 - 12.0 5.0 - 13.0 7.0 - 12.0 6.0 - 12.0 7.0 - 12.0 6.0 - 12.0 6.0 - 15.0 

Average 8.7 9.3 9.3 9.5 9.4 9.0 9.1 9.2 8.0 10.8 


Range 5.0 - 10.0 5.5 - 10.0 6.0 - 10.0 5.0 - 12.0 5.0 - 12.0 5.0 - 10.0 5.0 - 10.0 6.0 - 12.0 4.0 - 8.0 5.0 - 10.0 

Average 7.2 7.9 8.0 8.2 8.1 7.4 7.7 7.7 6.3 8.5 


Range 6.0 - 10.0 6.0 - 10.8 7.0 - 10.5 6.5 - 12.0 6.5 - 12.0 6.0 - 11.3 7.0 - 12.0 7.0 - 12.0 5.0 - 11.0 7.0 - 13.0 

Average 7.8 8.5 8.5 8.8 8.7 8.2 8.5 8.5 7.1 9.6 

1 First-tier investment properties are defined as new or newer quality construction in prime to good locations. 

A list of RERC Defined Regions is located in the back of this report in the “Scope and Methodology” section. 





Regional Investment Criteria - 4Q 2011 | Second-Tier 1 Investment Properties 



Regional 

Mall 

Power 

Center 

Neigh/Comm 

WINTER 2012 | VOL 40 | NO 4 



Range 6.5 - 13.0 6.5 - 15.0 6.5 - 12.2 7.5 - 13.0 7.5 - 12.0 6.0 - 14.0 6.0 - 13.0 6.5 - 15.0 5.0 - 13.0 7.5 - 13.5 

Average 10.0 10.3 9.9 10.1 10.3 10.1 10.2 10.4 8.8 11.2 


Range 6.0 - 10.5 6.5 - 10.5 5.8 - 10.0 6.3 - 10.0 6.5 - 10.0 6.0 - 11.0 6.5 - 10.0 6.0 - 10.5 5.0 - 9.0 7.0 - 12.0 

Average 8.1 8.5 8.2 8.4 8.5 8.2 8.3 8.4 7.0 9.4 


Range 6.5 - 11.0 7.0 - 11.0 6.5 - 11.0 6.8 - 11.0 6.8 - 11.0 6.8 - 12.0 7.0 - 11.0 6.3 - 11.0 6.0 - 10.0 7.5 - 12.0 

Average 8.7 9.0 8.7 8.8 9.0 8.9 8.9 9.0 7.8 9.9 



Range 6.0 - 13.0 6.0 - 13.0 6.0 - 13.0 6.0 - 13.0 6.0 - 13.0 6.0 - 13.0 6.0 - 13.0 6.0 - 13.0 6.0 - 14.0 6.0 - 15.0 

Average 10.3 10.4 10.2 10.3 10.4 10.1 10.0 10.2 9.3 10.8 


Range 6.0 - 13.0 6.0 - 13.0 6.0 - 13.0 6.0 - 11.0 6.0 - 11.0 6.5 - 11.0 6.8 - 11.0 7.0 - 12.0 5.5 - 12.0 7.0 - 13.0 

Average 9.1 9.2 9.1 9.2 9.3 9.1 9.1 9.2 8.1 10.1 


Range 6.5 - 12.5 7.5 - 12.0 7.0 - 12.0 7.8 - 13.0 8.0 - 13.0 6.5 - 13.0 6.8 - 13.0 7.0 - 13.5 6.0 - 13.0 8.0 - 14.0 

Average 9.7 9.7 9.6 9.8 9.8 9.7 9.7 9.9 8.7 10.8 



Range 8.5 - 13.0 9.0 - 13.0 8.5 - 13.0 9.0 - 13.0 9.0 - 13.0 8.5 - 13.0 8.5 - 13.0 9.0 - 14.0 8.0 - 13.0 9.3 - 14.0 

Average 10.5 10.6 10.5 10.8 10.9 10.6 10.6 10.9 9.8 11.6 


Range 7.0 - 10.0 7.5 - 9.8 7.0 - 11.0 7.0 - 10.5 7.3 - 10.5 6.5 - 11.0 7.3 - 10.5 7.0 - 11.0 6.0 - 10.0 7.5 - 11.0 

Average 8.6 8.8 8.8 9.0 9.1 8.7 8.8 9.0 7.8 9.5 


Range 7.0 - 11.0 7.5 - 11.0 7.0 - 12.0 6.5 - 11.0 7.0 - 11.0 6.8 - 11.0 8.0 - 11.0 7.8 - 11.0 6.0 - 11.0 8.0 - 12.0 

Average 9.2 9.4 9.4 9.5 9.7 9.3 9.4 9.6 8.4 10.2 



Range 6.0 - 14.0 7.0 - 13.0 6.5 - 12.0 6.0 - 15.0 6.0 - 13.0 6.0 - 12.0 7.0 - 13.0 6.0 - 14.0 6.8 - 12.0 9.0 - 14.0 

Average 9.6 9.9 9.7 10.2 9.9 9.6 9.8 10.0 8.6 11.4 


Range 5.0 - 12.0 6.5 - 12.0 5.0 - 12.0 7.3 - 12.0 7.0 - 12.0 6.0 - 11.0 6.0 - 11.0 6.8 - 12.0 5.3 - 10.0 8.0 - 12.0 

Average 8.1 8.7 8.6 9.0 8.9 8.4 8.5 8.5 7.3 9.9 


Range 6.5 - 14.0 7.0 - 12.0 7.0 - 12.0 6.5 - 14.0 6.5 - 12.0 6.5 - 12.0 7.0 - 12.0 7.0 - 12.0 6.0 - 10.5 7.0 - 14.0 

Average 8.9 9.4 9.4 9.7 9.5 9.2 9.2 9.1 7.9 10.6 

1 Second-tier investment properties are defined as aging, former first-tier properties, in good to average locations. 



WINTER 2012 | VOL 40 | NO 4 



Regional Investment Criteria - 4Q 2011 | Third-Tier 1 Investment Properties 



Regional 

Mall 


Power 

Center 

Neigh/Comm 



Range 7.0 - 15.0 7.0 - 15.0 8.0 - 13.0 8.0 - 14.0 8.0 - 13.0 7.0 - 15.0 7.0 - 15.0 7.0 - 15.0 6.5 - 14.0 10.0 - 15.5 

Average 11.0 11.2 10.7 11.0 11.1 11.3 11.3 11.2 9.9 12.2 


Range 7.0 - 11.5 7.0 - 12.0 6.5 - 11.0 7.0 - 11.0 7.0 - 11.0 7.0 - 12.0 6.5 - 12.0 6.5 - 12.0 5.8 - 12.0 8.0 - 13.0 

Average 8.9 9.2 8.9 9.1 9.2 9.1 9.1 9.2 8.0 10.4 


Range 7.5 - 15.0 7.5 - 12.0 7.0 - 12.0 7.3 - 12.0 7.3 - 12.0 7.3 - 15.0 7.3 - 12.0 7.0 - 12.0 6.5 - 12.0 8.5 - 13.0 

Average 9.7 9.8 9.6 9.7 9.8 10.0 9.7 9.9 8.7 11.0 



Range 8.0 - 15.0 8.0 - 15.0 8.0 - 15.0 8.0 - 15.0 8.0 - 15.0 8.0 - 15.0 8.0 - 15.0 8.0 - 16.0 8.0 - 15.0 8.0 - 18.0 

Average 11.4 11.6 11.3 11.3 11.5 11.4 11.4 11.6 10.5 12.2 


Range 8.0 - 14.0 8.0 - 14.0 8.5 - 14.0 8.5 - 14.0 8.5 - 15.0 8.0 - 15.0 8.0 - 15.0 8.0 - 15.0 7.0 - 13.0 8.8 - 16.0 

Average 10.3 10.4 10.3 10.4 10.5 10.3 10.2 10.5 9.3 11.3 


Range 8.0 - 15.0 8.0 - 15.0 8.5 - 15.0 9.0 - 15.0 9.0 - 15.0 8.0 - 15.0 8.0 - 15.0 8.0 - 16.0 6.0 - 15.0 9.0 - 15.0 

Average 10.9 10.8 10.7 11.0 11.0 10.7 10.7 11.1 9.9 11.4 



Range 9.0 - 14.0 9.5 - 14.0 9.0 - 14.0 9.5 - 14.0 10.0 - 15.0 10.0 - 14.0 9.0 - 14.0 9.3 - 14.0 9.0 - 14.0 10.5 - 15.0 

Average 11.3 11.6 11.2 11.5 11.8 11.9 11.6 11.7 10.9 12.8 


Range 7.8 - 12.0 8.5 - 12.0 8.0 - 12.0 8.5 - 12.0 8.5 - 13.0 8.5 - 13.0 8.5 - 13.0 8.5 - 13.0 7.0 - 13.0 8.5 - 13.0 

Average 9.6 9.7 9.6 9.9 10.1 9.9 9.9 9.9 9.0 10.6 


Range 8.3 - 12.0 9.0 - 12.0 8.8 - 12.0 8.8 - 12.0 8.8 - 13.0 9.0 - 13.0 9.0 - 13.0 8.8 - 13.0 7.3 - 13.0 9.0 - 13.0 

Average 10.3 10.4 10.2 10.4 10.6 10.5 10.5 10.4 9.6 11.3 



Range 7.0 - 15.0 8.0 - 15.0 7.0 - 13.0 5.0 - 14.0 7.0 - 14.0 7.0 - 16.0 8.0 - 15.0 8.0 - 13.0 7.0 - 15.0 10.0 - 15.0 

Average 10.8 11.2 10.6 10.8 10.9 11.3 11.0 10.9 9.8 12.7 


Range 6.8 - 14.0 7.0 - 14.0 6.0 - 14.0 7.5 - 14.0 7.5 - 14.0 7.0 - 15.0 6.0 - 14.0 7.8 - 11.5 6.5 - 12.0 9.0 - 14.0 

Average 9.4 9.8 9.6 10.0 9.8 9.9 9.7 9.5 8.4 10.9 


Range 6.0 - 14.0 6.0 - 14.0 8.0 - 15.0 8.0 - 14.0 7.5 - 14.0 7.0 - 15.5 7.0 - 14.0 7.0 - 15.0 6.0 - 15.0 9.0 - 15.0 

Average 10.1 10.4 10.4 10.6 10.4 10.6 10.4 10.2 9.1 12.0 

1 Third-tier investment properties are defined as older properties with functional inadequacies and/or marginal locations. 




RERC REAL ESTATE CAP RATE AND YIELD RATE EXPECTATIONS 

Metro 


NCREIF Total Returns (All Types) – 4Q 2011 

1-Year 

Average 

3-Year 

Average 

5-Year 

Average 

10-Year 

Average 

Atlanta 12.34% 1.49% 1.77% 5.95% 

Boston 16.54% 1.74% 5.95% 8.72% 

Chicago 13.49% 3.84% 4.26% 7.64% 

Dallas 13.68% 3.95% 4.22% 6.92% 

Houston 12.45% 5.44% 8.27% 10.24% 

Los Angeles 14.83% 3.13% 4.87% 10.28% 

Minneapolis 10.68% 2.67% 3.32% 6.86% 

New York 15.01% 3.00% 2.98% 10.46% 

San Francisco 23.49% 4.55% 5.92% 8.30% 

Seattle 16.65% 3.15% 4.95% 8.58% 

Washington DC 14.86% 7.43% 6.39% 12.04% 

Source: NCREIF, compiled by RERC, 4Q 2011. 

Property Sector/ 

Subsector 

WINTER 2012 | VOL 40 | NO 4 

NAREIT Investment Performance Index* – 4Q 2011 

Total Return 

2011 2010 

Number of 

REITs 

Dividend 

Yield** 

Equity REIT Index 8.28 27.95 124 3.82 

Industrial/Office -1.47 17.04 30 4.16 

Industrial -5.16 18.89 8 4.03 

Office -0.76 18.41 18 3.96 

Mixed Use 2.67 8.75 4 5.63 

Retail 12.20 33.41 28 3.61 

Shopping 

Centers 

-0.73 30.78 17 4.11 

Regional Malls 22.00 34.64 7 3.12 

Free Standing 0.43 37.37 4 5.43 

Residential 15.37 46.01 18 3.29 

Apartments 15.10 47.04 15 3.28 

Manufactured 

Homes 

NCREIF Property Index Returns – 4Q 2011 

20.38 27.02 3 3.46 

Diversified 2.82 23.75 14 4.25 

Lodging/Resorts -14.31 42.77 14 2.59 

Health Care 13.63 19.20 12 5.15 

Self Storage 35.22 29.29 4 2.84 

Specialty 7.65 4.31 4 3.71 

* All figures represent percent change except where noted. 

** Dividend yield is quoted in percent and is for month end. 

Source: NAREIT, as of December 31, 2011. 

Sector Current Quarter 2011 2010 2009 2008 2007 2006 

Office 2.51% 13.76% 11.74% -19.10% -7.29% 20.51% 19.16% 

Industrial 2.69% 14.59% 9.37% -17.85% -5.76% 14.95% 16.96% 

Retail 3.37% 13.77% 12.62% -10.95% -4.11% 13.51% 13.35% 

Apartment 3.48% 15.45% 18.21% -17.51% -7.29% 11.36% 14.63% 

Hotel 2.08% 11.80% 8.97% -20.40% -9.35% 18.10% 23.57% 

East 2.93% 14.11% 15.12% -17.19% -7.92% 16.03% 17.74% 

West 2.92% 15.96% 12.88% -19.07% -6.85% 18.29% 18.45% 

Midwest 2.88% 12.23% 9.70% -12.98% -5.28% 13.52% 11.46% 

South 3.13% 12.88% 12.07% -14.35% -3.83% 12.78% 14.72% 

National 2.96% 14.26% 13.11% -16.85% -6.46% 15.85% 16.60% 

Source: NCREIF, compiled by RERC, 4Q 2011. 


Property 

Type 

WINTER 2012 | VOL 40 | NO 4 

Apartments - 

Standard 

Retail - 

Anchored / 

Community 

Retail - 

Unanchored 

Industrial 

Warehouse - 

Bulk 

Industrial 

Warehouse - 

Flex 

Office - 

Class B 

Mobile Home 

Park 

Range of 

DSCR 

Max LTV 

Range 

Spread 

Range at 

Par 

Reprinted with permission of John B. Levy & Company, Inc., a real-estate investment bank in Richmond, Virginia (www.jblevyco.com). 

Copyright © 2012 Dow Jones & Company, Inc. All Rights Reserved. 


SURVEY OF MORTGAGE QUOTES - January 25, 2012 


#1 #2 #3 #4 #5 

Midpoint 

of Quote 

at Par 

Spread 

Range at 

Par 

Midpoint 

of Quote 

at Par 

Spread 

Range at 

Par 

Midpoint 

of Quote 

at Par 

Spread 

Range at 

Par 

Midpoint of 

Quote at 

Par 

Spread 

Range at 

Par 

Midpoint 

of Quote 

at Par 

1.25 - 1.35 65% - 75% 245 - 265 255 255 - 280 267.5 220 - 250 235 250 - 270 260 300 - 325 312.5 266.00 

1.25 - 1.35 65% - 75% 205 - 225 212.5 255 - 280 267.5 250 - 275 262.5 265 - 275 270 300 - 325 312.5 265.00 

1.25 - 1.35 55% - 70% 300 - 375 337.5 300 - 325 312.5 300 300 300 - 365 332.5 325 - 375 350 326.50 

1.25 - 1.35 65% - 75% 235 - 275 255 255 - 280 267.5 235 - 260 247.5 265 - 285 275 300 - 310 305 270.00 

1.25 - 1.35 65% - 75% 250 - 275 262.5 255 - 280 267.5 250 - 275 262.5 260 - 300 280 290 - 300 295 273.50 

1.25 - 1.35 65% - 75% 250 - 275 262.5 255 - 280 267.5 250 - 275 262.5 260 - 300 280 290 - 300 295 273.50 

1.25 - 1.35 65% - 75% 250 - 275 262.5 280 280 275 - 300 287.5 260 - 280 270 300 - 325 312.5 282.50 

Self Storage 1.25 - 1.35 55% - 70% 265 - 285 275 280 280 300 300 300 - 325 312.5 325 - 365 345 302.50 


Ave. of 

Midpoint 

Quotes 

Floating Rate - 30 Day LIBOR 

Apts - Leveraged at 65% to 75% 450 - 475 462.5 N/A N/A N/A N/A 275 275 450 450 395.83 

Mezzanine 9% - 12.5% 10.75% 10% - 12% 11.00% 9% - 12.5% 10.75% 10% - 12% 11.00% 10% - 13% 11.50% 11.00%


Executive Summary to Expectations & Market Realities in Real Estate 2012 - 

New Foundations in an Uncertain World 

When Real Estate Research Corporation (RERC), Deloitte, and the 

National Association of REALTORS® (NAR) began making plans to 

publish Expectations & Market Realities in Real Estate 2012, the 

already sluggish economy was starting to slow. The volatility in 

the stock market was becoming more pronounced as the second 

round of the government’s quantitative easing started winding 

down, and further increased as we witnessed the inability of 

politicians to come to an agreement about the nation’s debt ceiling. 

Then the market all but collapsed as the nation’s credit rating 

was downgraded from its AAA status, and investors—afraid the 

economy was about to fall into another recession—retreated to 

the safety and stability that investments like commercial real estate 

could offer. 

As the year 2011 comes to an end, fear and uncertainty have 

spread beyond the U.S., and Europe is being forced to focus on its 

own economic difficulties. The sovereign debt crisis has expanded 

beyond Greece and Portugal to Italy and Spain, and although there 

are moves toward strengthening the European Union’s response 

to their debt crisis, the risk remains that one or more nations may 

eventually default on their obligations and a new financial crisis, 

that could affect the West, will emerge. As a result, the investment 

world is even more uncertain while the relative safety of commercial 

real estate investment is even more attractive as investors look 

for “New Foundations in an Uncertain World.” 

THE ECONOMY 

n The unemployment rate remains stuck in the range of 9 percent. 

Compared to what it should be (had the recession never 

occurred and had job growth kept pace with population 

increases over the past few years) the economy is short some 

11 million jobs, according to NAR’s analysis of data provided by 

the Bureau of Labor Statistics (BLS). 

n The long-term unemployed remain at a troubling 6 million 

persons at the end of 2011, nearly three times the normal 

number of persons who remain unemployed during typical 

recessionary times, according to the BLS. 

n American workers are falling behind in their standard of living 

and are losing spending power, while hourly earnings are rising 

at a rate of less than 2 percent, well below the consumer 

price inflation rate of 3.8 percent, per the BLS. 

n Accumulating debt problems in both the U.S. and Europe are 

adding risk to the global economy. The U.S. economy may be 


WINTER 2012 | VOL 40 | NO 4 

just one negative external shock—a spike in oil prices as the 

Arab spring extends into the Arab fall, a major terrorist attack, 

or a sovereign debt default—away from a new recession. 

n Consumers continue to deleverage and to save, with savings 

more than doubling to nearly $600 billion annually from only 

$250 billion annually prior to the financial crisis, according to 

the Bureau of Economic Analysis (BEA). Businesses and banks 

are also tightening their belts by reducing debt or holding 

onto excess cash. State and local governments have deeply 

slashed employment, while the federal government has been 

increasing spending. The good news is that further deleveraging 

may not be needed in the private sector, and businesses 

will be pressured by shareholders to either invest in new 

plants and equipment or pay out higher dividends. Tax revenues 

at state and local governments have been rising slightly 

and should, at minimum, stop job cuts. 


WINTER 2012 | VOL 40 | NO 4 

n The Federal Reserve has few weapons left to fight the economic 

downturn. The federal funds rate is already at zero and 

cannot go lower, and Federal Reserve Chairman Ben Bernanke 

has promised to keep it at zero until mid-2013 at least. 

“Operation Twist,” in which the Federal Reserve buys longterm 

bonds by selling short-term bonds, is underway, but is 

expected to impact the broader economy only slightly. 

n Consumer prices have inched up 3.8 percent, reports the BLS, 

and while not alarming, they are hovering somewhat above 

the Federal Reserve’s comfort zone. Easy money has clearly 

impacted commodity prices, with the price for oil, corn, 

wheat, pork, beef, copper, coffee, and in particular, gold, all rising 

significantly. There appears to be even more price inflation 

pressure in the pipeline. 

n Housing remains a drag on the economy and on consumer 

spending. Home sales are running below levels seen a decade 

ago, home prices remain weak, housing starts are at a 60-year 

low, and foreclosures remain at historic highs. According to 

CoreLogic, 10.9 million homeowners were underwater with 

mortgage balances higher than their homes were worth as of 

mid-2011, representing one-fifth of all mortgages. 

n Despite the struggles in the housing market in 2011, there 

are numerous factors indicating that conditions are ripe for a 

housing market recovery: 

§ Record-high home affordability; 

§ Rising apartment rents; 

§ Overcorrection in home price to income ratio; 

§ Overcorrection in home price to rent ratio; 

§ Thinning out of inventory; 

§ Pent-up housing demand from the doubling-up 

phenomenon; 

§ Inventory of unsold homes is declining; 

§ 40-year low on newly constructed inventory; and 

§ According to the Census, the number of people “doubling-up” 

has increased by 12 percent since the beginning 

of the recession. 

n Economic wildcards include a technical default among any 

European countries, resulting in a broad financial liquidity 

panic, a significant increase in the price of oil, or stronger economic 

growth in emerging countries. 

CAPITAL MARKET TRENDS 

n More than two years after the credit crunch, money is starting 

to flow into commercial real estate. According to the Mortgage 

Bankers Association (MBA), commercial and multifamily 

mortgage originations more than doubled in the first half of 



2011 compared to the same period a year earlier, although 

current activity remains subdued compared to the hyperactivity 

of 2006 and 2007. 

n Investor type loans for commercial mortgage-backed securities 

(CMBS) increased by 638 percent in second quarter 2011 

compared to second quarter 2010, according to the MBA. 

During the past year, loans for commercial bank portfolios 

increased 150 percent, loans for life insurance companies 

increased 87 percent, and loans for government-sponsored 

entities (GSEs) increased 58 percent. 

n According to the National Association of Real Estate Investment 

Trusts (NAREIT), the total market valuation of outstanding 

public REIT companies was $191 billion in 2008, rose to 

$271 billion in 2009, and increased to $389 billion in 2010. At 

the end of September 2011, the market capitalization value of 

REITs was at an all-time high of $435 billion. 

PROPERTY TYPES 

n Given that economic fundamentals have been dominated by 

uncertainty, office investors continued to favor high-quality 

stable properties in major markets (New York, Washington, 

D.C., Los Angeles, Boston, and San Francisco), with the average 

deal size increasing to $37 million in the first half of 2011. 

According to Real Capital Analytics, in the first half of 2011, 

total transaction volume for the office market rose to $24.5 billion, 

a 77-percent increase from the same period in 2010. Pricing 

for office properties advanced 27 percent in the first half of 

2011, averaging $209 per square foot nationally. Several inland 

metropolitan markets are expected to see office transactions 

exceeding the $1 billion mark, including Houston, Chicago, 

Atlanta, Seattle, Denver, and Phoenix. 

n With minimal new completions, the office vacancy rate has 

plunged by a stout 40 basis points, ending second quarter 

2011 at 17.3 percent, according to Grubb & Ellis. However, with 

vacancy declines still at least 2 years away from equilibrium in 

most areas, rental rates have not yet begun to recover. Concessions 

are less generous than they were a year ago for Class 

A space, but Class B and C properties still are mired deep in a 

tenants’ market. 

n With the manufacturing sector remaining focused on rebuilding 

inventories and the expansion of international trade, 

industrial property market sales totaled $10.7 billion in the 

first half of 2011, a 54-percent gain over first-half sales in 2010. 

According to Real Capital Analytics, 1,087 industrial properties 

changed hands in the first half of 2011, the majority of which 

were warehouses. Chicago became the largest market by dollar 

volume in the first half of 2011, followed by Los Angeles. 



Pricing for industrial properties rose modestly during this 

time period, to $59 per square foot, and cap rates averaged 

7.9 percent. 

n The national vacancy rate for industrial space declined to 9.8 

percent by June 2011, according to Grubb & Ellis, as demand 

totaled 62 million square feet, the strongest six-month performance 

since 2007. However, there was slowdown in activity 

toward the end of second quarter 2011. Net effective rents 

have stabilized and are increasing for large Class A distribution 

buildings, but broad-based rent growth is unlikely to begin for 

at least another year. 

n Despite decreasing consumer confidence and higher consumer 

prices, second quarter 2011 retail property sales volume 

was the highest since third quarter 2007, with almost $15.2 billion 

in transactions, according to Real Capital Analytics. The 

majority of deals involved strip centers and grocery-anchored 

community centers, and cap rates remained relatively stable, 

although the price per square foot declined to $146 in second 

quarter 2011 from $165 in first quarter. 


WINTER 2012 | VOL 40 | NO 4 

n Of the major commercial property sectors, retail suffered 

most from the housing collapse and the Great Recession 

that followed. The vacancy rate among all retail center types 

retreated slightly to 7.2 percent by mid-year 2011, according 

to CoStar Group, as downward pressure on rents continued. 

n The apartment sector has continued to be one of the strongest 

performers in commercial real estate in 2011, with $22.9 

billion of significant apartment properties sold in the first half 

of 2011. This is a 104-percent increase from the same period 

a year ago, as reported by Real Capital Analytics, and is due 

primarily to robust portfolio transactions. Further, apartments 

have outperformed all other major property types (by nearly 

double) in terms of pricing, with an annualized appreciation 

rate of 15.08 percent through the first half of 2011. This was 

due in part to continued cap rate compression. 

n Annual effective rental rates for the apartment sector 

increased by 5.1 percent in second quarter 2011, accelerating 

from 4.5 percent during the same period in 2010, according 

to Axiometrics, Inc., while vacancies declined to 6.0 percent 

and concessions declined. Additionally, effective rent of $980 

per unit per month in second quarter 2011 is back to the peak 

reached in second quarter 2008, setting the stage for new 

construction. 

n Transaction volume for the hotel sector in the first half of 

2011 surpassed volume for the same period in 2010, but the 

momentum is slowing. Given a minimal portfolio pipeline and 

a falloff of CMBS lending, less transaction volume and pricing 

volatility may be expected through the remainder of the year. 

According to Real Capital Analytics, unit pricing of lodging 

properties increased to an average of $175,000 per key, but 

August 2011 data indicates that average unit pricing per room 

has decreased by approximately 15 percent due to investors’ 

appetite for higher returns for mid-market properties vs. top 

tier trophy assets. 

n Although PKF Hospitality Research (PKF-HR) lowered its 

demand forecast to settle at 4.5 percent for the remainder 

of 2011, hotel occupancy is expected to increase to a level 

of 59.8 percent for the remainder of 2011. Although average 

daily room rates (ADR) continue to lag occupancy increases, 

PKF-HR has increased its annual ADR forecast for 2011 to 3.2 

percent, slightly above the expected pace of inflation. 

OUTLOOK 

n Given that economic fundamentals have been dominated by 

uncertainty, office investors continued to favor high-quality 

stable properties in major markets (New York, Washington, 

D.C., Los Angeles, Boston, and San Francisco), with the average 


WINTER 2012 | VOL 40 | NO 4 

deal size increasing to $37 million in the first half of 2011. 

According to Real Capital Analytics, in the first half of 2011, 

total transaction volume for the office market rose to $24.5 billion, 

a 77-percent increase from the same period in 2010. Pricing 

for office properties advanced 27 percent in the first half of 

2011, averaging $209 per square foot nationally. Several inland 

metropolitan markets are expected to see office transactions 

exceeding the $1 billion mark, including Houston, Chicago, 

Atlanta, Seattle, Denver, and Phoenix. 

n With minimal new completions, the office vacancy rate has 

plunged by a stout 40 basis points, ending second quarter 

2011 at 17.3 percent, according to Grubb & Ellis. However, with 

vacancy declines still at least 2 years away from equilibrium in 

most areas, rental rates have not yet begun to recover. Concessions 

are less generous than they were a year ago for Class 

A space, but Class B and C properties still are mired deep in a 

tenants’ market. 

n With the manufacturing sector remaining focused on rebuilding 

inventories and the expansion of international trade, 

industrial property market sales totaled $10.7 billion in the 

first half of 2011, a 54-percent gain over first-half sales in 2010. 

According to Real Capital Analytics, 1,087 industrial properties 

changed hands in the first half of 2011, the majority of which 

were warehouses. Chicago became the largest market by dollar 

volume in the first half of 2011, followed by Los Angeles. 

Pricing for industrial properties rose modestly during this 

time period, to $59 per square foot, and cap rates averaged 

7.9 percent. 

n The national vacancy rate for industrial space declined to 9.8 

percent by June 2011, according to Grubb & Ellis, as demand 

totaled 62 million square feet, the strongest six-month performance 

since 2007. However, there was slowdown in activity 

toward the end of second quarter 2011. Net effective rents 

have stabilized and are increasing for large Class A distribution 

buildings, but broad-based rent growth is unlikely to begin for 

at least another year. 

n Despite decreasing consumer confidence and higher consumer 

prices, second quarter 2011 retail property sales volume 

was the highest since third quarter 2007, with almost $15.2 billion 

in transactions, according to Real Capital Analytics. The 

majority of deals involved strip centers and grocery-anchored 

community centers, and cap rates remained relatively stable, 

although the price per square foot declined to $146 in second 

quarter 2011 from $165 in first quarter. 

n Of the major commercial property sectors, retail suffered 

most from the housing collapse and the Great Recession 

that followed. The vacancy rate among all retail center types 

retreated slightly to 7.2 percent by mid-year 2011, according 

to CoStar Group, as downward pressure on rents continued. 



n The apartment sector has continued to be one of the strongest 

performers in commercial real estate in 2011, with $22.9 

billion of significant apartment properties sold in the first half 

of 2011. This is a 104-percent increase from the same period 

a year ago, as reported by Real Capital Analytics, and is due 

primarily to robust portfolio transactions. Further, apartments 

have outperformed all other major property types (by nearly 

double) in terms of pricing, with an annualized appreciation 

rate of 15.08 percent through the first half of 2011. This was 

due in part to continued cap rate compression. 

n Annual effective rental rates for the apartment sector 

increased by 5.1 percent in second quarter 2011, accelerating 

from 4.5 percent during the same period in 2010, according 

to Axiometrics, Inc., while vacancies declined to 6.0 percent 

and concessions declined. Additionally, effective rent of $980 

per unit per month in second quarter 2011 is back to the peak 

reached in second quarter 2008, setting the stage for new 

construction. 

n Transaction volume for the hotel sector in the first half of 

2011 surpassed volume for the same period in 2010, but the 

momentum is slowing. Given a minimal portfolio pipeline and 

a falloff of CMBS lending, less transaction volume and pricing 

volatility may be expected through the remainder of the year. 

According to Real Capital Analytics, unit pricing of lodging 

properties increased to an average of $175,000 per key, but 

August 2011 data indicates that average unit pricing per room 

has decreased by approximately 15 percent due to investors’ 

appetite for higher returns for mid-market properties vs. top 

tier trophy assets. 

n Although PKF Hospitality Research (PKF-HR) lowered its 

demand forecast to settle at 4.5 percent for the remainder 

of 2011, hotel occupancy is expected to increase to a level 

of 59.8 percent for the remainder of 2011. Although average 

daily room rates (ADR) continue to lag occupancy increases, 

PKF-HR has increased its annual ADR forecast for 2011 to 3.2 

percent, slightly above the expected pace of inflation. 

The complete 50-page annual forecast report, 

“Expectations & Market Realities in Real Estate 2012- 

New Foundations in an Uncertain World,” is available 

FREE to RERC subscribers on your member site. 

For non-RERC subscribers, the report can be purchased 

at www.rerc.com. 


Atlanta, GA 

Chicago, IL 


METROPOLITAN INVESTMENT CRITERIA 

Houston, TX 

Miami, FL 


Atlanta 

Austin 

Baltimore 

Boston 

Charlotte 

Chicago 

Cincinnati 

Cleveland 

Columbus 

Dallas/Ft. Worth 

Denver 

Detroit 

Hartford 

Honolulu 

Houston 

Indianapolis 

Kansas City 

Las Vegas 

Los Angeles 

Memphis 

Miami 

Milwaukee 

Minneapolis 

Nashville 

New York, NY 

Pittsburgh, PA 

San Francisco, CA 

St. Louis, MO 

WINTER 2012 | VOL 40 | NO 4 

New Orleans/Baton Rouge 

New York City 

Norfolk 

Northern New Jersey 

Oklahoma City 

Omaha 

Orlando 

Philadelphia 

Phoenix 

Pittsburgh 

Portland 

Raleigh 

Richmond 

Sacramento 

Salt Lake City 

San Antonio 

San Diego 

San Francisco 

Seattle 

St. Louis 

Tampa 

Toledo 

Tucson 

Washington, D.C. 


WINTER 2012 | VOL 40 | NO 4 

ATLANTA 


Estimate 


Atlanta Investment Criteria | First-Tier 1 Investment Properties 


4TH QUARTER 2011 

Pre-Tax Yield (%) Going-In Cap Rate (%) Terminal Cap Rate (%) Anticipated 1-Year Growth Rates 

South 

Region 

U.S. 


Estimate 

South 

Region 

U.S. 


Estimate 

Offc - CBD 9.0 9.8 9.3 7.3 7.9 7.6 7.9 8.5 8.3 1.0 1.9 0.8 1.1 

Offc - Suburban 9.6 9.9 9.6 7.9 8.1 8.1 8.5 8.7 8.6 0.1 0.7 0.1 0.3 

Ind - Warehouse 9.2 9.8 9.4 7.7 8.2 7.9 8.3 8.9 8.5 1.1 1.2 0.8 0.8 

Ind - R&D 9.8 10.0 9.7 8.1 8.4 8.2 8.7 9.0 8.8 0.4 1.3 0.3 1.0 

Ind - Flex 10.0 10.2 9.8 8.4 8.5 8.3 9.0 9.2 8.9 0.4 0.6 0.2 0.4 

Ret - Reg Mall 8.8 9.8 9.3 7.2 8.0 7.7 7.8 8.7 8.4 0.4 1.6 0.4 0.9 

Ret - Pwr Center 9.3 9.9 9.4 7.9 8.2 7.9 8.5 8.8 8.5 0.6 1.8 0.2 1.0 

Ret - Neigh/ 

Comm. 

South 

Region 

U.S. 

National 

Value 

South 

Value 

National 

Rent 

9.6 10.0 9.6 7.8 8.3 8.0 8.4 8.9 8.7 0.5 1.5 0.3 1.1 

Apartment 8.3 9.1 8.4 6.4 7.2 6.7 7.1 7.8 7.3 3.5 3.3 3.5 3.4 

Hotel 10.7 10.7 10.7 8.5 8.8 8.8 9.3 9.5 9.5 1.1 1.8 1.4 1.8 

Average 9.4 9.9 9.5 7.7 8.2 7.9 8.4 8.8 8.6 0.9 1.6 0.8 1.2 



AUSTIN 


Estimate 

Austin Investment Criteria | First-Tier 1 Investment Properties 

South 

Rent 



South 

Region 

U.S. 


Estimate 

South 

Region 

U.S. 


Estimate 

Offc - CBD 9.2 9.8 9.3 7.1 7.9 7.6 7.7 8.5 8.3 1.0 1.9 0.8 1.1 

Offc - Suburban 9.6 9.9 9.6 7.8 8.1 8.1 8.4 8.7 8.6 0.1 0.7 0.1 0.3 

Ind - Warehouse 9.7 9.8 9.4 8.0 8.2 7.9 8.7 8.9 8.5 1.1 1.2 0.8 0.8 

Ind - R&D 10.1 10.0 9.7 8.4 8.4 8.2 9.0 9.0 8.8 0.4 1.3 0.3 1.0 

Ind - Flex 10.3 10.2 9.8 8.6 8.5 8.3 9.2 9.2 8.9 0.4 0.6 0.2 0.4 

Ret - Reg Mall 9.1 9.8 9.3 7.4 8.0 7.7 8.0 8.7 8.4 0.4 1.6 0.4 0.9 

Ret - Pwr Center 9.3 9.9 9.4 7.5 8.2 7.9 8.1 8.8 8.5 0.6 1.8 0.2 1.0 

Ret - Neigh/ 

Comm. 

South 

Region 

U.S. 

National 

Value 

South 

Value 

National 

Rent 

9.4 10.0 9.6 7.7 8.3 8.0 8.2 8.9 8.7 0.5 1.5 0.3 1.1 

Apartment 8.5 9.1 8.4 6.5 7.2 6.7 7.1 7.8 7.3 3.5 3.3 3.5 3.4 

Hotel 10.7 10.7 10.7 8.5 8.8 8.8 9.2 9.5 9.5 1.1 1.8 1.4 1.8 

Average 9.6 9.9 9.5 7.8 8.2 7.9 8.4 8.8 8.6 0.9 1.6 0.8 1.2 



South 

Rent 



BALTIMORE 



Estimate 

Baltimore Investment Criteria | First-Tier 1 Investment Properties 

WINTER 2012 | VOL 40 | NO 4 



East 

Region 

U.S. 


Estimate 

East 

Region 

U.S. 


Estimate 

Offc - CBD 8.5 8.7 9.3 6.9 7.2 7.6 7.6 7.8 8.3 1.0 1.6 0.8 1.2 

Offc - Suburban 9.2 9.3 9.6 7.8 7.9 8.1 8.3 8.5 8.6 0.1 0.0 0.1 0.0 

Ind - Warehouse 8.9 9.3 9.4 7.5 8.0 7.9 8.1 8.5 8.5 1.1 1.1 0.8 0.9 

Ind - R&D 9.5 9.5 9.7 8.0 8.2 8.2 8.6 8.8 8.8 0.4 0.6 0.3 0.6 

Ind - Flex 9.6 9.4 9.8 8.1 8.1 8.3 8.7 8.7 8.9 0.4 0.5 0.2 0.5 

Ret - Reg Mall 8.3 9.0 9.3 6.9 7.4 7.7 7.6 8.2 8.4 0.4 0.7 0.4 1.0 

Ret - Pwr Center 8.7 9.1 9.4 7.3 7.7 7.9 7.9 8.5 8.5 0.6 0.6 0.2 0.9 

Ret - Neigh/ 

Comm. 

East 

Region 

U.S. 

National 

Value 

East 

Value 

National 

Rent 

8.8 9.2 9.6 7.3 7.7 8.0 8.0 8.5 8.7 0.5 0.9 0.3 0.9 

Apartment 7.6 8.0 8.4 6.0 6.3 6.7 6.7 7.1 7.3 3.5 3.6 3.5 3.8 

Hotel 10.5 10.8 10.7 8.3 8.5 8.8 9.3 9.6 9.5 1.1 1.2 1.4 1.3 

Average 9.0 9.2 9.5 7.4 7.7 7.9 8.1 8.4 8.6 0.9 1.1 0.8 1.1 



BOSTON 


Estimate 

Boston Investment Criteria | First-Tier 1 Investment Properties 

East 

Rent 



East 

Region 

U.S. 


Estimate 

East 

Region 

U.S. 


Estimate 

Offc - CBD 8.2 8.7 9.3 6.7 7.2 7.6 7.3 7.8 8.3 1.0 1.6 0.8 1.2 

Offc - Suburban 9.1 9.3 9.6 7.6 7.9 8.1 8.1 8.5 8.6 0.1 0.0 0.1 0.0 

Ind - Warehouse 9.2 9.3 9.4 7.7 8.0 7.9 8.2 8.5 8.5 1.1 1.1 0.8 0.9 

Ind - R&D 9.6 9.5 9.7 8.1 8.2 8.2 8.6 8.8 8.8 0.4 0.6 0.3 0.6 

Ind - Flex 9.7 9.4 9.8 8.3 8.1 8.3 8.8 8.7 8.9 0.4 0.5 0.2 0.5 

Ret - Reg Mall 8.1 9.0 9.3 6.6 7.4 7.7 7.5 8.2 8.4 0.4 0.7 0.4 1.0 

Ret - Pwr Center 8.6 9.1 9.4 7.2 7.7 7.9 8.1 8.5 8.5 0.6 0.6 0.2 0.9 

Ret - Neigh/ 

Comm. 

East 

Region 

U.S. 

National 

Value 

East 

Value 

National 

Rent 

8.7 9.2 9.6 7.3 7.7 8.0 7.9 8.5 8.7 0.5 0.9 0.3 0.9 

Apartment 7.5 8.0 8.4 5.7 6.3 6.7 6.6 7.1 7.3 3.5 3.6 3.5 3.8 

Hotel 10.2 10.8 10.7 7.9 8.5 8.8 9.1 9.6 9.5 1.1 1.2 1.4 1.3 

Average 8.9 9.2 9.5 7.3 7.7 7.9 8.0 8.4 8.6 0.9 1.1 0.8 1.1 



East 

Rent 


WINTER 2012 | VOL 40 | NO 4 

CHARLOTTE 


Estimate 


Charlotte Investment Criteria | First-Tier 1 Investment Properties 




East 

Region 

U.S. 


Estimate 

East 

Region 

U.S. 


Estimate 

Offc - CBD 8.5 8.7 9.3 7.0 7.2 7.6 7.6 7.8 8.3 1.0 1.6 0.8 1.2 

Offc - Suburban 9.3 9.3 9.6 7.8 7.9 8.1 8.3 8.5 8.6 0.1 0.0 0.1 0.0 

Ind - Warehouse 9.1 9.3 9.4 7.7 8.0 7.9 8.3 8.5 8.5 1.1 1.1 0.8 0.9 

Ind - R&D 9.6 9.5 9.7 8.2 8.2 8.2 8.7 8.8 8.8 0.4 0.6 0.3 0.6 

Ind - Flex 9.7 9.4 9.8 8.4 8.1 8.3 8.9 8.7 8.9 0.4 0.5 0.2 0.5 

Ret - Reg Mall 8.4 9.0 9.3 7.0 7.4 7.7 7.6 8.2 8.4 0.4 0.7 0.4 1.0 

Ret - Pwr Center 9.0 9.1 9.4 7.6 7.7 7.9 8.3 8.5 8.5 0.6 0.6 0.2 0.9 

Ret - Neigh/ 

Comm. 

East 

Region 

U.S. 

National 

Value 

East 

Value 

National 

Rent 

9.0 9.2 9.6 7.5 7.7 8.0 8.2 8.5 8.7 0.5 0.9 0.3 0.9 

Apartment 7.7 8.0 8.4 6.1 6.3 6.7 6.8 7.1 7.3 3.5 3.6 3.5 3.8 

Hotel 10.7 10.8 10.7 8.4 8.5 8.8 9.3 9.6 9.5 1.1 1.2 1.4 1.3 

Average 9.1 9.2 9.5 7.6 7.7 7.9 8.2 8.4 8.6 0.9 1.1 0.8 1.1 



CHICAGO 


Estimate 

Chicago Investment Criteria | First-Tier 1 Investment Properties 

East 

Rent 



Midwest 

Region 

U.S. 


Estimate 

Midwest 

Region 

U.S. 


Estimate 

Offc - CBD 8.5 9.6 9.3 7.3 8.2 7.6 8.0 8.8 8.3 1.0 -0.2 0.8 -0.2 

Offc - Suburban 9.0 9.7 9.6 8.0 8.5 8.1 8.5 8.9 8.6 0.1 -0.9 0.1 -0.7 

Ind - Warehouse 8.7 9.4 9.4 7.8 8.3 7.9 8.4 8.9 8.5 1.1 0.8 0.8 0.5 

Ind - R&D 9.1 9.8 9.7 8.1 8.6 8.2 8.8 9.2 8.8 0.4 -0.1 0.3 -0.2 

Ind - Flex 9.2 9.7 9.8 8.2 8.6 8.3 8.8 9.1 8.9 0.4 0.2 0.2 0.0 

Ret - Reg Mall 8.2 9.0 9.3 7.6 8.2 7.7 7.9 8.6 8.4 0.4 -0.5 0.4 -0.7 

Ret - Pwr Center 8.5 9.0 9.4 7.7 8.1 7.9 8.1 8.5 8.5 0.6 -0.4 0.2 -0.4 

Ret - Neigh/ 

Comm. 

Midwest 

Region 

U.S. 

National 

Value 

Midwest 

Value 

National 

Rent 

8.8 9.5 9.6 7.9 8.4 8.0 8.5 9.0 8.7 0.5 -0.7 0.3 -0.9 

Apartment 8.1 8.6 8.4 6.6 7.3 6.7 7.2 7.7 7.3 3.5 2.9 3.5 2.8 

Hotel 10.2 10.6 10.7 9.0 9.4 8.8 9.3 9.8 9.5 1.1 0.5 1.4 0.7 

Average 8.8 9.5 9.5 7.8 8.4 7.9 8.4 8.9 8.6 0.9 0.2 0.8 0.1 



Midwest 

Rent 



CINCINNATI 



Estimate 

Cincinnati Investment Criteria | First-Tier 1 Investment Properties 

WINTER 2012 | VOL 40 | NO 4 



Midwest 

Region 

U.S. 


Estimate 

Midwest 

Region 

U.S. 


Estimate 

Offc - CBD 9.1 9.6 9.3 7.6 8.2 7.6 8.2 8.8 8.3 1.0 -0.2 0.8 -0.2 

Offc - Suburban 9.7 9.7 9.6 8.2 8.5 8.1 8.7 8.9 8.6 0.1 -0.9 0.1 -0.7 

Ind - Warehouse 9.1 9.4 9.4 7.7 8.3 7.9 8.2 8.9 8.5 1.1 0.8 0.8 0.5 

Ind - R&D 9.6 9.8 9.7 8.2 8.6 8.2 8.7 9.2 8.8 0.4 -0.1 0.3 -0.2 

Ind - Flex 9.7 9.7 9.8 8.4 8.6 8.3 8.9 9.1 8.9 0.4 0.2 0.2 0.0 

Ret - Reg Mall 8.8 9.0 9.3 7.5 8.2 7.7 8.0 8.6 8.4 0.4 -0.5 0.4 -0.7 

Ret - Pwr Center 9.2 9.0 9.4 7.8 8.1 7.9 8.4 8.5 8.5 0.6 -0.4 0.2 -0.4 

Ret - Neigh/ 

Comm. 

Midwest 

Region 

U.S. 

National 

Value 

Midwest 

Value 

National 

Rent 

9.3 9.5 9.6 8.0 8.4 8.0 8.6 9.0 8.7 0.5 -0.7 0.3 -0.9 

Apartment 8.2 8.6 8.4 6.6 7.3 6.7 7.1 7.7 7.3 3.5 2.9 3.5 2.8 

Hotel 10.7 10.6 10.7 9.0 9.4 8.8 9.6 9.8 9.5 1.1 0.5 1.4 0.7 

Average 9.3 9.5 9.5 7.9 8.4 7.9 8.4 8.9 8.6 0.9 0.2 0.8 0.1 



CLEVELAND 


Estimate 

Cleveland Investment Criteria | First-Tier 1 Investment Properties 

Midwest 

Rent 



Midwest 

Region 

U.S. 


Estimate 

Midwest 

Region 

U.S. 


Estimate 

Offc - CBD 9.2 9.6 9.3 7.8 8.2 7.6 8.4 8.8 8.3 1.0 -0.2 0.8 -0.2 

Offc - Suburban 9.7 9.7 9.6 8.3 8.5 8.1 8.8 8.9 8.6 0.1 -0.9 0.1 -0.7 

Ind - Warehouse 9.1 9.4 9.4 7.8 8.3 7.9 8.3 8.9 8.5 1.1 0.8 0.8 0.5 

Ind - R&D 9.5 9.8 9.7 8.2 8.6 8.2 8.8 9.2 8.8 0.4 -0.1 0.3 -0.2 

Ind - Flex 9.6 9.7 9.8 8.4 8.6 8.3 8.8 9.1 8.9 0.4 0.2 0.2 0.0 

Ret - Reg Mall 8.8 9.0 9.3 7.7 8.2 7.7 8.2 8.6 8.4 0.4 -0.5 0.4 -0.7 

Ret - Pwr Center 9.1 9.0 9.4 7.9 8.1 7.9 8.4 8.5 8.5 0.6 -0.4 0.2 -0.4 

Ret - Neigh/ 

Comm. 

Midwest 

Region 

U.S. 

National 

Value 

Midwest 

Value 

National 

Rent 

9.1 9.5 9.6 7.9 8.4 8.0 8.4 9.0 8.7 0.5 -0.7 0.3 -0.9 

Apartment 7.8 8.6 8.4 6.4 7.3 6.7 7.1 7.7 7.3 3.5 2.9 3.5 2.8 

Hotel 10.7 10.6 10.7 9.1 9.4 8.8 9.6 9.8 9.5 1.1 0.5 1.4 0.7 

Average 9.3 9.5 9.5 8.0 8.4 7.9 8.5 8.9 8.6 0.9 0.2 0.8 0.1 



Midwest 

Rent 


WINTER 2012 | VOL 40 | NO 4 

COLUMBUS 


Estimate 


Columbus Investment Criteria | First-Tier 1 Investment Properties 




Midwest 

Region 

U.S. 


Estimate 

Midwest 

Region 

U.S. 


Estimate 

Offc - CBD 9.1 9.6 9.3 7.5 8.2 7.6 8.1 8.8 8.3 1.0 -0.2 0.8 -0.2 

Offc - Suburban 9.8 9.7 9.6 8.2 8.5 8.1 8.7 8.9 8.6 0.1 -0.9 0.1 -0.7 

Ind - Warehouse 9.2 9.4 9.4 7.7 8.3 7.9 8.3 8.9 8.5 1.1 0.8 0.8 0.5 

Ind - R&D 9.7 9.8 9.7 8.2 8.6 8.2 8.7 9.2 8.8 0.4 -0.1 0.3 -0.2 

Ind - Flex 9.8 9.7 9.8 8.4 8.6 8.3 8.9 9.1 8.9 0.4 0.2 0.2 0.0 

Ret - Reg Mall 8.8 9.0 9.3 7.5 8.2 7.7 7.9 8.6 8.4 0.4 -0.5 0.4 -0.7 

Ret - Pwr Center 9.2 9.0 9.4 7.8 8.1 7.9 8.3 8.5 8.5 0.6 -0.4 0.2 -0.4 

Ret - Neigh/ 

Comm. 

Midwest 

Region 

U.S. 

National 

Value 

Midwest 

Value 

National 

Rent 

9.5 9.5 9.6 8.0 8.4 8.0 8.5 9.0 8.7 0.5 -0.7 0.3 -0.9 

Apartment 8.3 8.6 8.4 6.6 7.3 6.7 7.2 7.7 7.3 3.5 2.9 3.5 2.8 

Hotel 10.7 10.6 10.7 8.9 9.4 8.8 9.4 9.8 9.5 1.1 0.5 1.4 0.7 

Average 9.4 9.5 9.5 7.9 8.4 7.9 8.4 8.9 8.6 0.9 0.2 0.8 0.1 



DALLAS/FT. WORTH 


Estimate 

Dallas/Ft. Worth Investment Criteria | First-Tier 1 Investment Properties 

Midwest 

Rent 



South 

Region 

U.S. 


Estimate 

South 

Region 

U.S. 


Estimate 

Offc - CBD 9.5 9.8 9.3 7.7 7.9 7.6 8.6 8.5 8.3 1.0 1.9 0.8 1.1 

Offc - Suburban 9.8 9.9 9.6 8.0 8.1 8.1 8.8 8.7 8.6 0.1 0.7 0.1 0.3 

Ind - Warehouse 9.5 9.8 9.4 7.9 8.2 7.9 8.7 8.9 8.5 1.1 1.2 0.8 0.8 

Ind - R&D 9.9 10.0 9.7 8.2 8.4 8.2 8.9 9.0 8.8 0.4 1.3 0.3 1.0 

Ind - Flex 10.1 10.2 9.8 8.4 8.5 8.3 9.1 9.2 8.9 0.4 0.6 0.2 0.4 

Ret - Reg Mall 9.4 9.8 9.3 7.8 8.0 7.7 8.6 8.7 8.4 0.4 1.6 0.4 0.9 

Ret - Pwr Center 9.6 9.9 9.4 8.0 8.2 7.9 8.7 8.8 8.5 0.6 1.8 0.2 1.0 

Ret - Neigh/ 

Comm. 

South 

Region 

U.S. 

National 

Value 

South 

Value 

National 

Rent 

9.7 10.0 9.6 7.9 8.3 8.0 8.7 8.9 8.7 0.5 1.5 0.3 1.1 

Apartment 8.8 9.1 8.4 6.8 7.2 6.7 7.5 7.8 7.3 3.5 3.3 3.5 3.4 

Hotel 10.9 10.7 10.7 8.8 8.8 8.8 9.7 9.5 9.5 1.1 1.8 1.4 1.8 

Average 9.7 9.9 9.5 8.0 8.2 7.9 8.7 8.8 8.6 0.9 1.6 0.8 1.2 



South 

Rent 



DENVER 



Estimate 

Denver Investment Criteria | First-Tier 1 Investment Properties 

WINTER 2012 | VOL 40 | NO 4 



West 

Region 

U.S. 


Estimate 

West 

Region 

U.S. 


Estimate 

Offc - CBD 8.9 9.2 9.3 7.2 7.3 7.6 7.9 8.1 8.3 1.0 0.9 0.8 1.0 

Offc - Suburban 9.7 9.7 9.6 7.9 7.9 8.1 8.4 8.5 8.6 0.1 0.4 0.1 0.6 

Ind - Warehouse 9.0 9.1 9.4 7.5 7.5 7.9 8.0 8.1 8.5 1.1 1.3 0.8 1.0 

Ind - R&D 9.6 9.6 9.7 7.9 7.8 8.2 8.4 8.4 8.8 0.4 0.1 0.3 0.1 

Ind - Flex 9.7 9.8 9.8 8.2 8.0 8.3 8.7 8.6 8.9 0.4 0.3 0.2 0.0 

Ret - Reg Mall 9.0 9.4 9.3 7.4 7.6 7.7 7.9 8.2 8.4 0.4 -0.1 0.4 0.5 

Ret - Pwr Center 9.3 9.6 9.4 7.7 7.7 7.9 8.2 8.3 8.5 0.6 0.5 0.2 -0.4 

Ret - Neigh/ 

Comm. 

West 

Region 

U.S. 

National 

Value 

West 

Value 

National 

Rent 

9.4 9.6 9.6 7.9 7.8 8.0 8.4 8.3 8.7 0.5 0.3 0.3 0.4 

Apartment 7.9 8.2 8.4 6.2 6.2 6.7 6.8 6.9 7.3 3.5 4.0 3.5 4.0 

Hotel 10.7 10.6 10.7 8.8 8.7 8.8 9.2 9.2 9.5 1.1 1.0 1.4 1.8 

Average 9.3 9.5 9.5 7.7 7.7 7.9 8.2 8.3 8.6 0.9 0.9 0.8 0.9 



DETROIT 


Estimate 

Detroit Investment Criteria | First-Tier 1 Investment Properties 

West 

Rent 



Midwest 

Region 

U.S. 


Estimate 

Midwest 

Region 

U.S. 


Estimate 

Offc - CBD 9.3 9.6 9.3 7.8 8.2 7.6 8.4 8.8 8.3 1.0 -0.2 0.8 -0.2 

Offc - Suburban 9.8 9.7 9.6 8.4 8.5 8.1 8.8 8.9 8.6 0.1 -0.9 0.1 -0.7 

Ind - Warehouse 9.2 9.4 9.4 7.9 8.3 7.9 8.5 8.9 8.5 1.1 0.8 0.8 0.5 

Ind - R&D 9.6 9.8 9.7 8.3 8.6 8.2 8.9 9.2 8.8 0.4 -0.1 0.3 -0.2 

Ind - Flex 9.7 9.7 9.8 8.4 8.6 8.3 8.9 9.1 8.9 0.4 0.2 0.2 0.0 

Ret - Reg Mall 8.7 9.0 9.3 7.6 8.2 7.7 8.0 8.6 8.4 0.4 -0.5 0.4 -0.7 

Ret - Pwr Center 8.9 9.0 9.4 7.8 8.1 7.9 8.3 8.5 8.5 0.6 -0.4 0.2 -0.4 

Ret - Neigh/ 

Comm. 

Midwest 

Region 

U.S. 

National 

Value 

Midwest 

Value 

National 

Rent 

9.2 9.5 9.6 8.0 8.4 8.0 8.6 9.0 8.7 0.5 -0.7 0.3 -0.9 

Apartment 8.2 8.6 8.4 6.7 7.3 6.7 7.2 7.7 7.3 3.5 2.9 3.5 2.8 

Hotel 10.7 10.6 10.7 9.2 9.4 8.8 9.7 9.8 9.5 1.1 0.5 1.4 0.7 

Average 9.3 9.5 9.5 8.0 8.4 7.9 8.5 8.9 8.6 0.9 0.2 0.8 0.1 



Midwest 

Rent 


WINTER 2012 | VOL 40 | NO 4 

HARTFORD 


Estimate 


Hartford Investment Criteria | First-Tier 1 Investment Properties 




East 

Region 

U.S. 


Estimate 

East 

Region 

U.S. 


Estimate 

Offc - CBD 8.6 8.7 9.3 6.9 7.2 7.6 7.6 7.8 8.3 1.0 1.6 0.8 1.2 

Offc - Suburban 9.5 9.3 9.6 7.8 7.9 8.1 8.3 8.5 8.6 0.1 0.0 0.1 0.0 

Ind - Warehouse 9.2 9.3 9.4 7.6 8.0 7.9 8.1 8.5 8.5 1.1 1.1 0.8 0.9 

Ind - R&D 9.6 9.5 9.7 7.9 8.2 8.2 8.5 8.8 8.8 0.4 0.6 0.3 0.6 

Ind - Flex 9.8 9.4 9.8 8.1 8.1 8.3 8.7 8.7 8.9 0.4 0.5 0.2 0.5 

Ret - Reg Mall 8.7 9.0 9.3 6.9 7.4 7.7 7.5 8.2 8.4 0.4 0.7 0.4 1.0 

Ret - Pwr Center 9.2 9.1 9.4 7.4 7.7 7.9 8.1 8.5 8.5 0.6 0.6 0.2 0.9 

Ret - Neigh/ 

Comm. 

East 

Region 

U.S. 

National 

Value 

East 

Value 

National 

Rent 

9.0 9.2 9.6 7.5 7.7 8.0 8.1 8.5 8.7 0.5 0.9 0.3 0.9 

Apartment 7.7 8.0 8.4 6.0 6.3 6.7 6.6 7.1 7.3 3.5 3.6 3.5 3.8 

Hotel 10.9 10.8 10.7 8.2 8.5 8.8 9.2 9.6 9.5 1.1 1.2 1.4 1.3 

Average 9.2 9.2 9.5 7.4 7.7 7.9 8.1 8.4 8.6 0.9 1.1 0.8 1.1 



HONOLULU 


Estimate 

Honolulu Investment Criteria | First-Tier 1 Investment Properties 

East 

Rent 



West 

Region 

U.S. 


Estimate 

West 

Region 

U.S. 


Estimate 

Offc - CBD 8.8 9.2 9.3 7.1 7.3 7.6 7.8 8.1 8.3 1.0 0.9 0.8 1.0 

Offc - Suburban 9.9 9.7 9.6 8.0 7.9 8.1 8.6 8.5 8.6 0.1 0.4 0.1 0.6 

Ind - Warehouse 9.0 9.1 9.4 7.3 7.5 7.9 8.0 8.1 8.5 1.1 1.3 0.8 1.0 

Ind - R&D 9.8 9.6 9.7 7.9 7.8 8.2 8.5 8.4 8.8 0.4 0.1 0.3 0.1 

Ind - Flex 10.0 9.8 9.8 8.1 8.0 8.3 8.7 8.6 8.9 0.4 0.3 0.2 0.0 

Ret - Reg Mall 8.8 9.4 9.3 7.1 7.6 7.7 7.7 8.2 8.4 0.4 -0.1 0.4 0.5 

Ret - Pwr Center 9.3 9.6 9.4 7.5 7.7 7.9 8.1 8.3 8.5 0.6 0.5 0.2 -0.4 

Ret - Neigh/ 

Comm. 

West 

Region 

U.S. 

National 

Value 

West 

Value 

National 

Rent 

9.2 9.6 9.6 7.4 7.8 8.0 8.0 8.3 8.7 0.5 0.3 0.3 0.4 

Apartment 7.9 8.2 8.4 6.0 6.2 6.7 6.7 6.9 7.3 3.5 4.0 3.5 4.0 

Hotel 10.5 10.6 10.7 8.3 8.7 8.8 9.0 9.2 9.5 1.1 1.0 1.4 1.8 

Average 9.3 9.5 9.5 7.5 7.7 7.9 8.1 8.3 8.6 0.9 0.9 0.8 0.9 



West 

Rent 



HOUSTON 



Estimate 

Houston Investment Criteria | First-Tier 1 Investment Properties 

WINTER 2012 | VOL 40 | NO 4 



South 

Region 

U.S. 


Estimate 

South 

Region 

U.S. 


Estimate 

Offc - CBD 9.1 9.8 9.3 7.2 7.9 7.6 7.8 8.5 8.3 1.0 1.9 0.8 1.1 

Offc - Suburban 9.6 9.9 9.6 7.8 8.1 8.1 8.4 8.7 8.6 0.1 0.7 0.1 0.3 

Ind - Warehouse 9.4 9.8 9.4 7.8 8.2 7.9 8.5 8.9 8.5 1.1 1.2 0.8 0.8 

Ind - R&D 9.8 10.0 9.7 8.1 8.4 8.2 8.6 9.0 8.8 0.4 1.3 0.3 1.0 

Ind - Flex 10.1 10.2 9.8 8.3 8.5 8.3 9.0 9.2 8.9 0.4 0.6 0.2 0.4 

Ret - Reg Mall 9.0 9.8 9.3 7.5 8.0 7.7 8.1 8.7 8.4 0.4 1.6 0.4 0.9 

Ret - Pwr Center 9.4 9.9 9.4 7.7 8.2 7.9 8.3 8.8 8.5 0.6 1.8 0.2 1.0 

Ret - Neigh/ 

Comm. 

South 

Region 

U.S. 

National 

Value 

South 

Value 

National 

Rent 

9.7 10.0 9.6 7.9 8.3 8.0 8.5 8.9 8.7 0.5 1.5 0.3 1.1 

Apartment 8.8 9.1 8.4 6.9 7.2 6.7 7.5 7.8 7.3 3.5 3.3 3.5 3.4 

Hotel 10.8 10.7 10.7 8.9 8.8 8.8 9.4 9.5 9.5 1.1 1.8 1.4 1.8 

Average 9.6 9.9 9.5 7.8 8.2 7.9 8.4 8.8 8.6 0.9 1.6 0.8 1.2 



INDIANAPOLIS 


Estimate 

Indianapolis Investment Criteria | First-Tier 1 Investment Properties 

South 

Rent 



Midwest 

Region 

U.S. 


Estimate 

Midwest 

Region 

U.S. 


Estimate 

Offc - CBD 9.2 9.6 9.3 7.9 8.2 7.6 8.4 8.8 8.3 1.0 -0.2 0.8 -0.2 

Offc - Suburban 9.8 9.7 9.6 8.6 8.5 8.1 8.9 8.9 8.6 0.1 -0.9 0.1 -0.7 

Ind - Warehouse 9.2 9.4 9.4 7.9 8.3 7.9 8.5 8.9 8.5 1.1 0.8 0.8 0.5 

Ind - R&D 9.6 9.8 9.7 8.5 8.6 8.2 9.1 9.2 8.8 0.4 -0.1 0.3 -0.2 

Ind - Flex 9.8 9.7 9.8 8.6 8.6 8.3 9.1 9.1 8.9 0.4 0.2 0.2 0.0 

Ret - Reg Mall 8.9 9.0 9.3 7.7 8.2 7.7 8.2 8.6 8.4 0.4 -0.5 0.4 -0.7 

Ret - Pwr Center 9.3 9.0 9.4 8.0 8.1 7.9 8.4 8.5 8.5 0.6 -0.4 0.2 -0.4 

Ret - Neigh/ 

Comm. 

Midwest 

Region 

U.S. 

National 

Value 

Midwest 

Value 

National 

Rent 

9.6 9.5 9.6 8.2 8.4 8.0 8.7 9.0 8.7 0.5 -0.7 0.3 -0.9 

Apartment 8.3 8.6 8.4 7.0 7.3 6.7 7.3 7.7 7.3 3.5 2.9 3.5 2.8 

Hotel 10.7 10.6 10.7 9.4 9.4 8.8 9.8 9.8 9.5 1.1 0.5 1.4 0.7 

Average 9.4 9.5 9.5 8.2 8.4 7.9 8.6 8.9 8.6 0.9 0.2 0.8 0.1 



Midwest 

Rent 


WINTER 2012 | VOL 40 | NO 4 

KANSAS CITY 


Estimate 


Kansas City Investment Criteria | First-Tier 1 Investment Properties 




Midwest 

Region 

U.S. 


Estimate 

Midwest 

Region 

U.S. 


Estimate 

Offc - CBD 9.1 9.6 9.3 7.8 8.2 7.6 8.4 8.8 8.3 1.0 -0.2 0.8 -0.2 

Offc - Suburban 9.7 9.7 9.6 8.3 8.5 8.1 8.7 8.9 8.6 0.1 -0.9 0.1 -0.7 

Ind - Warehouse 9.1 9.4 9.4 7.8 8.3 7.9 8.4 8.9 8.5 1.1 0.8 0.8 0.5 

Ind - R&D 9.7 9.8 9.7 8.4 8.6 8.2 8.9 9.2 8.8 0.4 -0.1 0.3 -0.2 

Ind - Flex 9.8 9.7 9.8 8.4 8.6 8.3 8.9 9.1 8.9 0.4 0.2 0.2 0.0 

Ret - Reg Mall 8.8 9.0 9.3 7.5 8.2 7.7 7.9 8.6 8.4 0.4 -0.5 0.4 -0.7 

Ret - Pwr Center 9.1 9.0 9.4 7.8 8.1 7.9 8.3 8.5 8.5 0.6 -0.4 0.2 -0.4 

Ret - Neigh/ 

Comm. 

Midwest 

Region 

U.S. 

National 

Value 

Midwest 

Value 

National 

Rent 

9.3 9.5 9.6 7.9 8.4 8.0 8.5 9.0 8.7 0.5 -0.7 0.3 -0.9 

Apartment 8.3 8.6 8.4 6.7 7.3 6.7 7.2 7.7 7.3 3.5 2.9 3.5 2.8 

Hotel 10.9 10.6 10.7 9.0 9.4 8.8 9.5 9.8 9.5 1.1 0.5 1.4 0.7 

Average 9.4 9.5 9.5 8.0 8.4 7.9 8.5 8.9 8.6 0.9 0.2 0.8 0.1 



LAS VEGAS 


Estimate 

Las Vegas Investment Criteria | First-Tier 1 Investment Properties 

Midwest 

Rent 



West 

Region 

U.S. 


Estimate 

West 

Region 

U.S. 


Estimate 

Offc - CBD 8.9 9.2 9.3 7.4 7.3 7.6 8.0 8.1 8.3 1.0 0.9 0.8 1.0 

Offc - Suburban 9.8 9.7 9.6 8.2 7.9 8.1 8.7 8.5 8.6 0.1 0.4 0.1 0.6 

Ind - Warehouse 9.1 9.1 9.4 7.5 7.5 7.9 8.0 8.1 8.5 1.1 1.3 0.8 1.0 

Ind - R&D 9.6 9.6 9.7 8.0 7.8 8.2 8.4 8.4 8.8 0.4 0.1 0.3 0.1 

Ind - Flex 9.8 9.8 9.8 8.2 8.0 8.3 8.7 8.6 8.9 0.4 0.3 0.2 0.0 

Ret - Reg Mall 8.7 9.4 9.3 7.2 7.6 7.7 7.7 8.2 8.4 0.4 -0.1 0.4 0.5 

Ret - Pwr Center 9.1 9.6 9.4 7.6 7.7 7.9 8.1 8.3 8.5 0.6 0.5 0.2 -0.4 

Ret - Neigh/ 

Comm. 

West 

Region 

U.S. 

National 

Value 

West 

Value 

National 

Rent 

9.3 9.6 9.6 7.7 7.8 8.0 8.2 8.3 8.7 0.5 0.3 0.3 0.4 

Apartment 8.0 8.2 8.4 6.2 6.2 6.7 6.9 6.9 7.3 3.5 4.0 3.5 4.0 

Hotel 10.8 10.6 10.7 8.9 8.7 8.8 9.4 9.2 9.5 1.1 1.0 1.4 1.8 

Average 9.3 9.5 9.5 7.7 7.7 7.9 8.2 8.3 8.6 0.9 0.9 0.8 0.9 



West 

Rent 



LOS ANGELES 



Estimate 

Los Angeles Investment Criteria | First-Tier 1 Investment Properties 

WINTER 2012 | VOL 40 | NO 4 



West 

Region 

U.S. 


Estimate 

West 

Region 

U.S. 


Estimate 

Offc - CBD 8.6 9.2 9.3 6.9 7.3 7.6 7.6 8.1 8.3 1.0 0.9 0.8 1.0 

Offc - Suburban 9.3 9.7 9.6 7.4 7.9 8.1 8.0 8.5 8.6 0.1 0.4 0.1 0.6 

Ind - Warehouse 8.6 9.1 9.4 6.9 7.5 7.9 7.6 8.1 8.5 1.1 1.3 0.8 1.0 

Ind - R&D 9.0 9.6 9.7 7.3 7.8 8.2 7.9 8.4 8.8 0.4 0.1 0.3 0.1 

Ind - Flex 9.2 9.8 9.8 7.5 8.0 8.3 8.0 8.6 8.9 0.4 0.3 0.2 0.0 

Ret - Reg Mall 8.9 9.4 9.3 7.0 7.6 7.7 7.6 8.2 8.4 0.4 -0.1 0.4 0.5 

Ret - Pwr Center 9.1 9.6 9.4 7.3 7.7 7.9 7.8 8.3 8.5 0.6 0.5 0.2 -0.4 

Ret - Neigh/ 

Comm. 

West 

Region 

U.S. 

National 

Value 

West 

Value 

National 

Rent 

9.0 9.6 9.6 7.2 7.8 8.0 7.7 8.3 8.7 0.5 0.3 0.3 0.4 

Apartment 7.8 8.2 8.4 5.7 6.2 6.7 6.4 6.9 7.3 3.5 4.0 3.5 4.0 

Hotel 10.4 10.6 10.7 8.1 8.7 8.8 8.7 9.2 9.5 1.1 1.0 1.4 1.8 

Average 9.0 9.5 9.5 7.1 7.7 7.9 7.7 8.3 8.6 0.9 0.9 0.8 0.9 



MEMPHIS 


Estimate 

Memphis Investment Criteria | First-Tier 1 Investment Properties 

West 

Rent 



South 

Region 

U.S. 


Estimate 

South 

Region 

U.S. 


Estimate 

Offc - CBD 9.5 9.8 9.3 7.7 7.9 7.6 8.3 8.5 8.3 1.0 1.9 0.8 1.1 

Offc - Suburban 10.0 9.9 9.6 8.2 8.1 8.1 8.8 8.7 8.6 0.1 0.7 0.1 0.3 

Ind - Warehouse 9.8 9.8 9.4 8.1 8.2 7.9 8.8 8.9 8.5 1.1 1.2 0.8 0.8 

Ind - R&D 10.2 10.0 9.7 8.5 8.4 8.2 9.1 9.0 8.8 0.4 1.3 0.3 1.0 

Ind - Flex 10.4 10.2 9.8 8.7 8.5 8.3 9.3 9.2 8.9 0.4 0.6 0.2 0.4 

Ret - Reg Mall 9.3 9.8 9.3 7.6 8.0 7.7 8.3 8.7 8.4 0.4 1.6 0.4 0.9 

Ret - Pwr Center 9.7 9.9 9.4 8.0 8.2 7.9 8.6 8.8 8.5 0.6 1.8 0.2 1.0 

Ret - Neigh/ 

Comm. 

South 

Region 

U.S. 

National 

Value 

South 

Value 

National 

Rent 

9.8 10.0 9.6 8.0 8.3 8.0 8.6 8.9 8.7 0.5 1.5 0.3 1.1 

Apartment 8.8 9.1 8.4 6.9 7.2 6.7 7.6 7.8 7.3 3.5 3.3 3.5 3.4 

Hotel 10.9 10.7 10.7 8.7 8.8 8.8 9.5 9.5 9.5 1.1 1.8 1.4 1.8 

Average 9.8 9.9 9.5 8.0 8.2 7.9 8.7 8.8 8.6 0.9 1.6 0.8 1.2 



South 

Rent 


WINTER 2012 | VOL 40 | NO 4 

MIAMI 


Estimate 


Miami Investment Criteria | First-Tier 1 Investment Properties 




South 

Region 

U.S. 


Estimate 

South 

Region 

U.S. 


Estimate 

Offc - CBD 9.0 9.8 9.3 7.5 7.9 7.6 7.8 8.5 8.3 1.0 1.9 0.8 1.1 

Offc - Suburban 9.7 9.9 9.6 8.0 8.1 8.1 8.4 8.7 8.6 0.1 0.7 0.1 0.3 

Ind - Warehouse 9.1 9.8 9.4 7.7 8.2 7.9 8.0 8.9 8.5 1.1 1.2 0.8 0.8 

Ind - R&D 9.6 10.0 9.7 7.9 8.4 8.2 8.3 9.0 8.8 0.4 1.3 0.3 1.0 

Ind - Flex 9.7 10.2 9.8 8.1 8.5 8.3 8.5 9.2 8.9 0.4 0.6 0.2 0.4 

Ret - Reg Mall 8.9 9.8 9.3 7.2 8.0 7.7 7.7 8.7 8.4 0.4 1.6 0.4 0.9 

Ret - Pwr Center 9.2 9.9 9.4 7.6 8.2 7.9 8.0 8.8 8.5 0.6 1.8 0.2 1.0 

Ret - Neigh/ 

Comm. 

South 

Region 

U.S. 

National 

Value 

South 

Value 

National 

Rent 

9.3 10.0 9.6 7.7 8.3 8.0 8.1 8.9 8.7 0.5 1.5 0.3 1.1 

Apartment 8.3 9.1 8.4 6.8 7.2 6.7 6.9 7.8 7.3 3.5 3.3 3.5 3.4 

Hotel 10.5 10.7 10.7 8.4 8.8 8.8 9.0 9.5 9.5 1.1 1.8 1.4 1.8 

Average 9.3 9.9 9.5 7.7 8.2 7.9 8.1 8.8 8.6 0.9 1.6 0.8 1.2 



MILWAUKEE 


Estimate 

Milwaukee Investment Criteria | First-Tier 1 Investment Properties 

South 

Rent 



Midwest 

Region 

U.S. 


Estimate 

Midwest 

Region 

U.S. 


Estimate 

Offc - CBD 9.3 9.6 9.3 7.6 8.2 7.6 8.3 8.8 8.3 1.0 -0.2 0.8 -0.2 

Offc - Suburban 9.9 9.7 9.6 8.3 8.5 8.1 8.8 8.9 8.6 0.1 -0.9 0.1 -0.7 

Ind - Warehouse 9.2 9.4 9.4 7.8 8.3 7.9 8.4 8.9 8.5 1.1 0.8 0.8 0.5 

Ind - R&D 9.9 9.8 9.7 8.3 8.6 8.2 8.8 9.2 8.8 0.4 -0.1 0.3 -0.2 

Ind - Flex 10.0 9.7 9.8 8.4 8.6 8.3 9.0 9.1 8.9 0.4 0.2 0.2 0.0 

Ret - Reg Mall 8.9 9.0 9.3 7.5 8.2 7.7 8.1 8.6 8.4 0.4 -0.5 0.4 -0.7 

Ret - Pwr Center 9.3 9.0 9.4 7.9 8.1 7.9 8.4 8.5 8.5 0.6 -0.4 0.2 -0.4 

Ret - Neigh/ 

Comm. 

Midwest 

Region 

U.S. 

National 

Value 

Midwest 

Value 

National 

Rent 

9.5 9.5 9.6 8.1 8.4 8.0 8.7 9.0 8.7 0.5 -0.7 0.3 -0.9 

Apartment 8.2 8.6 8.4 6.7 7.3 6.7 7.2 7.7 7.3 3.5 2.9 3.5 2.8 

Hotel 10.8 10.6 10.7 8.9 9.4 8.8 9.5 9.8 9.5 1.1 0.5 1.4 0.7 

Average 9.5 9.5 9.5 8.0 8.4 7.9 8.5 8.9 8.6 0.9 0.2 0.8 0.1 



Midwest 

Rent 



MINNEAPOLIS 



Estimate 

Minneapolis Investment Criteria | First-Tier 1 Investment Properties 

WINTER 2012 | VOL 40 | NO 4 



Midwest 

Region 

U.S. 


Estimate 

Midwest 

Region 

U.S. 


Estimate 

Offc - CBD 9.1 9.6 9.3 7.7 8.2 7.6 8.4 8.8 8.3 1.0 -0.2 0.8 -0.2 

Offc - Suburban 9.5 9.7 9.6 8.1 8.5 8.1 8.5 8.9 8.6 0.1 -0.9 0.1 -0.7 

Ind - Warehouse 9.1 9.4 9.4 7.9 8.3 7.9 8.5 8.9 8.5 1.1 0.8 0.8 0.5 

Ind - R&D 9.5 9.8 9.7 8.3 8.6 8.2 8.7 9.2 8.8 0.4 -0.1 0.3 -0.2 

Ind - Flex 9.5 9.7 9.8 8.3 8.6 8.3 8.7 9.1 8.9 0.4 0.2 0.2 0.0 

Ret - Reg Mall 8.7 9.0 9.3 7.7 8.2 7.7 8.0 8.6 8.4 0.4 -0.5 0.4 -0.7 

Ret - Pwr Center 9.0 9.0 9.4 7.9 8.1 7.9 8.3 8.5 8.5 0.6 -0.4 0.2 -0.4 

Ret - Neigh/ 

Comm. 

Midwest 

Region 

U.S. 

National 

Value 

Midwest 

Value 

National 

Rent 

9.3 9.5 9.6 8.1 8.4 8.0 8.6 9.0 8.7 0.5 -0.7 0.3 -0.9 

Apartment 7.9 8.6 8.4 6.6 7.3 6.7 7.0 7.7 7.3 3.5 2.9 3.5 2.8 

Hotel 10.5 10.6 10.7 9.2 9.4 8.8 9.5 9.8 9.5 1.1 0.5 1.4 0.7 

Average 9.2 9.5 9.5 8.0 8.4 7.9 8.4 8.9 8.6 0.9 0.2 0.8 0.1 



NASHVILLE 


Estimate 

Nashville Investment Criteria | First-Tier 1 Investment Properties 

Midwest 

Rent 



South 

Region 

U.S. 


Estimate 

South 

Region 

U.S. 


Estimate 

Offc - CBD 9.2 9.8 9.3 7.5 7.9 7.6 8.1 8.5 8.3 1.0 1.9 0.8 1.1 

Offc - Suburban 9.7 9.9 9.6 8.0 8.1 8.1 8.6 8.7 8.6 0.1 0.7 0.1 0.3 

Ind - Warehouse 9.5 9.8 9.4 7.9 8.2 7.9 8.6 8.9 8.5 1.1 1.2 0.8 0.8 

Ind - R&D 9.9 10.0 9.7 8.2 8.4 8.2 8.8 9.0 8.8 0.4 1.3 0.3 1.0 

Ind - Flex 10.0 10.2 9.8 8.4 8.5 8.3 9.0 9.2 8.9 0.4 0.6 0.2 0.4 

Ret - Reg Mall 8.9 9.8 9.3 7.3 8.0 7.7 7.9 8.7 8.4 0.4 1.6 0.4 0.9 

Ret - Pwr Center 9.3 9.9 9.4 7.7 8.2 7.9 8.3 8.8 8.5 0.6 1.8 0.2 1.0 

Ret - Neigh/ 

Comm. 

South 

Region 

U.S. 

National 

Value 

South 

Value 

National 

Rent 

9.4 10.0 9.6 7.8 8.3 8.0 8.3 8.9 8.7 0.5 1.5 0.3 1.1 

Apartment 8.4 9.1 8.4 6.6 7.2 6.7 7.2 7.8 7.3 3.5 3.3 3.5 3.4 

Hotel 10.7 10.7 10.7 8.6 8.8 8.8 9.3 9.5 9.5 1.1 1.8 1.4 1.8 

Average 9.5 9.9 9.5 7.8 8.2 7.9 8.4 8.8 8.6 0.9 1.6 0.8 1.2 



South 

Rent 


WINTER 2012 | VOL 40 | NO 4 

NEW ORLEANS/BATON ROUGE 


Estimate 



New Orleans/Baton Rouge Investment Criteria | First-Tier 1 Investment Properties 



South 

Region 

U.S. 


Estimate 

South 

Region 

U.S. 


Estimate 

Offc - CBD 9.3 9.8 9.3 7.7 7.9 7.6 8.3 8.5 8.3 1.0 1.9 0.8 1.1 

Offc - Suburban 10.0 9.9 9.6 8.2 8.1 8.1 8.7 8.7 8.6 0.1 0.7 0.1 0.3 

Ind - Warehouse 9.5 9.8 9.4 7.8 8.2 7.9 8.4 8.9 8.5 1.1 1.2 0.8 0.8 

Ind - R&D 10.0 10.0 9.7 8.3 8.4 8.2 8.8 9.0 8.8 0.4 1.3 0.3 1.0 

Ind - Flex 10.3 10.2 9.8 8.5 8.5 8.3 9.1 9.2 8.9 0.4 0.6 0.2 0.4 

Ret - Reg Mall 9.4 9.8 9.3 7.5 8.0 7.7 8.1 8.7 8.4 0.4 1.6 0.4 0.9 

Ret - Pwr Center 9.8 9.9 9.4 8.1 8.2 7.9 8.7 8.8 8.5 0.6 1.8 0.2 1.0 

Ret - Neigh/ 

Comm. 

South 

Region 

U.S. 

National 

Value 

South 

Value 

National 

Rent 

9.9 10.0 9.6 8.1 8.3 8.0 8.6 8.9 8.7 0.5 1.5 0.3 1.1 

Apartment 8.7 9.1 8.4 6.7 7.2 6.7 7.3 7.8 7.3 3.5 3.3 3.5 3.4 

Hotel 10.8 10.7 10.7 8.5 8.8 8.8 9.3 9.5 9.5 1.1 1.8 1.4 1.8 

Average 9.8 9.9 9.5 7.9 8.2 7.9 8.5 8.8 8.6 0.9 1.6 0.8 1.2 



NEW YORK CITY 


Estimate 

New York City Investment Criteria | First-Tier 1 Investment Properties 

South 

Rent 



East 

Region 

U.S. 


Estimate 

East 

Region 

U.S. 


Estimate 

Offc - CBD 8.1 8.7 9.3 6.3 7.2 7.6 7.1 7.8 8.3 1.0 1.6 0.8 1.2 

Offc - Suburban 9.0 9.3 9.6 7.5 7.9 8.1 8.1 8.5 8.6 0.1 0.0 0.1 0.0 

Ind - Warehouse 8.8 9.3 9.4 7.4 8.0 7.9 8.1 8.5 8.5 1.1 1.1 0.8 0.9 

Ind - R&D 9.3 9.5 9.7 7.6 8.2 8.2 8.3 8.8 8.8 0.4 0.6 0.3 0.6 

Ind - Flex 9.3 9.4 9.8 7.8 8.1 8.3 8.4 8.7 8.9 0.4 0.5 0.2 0.5 

Ret - Reg Mall 8.4 9.0 9.3 6.7 7.4 7.7 7.4 8.2 8.4 0.4 0.7 0.4 1.0 

Ret - Pwr Center 8.8 9.1 9.4 7.1 7.7 7.9 7.9 8.5 8.5 0.6 0.6 0.2 0.9 

Ret - Neigh/ 

Comm. 

East 

Region 

U.S. 

National 

Value 

East 

Value 

National 

Rent 

8.8 9.2 9.6 7.1 7.7 8.0 7.9 8.5 8.7 0.5 0.9 0.3 0.9 

Apartment 7.7 8.0 8.4 5.6 6.3 6.7 6.5 7.1 7.3 3.5 3.6 3.5 3.8 

Hotel 10.5 10.8 10.7 7.9 8.5 8.8 8.9 9.6 9.5 1.1 1.2 1.4 1.3 

Average 8.9 9.2 9.5 7.1 7.7 7.9 7.9 8.4 8.6 0.9 1.1 0.8 1.1 



East 

Rent 



NORFOLK 



Estimate 

Norfolk Investment Criteria | First-Tier 1 Investment Properties 

WINTER 2012 | VOL 40 | NO 4 



East 

Region 

U.S. 


Estimate 

East 

Region 

U.S. 


Estimate 

Offc - CBD 8.8 8.7 9.3 7.2 7.2 7.6 7.8 7.8 8.3 1.0 1.6 0.8 1.2 

Offc - Suburban 9.6 9.3 9.6 8.0 7.9 8.1 8.6 8.5 8.6 0.1 0.0 0.1 0.0 

Ind - Warehouse 9.3 9.3 9.4 7.8 8.0 7.9 8.4 8.5 8.5 1.1 1.1 0.8 0.9 

Ind - R&D 9.7 9.5 9.7 8.2 8.2 8.2 8.8 8.8 8.8 0.4 0.6 0.3 0.6 

Ind - Flex 9.7 9.4 9.8 8.3 8.1 8.3 8.9 8.7 8.9 0.4 0.5 0.2 0.5 

Ret - Reg Mall 8.8 9.0 9.3 7.2 7.4 7.7 7.9 8.2 8.4 0.4 0.7 0.4 1.0 

Ret - Pwr Center 9.1 9.1 9.4 7.7 7.7 7.9 8.4 8.5 8.5 0.6 0.6 0.2 0.9 

Ret - Neigh/ 

Comm. 

East 

Region 

U.S. 

National 

Value 

East 

Value 

National 

Rent 

9.1 9.2 9.6 7.7 7.7 8.0 8.3 8.5 8.7 0.5 0.9 0.3 0.9 

Apartment 8.0 8.0 8.4 6.2 6.3 6.7 7.0 7.1 7.3 3.5 3.6 3.5 3.8 

Hotel 10.7 10.8 10.7 8.4 8.5 8.8 9.4 9.6 9.5 1.1 1.2 1.4 1.3 

Average 9.3 9.2 9.5 7.7 7.7 7.9 8.4 8.4 8.6 0.9 1.1 0.8 1.1 



NORTHERN NEW JERSEY 


Estimate 

Northern New Jersey Investment Criteria | First-Tier 1 Investment Properties 

East 

Rent 



East 

Region 

U.S. 


Estimate 

East 

Region 

U.S. 


Estimate 

Offc - CBD 8.4 8.7 9.3 6.9 7.2 7.6 7.5 7.8 8.3 1.0 1.6 0.8 1.2 

Offc - Suburban 9.2 9.3 9.6 7.7 7.9 8.1 8.3 8.5 8.6 0.1 0.0 0.1 0.0 

Ind - Warehouse 9.1 9.3 9.4 7.7 8.0 7.9 8.3 8.5 8.5 1.1 1.1 0.8 0.9 

Ind - R&D 9.5 9.5 9.7 8.1 8.2 8.2 8.7 8.8 8.8 0.4 0.6 0.3 0.6 

Ind - Flex 9.6 9.4 9.8 8.2 8.1 8.3 8.7 8.7 8.9 0.4 0.5 0.2 0.5 

Ret - Reg Mall 8.5 9.0 9.3 7.0 7.4 7.7 7.7 8.2 8.4 0.4 0.7 0.4 1.0 

Ret - Pwr Center 8.9 9.1 9.4 7.4 7.7 7.9 8.1 8.5 8.5 0.6 0.6 0.2 0.9 

Ret - Neigh/ 

Comm. 

East 

Region 

U.S. 

National 

Value 

East 

Value 

National 

Rent 

8.9 9.2 9.6 7.4 7.7 8.0 8.1 8.5 8.7 0.5 0.9 0.3 0.9 

Apartment 7.6 8.0 8.4 5.9 6.3 6.7 6.7 7.1 7.3 3.5 3.6 3.5 3.8 

Hotel 10.5 10.8 10.7 8.3 8.5 8.8 9.3 9.6 9.5 1.1 1.2 1.4 1.3 

Average 9.0 9.2 9.5 7.5 7.7 7.9 8.1 8.4 8.6 0.9 1.1 0.8 1.1 



East 

Rent 


WINTER 2012 | VOL 40 | NO 4 

OKLAHOMA CITY 


Estimate 


Oklahoma City Investment Criteria | First-Tier 1 Investment Properties 




South 

Region 

U.S. 


Estimate 

South 

Region 

U.S. 


Estimate 

Offc - CBD 9.4 9.8 9.3 7.5 7.9 7.6 8.2 8.5 8.3 1.0 1.9 0.8 1.1 

Offc - Suburban 10.0 9.9 9.6 8.1 8.1 8.1 8.7 8.7 8.6 0.1 0.7 0.1 0.3 

Ind - Warehouse 9.6 9.8 9.4 7.9 8.2 7.9 8.6 8.9 8.5 1.1 1.2 0.8 0.8 

Ind - R&D 10.2 10.0 9.7 8.4 8.4 8.2 9.0 9.0 8.8 0.4 1.3 0.3 1.0 

Ind - Flex 10.4 10.2 9.8 8.6 8.5 8.3 9.2 9.2 8.9 0.4 0.6 0.2 0.4 

Ret - Reg Mall 9.4 9.8 9.3 7.4 8.0 7.7 8.1 8.7 8.4 0.4 1.6 0.4 0.9 

Ret - Pwr Center 9.8 9.9 9.4 7.9 8.2 7.9 8.5 8.8 8.5 0.6 1.8 0.2 1.0 

Ret - Neigh/ 

Comm. 

South 

Region 

U.S. 

National 

Value 

South 

Value 

National 

Rent 

9.9 10.0 9.6 8.0 8.3 8.0 8.7 8.9 8.7 0.5 1.5 0.3 1.1 

Apartment 8.8 9.1 8.4 6.8 7.2 6.7 7.4 7.8 7.3 3.5 3.3 3.5 3.4 

Hotel 11.0 10.7 10.7 8.7 8.8 8.8 9.5 9.5 9.5 1.1 1.8 1.4 1.8 

Average 9.9 9.9 9.5 7.9 8.2 7.9 8.6 8.8 8.6 0.9 1.6 0.8 1.2 



OMAHA 


Estimate 

Omaha Investment Criteria | First-Tier 1 Investment Properties 

South 

Rent 



Midwest 

Region 

U.S. 


Estimate 

Midwest 

Region 

U.S. 


Estimate 

Offc - CBD 9.4 9.6 9.3 7.9 8.2 7.6 8.5 8.8 8.3 1.0 -0.2 0.8 -0.2 

Offc - Suburban 9.9 9.7 9.6 8.4 8.5 8.1 8.9 8.9 8.6 0.1 -0.9 0.1 -0.7 

Ind - Warehouse 9.4 9.4 9.4 8.1 8.3 7.9 8.6 8.9 8.5 1.1 0.8 0.8 0.5 

Ind - R&D 9.8 9.8 9.7 8.5 8.6 8.2 9.1 9.2 8.8 0.4 -0.1 0.3 -0.2 

Ind - Flex 9.9 9.7 9.8 8.6 8.6 8.3 9.1 9.1 8.9 0.4 0.2 0.2 0.0 

Ret - Reg Mall 8.9 9.0 9.3 7.8 8.2 7.7 8.3 8.6 8.4 0.4 -0.5 0.4 -0.7 

Ret - Pwr Center 9.2 9.0 9.4 8.0 8.1 7.9 8.5 8.5 8.5 0.6 -0.4 0.2 -0.4 

Ret - Neigh/ 

Comm. 

Midwest 

Region 

U.S. 

National 

Value 

Midwest 

Value 

National 

Rent 

9.5 9.5 9.6 8.2 8.4 8.0 8.8 9.0 8.7 0.5 -0.7 0.3 -0.9 

Apartment 8.5 8.6 8.4 7.0 7.3 6.7 7.4 7.7 7.3 3.5 2.9 3.5 2.8 

Hotel 10.7 10.6 10.7 9.2 9.4 8.8 9.7 9.8 9.5 1.1 0.5 1.4 0.7 

Average 9.5 9.5 9.5 8.2 8.4 7.9 8.7 8.9 8.6 0.9 0.2 0.8 0.1 



Midwest 

Rent 



ORLANDO 



Estimate 

Orlando Investment Criteria | First-Tier 1 Investment Properties 

WINTER 2012 | VOL 40 | NO 4 



South 

Region 

U.S. 


Estimate 

South 

Region 

U.S. 


Estimate 

Offc - CBD 9.2 9.8 9.3 7.4 7.9 7.6 8.0 8.5 8.3 1.0 1.9 0.8 1.1 

Offc - Suburban 9.8 9.9 9.6 8.0 8.1 8.1 8.6 8.7 8.6 0.1 0.7 0.1 0.3 

Ind - Warehouse 9.5 9.8 9.4 8.0 8.2 7.9 8.6 8.9 8.5 1.1 1.2 0.8 0.8 

Ind - R&D 9.9 10.0 9.7 8.2 8.4 8.2 8.8 9.0 8.8 0.4 1.3 0.3 1.0 

Ind - Flex 10.1 10.2 9.8 8.4 8.5 8.3 9.0 9.2 8.9 0.4 0.6 0.2 0.4 

Ret - Reg Mall 9.0 9.8 9.3 7.4 8.0 7.7 8.0 8.7 8.4 0.4 1.6 0.4 0.9 

Ret - Pwr Center 9.3 9.9 9.4 7.9 8.2 7.9 8.3 8.8 8.5 0.6 1.8 0.2 1.0 

Ret - Neigh/ 

Comm. 

South 

Region 

U.S. 

National 

Value 

South 

Value 

National 

Rent 

9.5 10.0 9.6 7.9 8.3 8.0 8.5 8.9 8.7 0.5 1.5 0.3 1.1 

Apartment 8.4 9.1 8.4 6.6 7.2 6.7 7.3 7.8 7.3 3.5 3.3 3.5 3.4 

Hotel 10.8 10.7 10.7 8.5 8.8 8.8 9.3 9.5 9.5 1.1 1.8 1.4 1.8 

Average 9.6 9.9 9.5 7.8 8.2 7.9 8.4 8.8 8.6 0.9 1.6 0.8 1.2 



PHILADELPHIA 


Estimate 

Philadelphia Investment Criteria | First-Tier 1 Investment Properties 

South 

Rent 



East 

Region 

U.S. 


Estimate 

East 

Region 

U.S. 


Estimate 

Offc - CBD 8.3 8.7 9.3 6.9 7.2 7.6 7.5 7.8 8.3 1.0 1.6 0.8 1.2 

Offc - Suburban 9.1 9.3 9.6 7.7 7.9 8.1 8.2 8.5 8.6 0.1 0.0 0.1 0.0 

Ind - Warehouse 8.8 9.3 9.4 7.5 8.0 7.9 8.0 8.5 8.5 1.1 1.1 0.8 0.9 

Ind - R&D 9.4 9.5 9.7 8.0 8.2 8.2 8.6 8.8 8.8 0.4 0.6 0.3 0.6 

Ind - Flex 9.3 9.4 9.8 8.0 8.1 8.3 8.5 8.7 8.9 0.4 0.5 0.2 0.5 

Ret - Reg Mall 8.3 9.0 9.3 6.8 7.4 7.7 7.4 8.2 8.4 0.4 0.7 0.4 1.0 

Ret - Pwr Center 8.7 9.1 9.4 7.3 7.7 7.9 7.9 8.5 8.5 0.6 0.6 0.2 0.9 

Ret - Neigh/ 

Comm. 

East 

Region 

U.S. 

National 

Value 

East 

Value 

National 

Rent 

8.8 9.2 9.6 7.4 7.7 8.0 8.1 8.5 8.7 0.5 0.9 0.3 0.9 

Apartment 7.6 8.0 8.4 6.0 6.3 6.7 6.7 7.1 7.3 3.5 3.6 3.5 3.8 

Hotel 10.6 10.8 10.7 8.4 8.5 8.8 9.3 9.6 9.5 1.1 1.2 1.4 1.3 

Average 8.9 9.2 9.5 7.4 7.7 7.9 8.0 8.4 8.6 0.9 1.1 0.8 1.1 



East 

Rent 


WINTER 2012 | VOL 40 | NO 4 

PHOENIX 


Estimate 


Phoenix Investment Criteria | First-Tier 1 Investment Properties 




West 

Region 

U.S. 


Estimate 

West 

Region 

U.S. 


Estimate 

Offc - CBD 9.9 9.2 9.3 7.6 7.3 7.6 8.6 8.1 8.3 1.0 0.9 0.8 1.0 

Offc - Suburban 10.5 9.7 9.6 8.2 7.9 8.1 9.0 8.5 8.6 0.1 0.4 0.1 0.6 

Ind - Warehouse 9.7 9.1 9.4 7.5 7.5 7.9 8.3 8.1 8.5 1.1 1.3 0.8 1.0 

Ind - R&D 10.2 9.6 9.7 8.1 7.8 8.2 8.7 8.4 8.8 0.4 0.1 0.3 0.1 

Ind - Flex 10.2 9.8 9.8 8.2 8.0 8.3 8.8 8.6 8.9 0.4 0.3 0.2 0.0 

Ret - Reg Mall 9.7 9.4 9.3 7.6 7.6 7.7 8.5 8.2 8.4 0.4 -0.1 0.4 0.5 

Ret - Pwr Center 10.1 9.6 9.4 7.9 7.7 7.9 8.6 8.3 8.5 0.6 0.5 0.2 -0.4 

Ret - Neigh/ 

Comm. 

West 

Region 

U.S. 

National 

Value 

West 

Value 

National 

Rent 

9.7 9.6 9.6 8.0 7.8 8.0 8.7 8.3 8.7 0.5 0.3 0.3 0.4 

Apartment 8.7 8.2 8.4 6.5 6.2 6.7 7.4 6.9 7.3 3.5 4.0 3.5 4.0 

Hotel 11.2 10.6 10.7 8.8 8.7 8.8 9.7 9.2 9.5 1.1 1.0 1.4 1.8 

Average 10.0 9.5 9.5 7.8 7.7 7.9 8.6 8.3 8.6 0.9 0.9 0.8 0.9 



PITTSBURGH 


Estimate 

Pittsburgh Investment Criteria | First-Tier 1 Investment Properties 

West 

Rent 



East 

Region 

U.S. 


Estimate 

East 

Region 

U.S. 


Estimate 

Offc - CBD 8.5 8.7 9.3 7.0 7.2 7.6 7.7 7.8 8.3 1.0 1.6 0.8 1.2 

Offc - Suburban 9.3 9.3 9.6 7.9 7.9 8.1 8.4 8.5 8.6 0.1 0.0 0.1 0.0 

Ind - Warehouse 9.0 9.3 9.4 7.6 8.0 7.9 8.2 8.5 8.5 1.1 1.1 0.8 0.9 

Ind - R&D 9.4 9.5 9.7 8.0 8.2 8.2 8.6 8.8 8.8 0.4 0.6 0.3 0.6 

Ind - Flex 9.5 9.4 9.8 8.1 8.1 8.3 8.7 8.7 8.9 0.4 0.5 0.2 0.5 

Ret - Reg Mall 8.7 9.0 9.3 7.2 7.4 7.7 8.0 8.2 8.4 0.4 0.7 0.4 1.0 

Ret - Pwr Center 9.1 9.1 9.4 7.6 7.7 7.9 8.3 8.5 8.5 0.6 0.6 0.2 0.9 

Ret - Neigh/ 

Comm. 

East 

Region 

U.S. 

National 

Value 

East 

Value 

National 

Rent 

9.1 9.2 9.6 7.6 7.7 8.0 8.3 8.5 8.7 0.5 0.9 0.3 0.9 

Apartment 7.8 8.0 8.4 6.1 6.3 6.7 6.8 7.1 7.3 3.5 3.6 3.5 3.8 

Hotel 10.7 10.8 10.7 8.4 8.5 8.8 9.6 9.6 9.5 1.1 1.2 1.4 1.3 

Average 9.1 9.2 9.5 7.6 7.7 7.9 8.3 8.4 8.6 0.9 1.1 0.8 1.1 



East 

Rent 



PORTLAND 



Estimate 

Portland Investment Criteria | First-Tier 1 Investment Properties 

WINTER 2012 | VOL 40 | NO 4 



West 

Region 

U.S. 


Estimate 

West 

Region 

U.S. 


Estimate 

Offc - CBD 8.6 9.2 9.3 7.0 7.3 7.6 7.7 8.1 8.3 1.0 0.9 0.8 1.0 

Offc - Suburban 9.4 9.7 9.6 7.8 7.9 8.1 8.3 8.5 8.6 0.1 0.4 0.1 0.6 

Ind - Warehouse 8.5 9.1 9.4 7.3 7.5 7.9 7.9 8.1 8.5 1.1 1.3 0.8 1.0 

Ind - R&D 9.3 9.6 9.7 7.9 7.8 8.2 8.4 8.4 8.8 0.4 0.1 0.3 0.1 

Ind - Flex 9.5 9.8 9.8 8.1 8.0 8.3 8.6 8.6 8.9 0.4 0.3 0.2 0.0 

Ret - Reg Mall 8.3 9.4 9.3 6.9 7.6 7.7 7.5 8.2 8.4 0.4 -0.1 0.4 0.5 

Ret - Pwr Center 8.9 9.6 9.4 7.4 7.7 7.9 7.9 8.3 8.5 0.6 0.5 0.2 -0.4 

Ret - Neigh/ 

Comm. 

West 

Region 

U.S. 

National 

Value 

West 

Value 

National 

Rent 

9.0 9.6 9.6 7.4 7.8 8.0 7.9 8.3 8.7 0.5 0.3 0.3 0.4 

Apartment 7.5 8.2 8.4 6.0 6.2 6.7 6.7 6.9 7.3 3.5 4.0 3.5 4.0 

Hotel 10.4 10.6 10.7 8.5 8.7 8.8 9.1 9.2 9.5 1.1 1.0 1.4 1.8 

Average 8.9 9.5 9.5 7.4 7.7 7.9 8.0 8.3 8.6 0.9 0.9 0.8 0.9 



RALEIGH 


Estimate 

Raleigh Investment Criteria | First-Tier 1 Investment Properties 

West 

Rent 



East 

Region 

U.S. 


Estimate 

East 

Region 

U.S. 


Estimate 

Offc - CBD 8.5 8.7 9.3 7.0 7.2 7.6 7.6 7.8 8.3 1.0 1.6 0.8 1.2 

Offc - Suburban 9.4 9.3 9.6 7.9 7.9 8.1 8.5 8.5 8.6 0.1 0.0 0.1 0.0 

Ind - Warehouse 9.4 9.3 9.4 7.9 8.0 7.9 8.5 8.5 8.5 1.1 1.1 0.8 0.9 

Ind - R&D 9.9 9.5 9.7 8.3 8.2 8.2 8.9 8.8 8.8 0.4 0.6 0.3 0.6 

Ind - Flex 10.0 9.4 9.8 8.4 8.1 8.3 9.0 8.7 8.9 0.4 0.5 0.2 0.5 

Ret - Reg Mall 8.5 9.0 9.3 7.0 7.4 7.7 7.7 8.2 8.4 0.4 0.7 0.4 1.0 

Ret - Pwr Center 9.0 9.1 9.4 7.5 7.7 7.9 8.1 8.5 8.5 0.6 0.6 0.2 0.9 

Ret - Neigh/ 

Comm. 

East 

Region 

U.S. 

National 

Value 

East 

Value 

National 

Rent 

8.9 9.2 9.6 7.5 7.7 8.0 8.1 8.5 8.7 0.5 0.9 0.3 0.9 

Apartment 7.7 8.0 8.4 6.1 6.3 6.7 6.8 7.1 7.3 3.5 3.6 3.5 3.8 

Hotel 10.6 10.8 10.7 8.4 8.5 8.8 9.3 9.6 9.5 1.1 1.2 1.4 1.3 

Average 9.2 9.2 9.5 7.6 7.7 7.9 8.3 8.4 8.6 0.9 1.1 0.8 1.1 



East 

Rent 


WINTER 2012 | VOL 40 | NO 4 

RICHMOND 


Estimate 


Richmond Investment Criteria | First-Tier 1 Investment Properties 




East 

Region 

U.S. 


Estimate 

East 

Region 

U.S. 


Estimate 

Offc - CBD 8.6 8.7 9.3 7.0 7.2 7.6 7.7 7.8 8.3 1.0 1.6 0.8 1.2 

Offc - Suburban 9.4 9.3 9.6 7.9 7.9 8.1 8.5 8.5 8.6 0.1 0.0 0.1 0.0 

Ind - Warehouse 9.3 9.3 9.4 7.8 8.0 7.9 8.4 8.5 8.5 1.1 1.1 0.8 0.9 

Ind - R&D 9.7 9.5 9.7 8.3 8.2 8.2 8.8 8.8 8.8 0.4 0.6 0.3 0.6 

Ind - Flex 9.8 9.4 9.8 8.4 8.1 8.3 9.0 8.7 8.9 0.4 0.5 0.2 0.5 

Ret - Reg Mall 8.5 9.0 9.3 7.0 7.4 7.7 7.6 8.2 8.4 0.4 0.7 0.4 1.0 

Ret - Pwr Center 9.0 9.1 9.4 7.5 7.7 7.9 8.2 8.5 8.5 0.6 0.6 0.2 0.9 

Ret - Neigh/ 

Comm. 

East 

Region 

U.S. 

National 

Value 

East 

Value 

National 

Rent 

9.0 9.2 9.6 7.5 7.7 8.0 8.2 8.5 8.7 0.5 0.9 0.3 0.9 

Apartment 7.8 8.0 8.4 6.1 6.3 6.7 6.8 7.1 7.3 3.5 3.6 3.5 3.8 

Hotel 10.5 10.8 10.7 8.4 8.5 8.8 9.2 9.6 9.5 1.1 1.2 1.4 1.3 

Average 9.2 9.2 9.5 7.6 7.7 7.9 8.2 8.4 8.6 0.9 1.1 0.8 1.1 



SACRAMENTO 


Estimate 

Sacramento Investment Criteria | First-Tier 1 Investment Properties 

East 

Rent 



West 

Region 

U.S. 


Estimate 

West 

Region 

U.S. 


Estimate 

Offc - CBD 8.8 9.2 9.3 7.1 7.3 7.6 7.8 8.1 8.3 1.0 0.9 0.8 1.0 

Offc - Suburban 9.8 9.7 9.6 8.0 7.9 8.1 8.6 8.5 8.6 0.1 0.4 0.1 0.6 

Ind - Warehouse 9.1 9.1 9.4 7.4 7.5 7.9 8.1 8.1 8.5 1.1 1.3 0.8 1.0 

Ind - R&D 9.7 9.6 9.7 7.9 7.8 8.2 8.5 8.4 8.8 0.4 0.1 0.3 0.1 

Ind - Flex 10.1 9.8 9.8 8.4 8.0 8.3 9.0 8.6 8.9 0.4 0.3 0.2 0.0 

Ret - Reg Mall 8.9 9.4 9.3 7.2 7.6 7.7 7.8 8.2 8.4 0.4 -0.1 0.4 0.5 

Ret - Pwr Center 9.2 9.6 9.4 7.5 7.7 7.9 8.1 8.3 8.5 0.6 0.5 0.2 -0.4 

Ret - Neigh/ 

Comm. 

West 

Region 

U.S. 

National 

Value 

West 

Value 

National 

Rent 

9.2 9.6 9.6 7.5 7.8 8.0 8.1 8.3 8.7 0.5 0.3 0.3 0.4 

Apartment 7.8 8.2 8.4 5.9 6.2 6.7 6.7 6.9 7.3 3.5 4.0 3.5 4.0 

Hotel 10.6 10.6 10.7 8.5 8.7 8.8 9.1 9.2 9.5 1.1 1.0 1.4 1.8 

Average 9.3 9.5 9.5 7.5 7.7 7.9 8.2 8.3 8.6 0.9 0.9 0.8 0.9 



West 

Rent 



SALT LAKE CITY 



Estimate 

Salt Lake City Investment Criteria | First-Tier 1 Investment Properties 

WINTER 2012 | VOL 40 | NO 4 



West 

Region 

U.S. 


Estimate 

West 

Region 

U.S. 


Estimate 

Offc - CBD 8.9 9.2 9.3 7.1 7.3 7.6 7.8 8.1 8.3 1.0 0.9 0.8 1.0 

Offc - Suburban 9.7 9.7 9.6 7.9 7.9 8.1 8.5 8.5 8.6 0.1 0.4 0.1 0.6 

Ind - Warehouse 9.1 9.1 9.4 7.4 7.5 7.9 8.0 8.1 8.5 1.1 1.3 0.8 1.0 

Ind - R&D 9.6 9.6 9.7 7.9 7.8 8.2 8.4 8.4 8.8 0.4 0.1 0.3 0.1 

Ind - Flex 9.9 9.8 9.8 8.2 8.0 8.3 8.7 8.6 8.9 0.4 0.3 0.2 0.0 

Ret - Reg Mall 8.9 9.4 9.3 7.1 7.6 7.7 7.7 8.2 8.4 0.4 -0.1 0.4 0.5 

Ret - Pwr Center 9.4 9.6 9.4 7.6 7.7 7.9 8.2 8.3 8.5 0.6 0.5 0.2 -0.4 

Ret - Neigh/ 

Comm. 

West 

Region 

U.S. 

National 

Value 

West 

Value 

National 

Rent 

9.4 9.6 9.6 7.6 7.8 8.0 8.2 8.3 8.7 0.5 0.3 0.3 0.4 

Apartment 8.0 8.2 8.4 6.1 6.2 6.7 6.8 6.9 7.3 3.5 4.0 3.5 4.0 

Hotel 10.6 10.6 10.7 8.4 8.7 8.8 9.1 9.2 9.5 1.1 1.0 1.4 1.8 

Average 9.4 9.5 9.5 7.5 7.7 7.9 8.1 8.3 8.6 0.9 0.9 0.8 0.9 



SAN ANTONIO 


Estimate 

San Antonio Investment Criteria | First-Tier 1 Investment Properties 

West 

Rent 



South 

Region 

U.S. 


Estimate 

South 

Region 

U.S. 


Estimate 

Offc - CBD 9.0 9.8 9.3 7.5 7.9 7.6 8.1 8.5 8.3 1.0 1.9 0.8 1.1 

Offc - Suburban 9.6 9.9 9.6 8.1 8.1 8.1 8.7 8.7 8.6 0.1 0.7 0.1 0.3 

Ind - Warehouse 9.4 9.8 9.4 7.9 8.2 7.9 8.6 8.9 8.5 1.1 1.2 0.8 0.8 

Ind - R&D 9.8 10.0 9.7 8.4 8.4 8.2 9.0 9.0 8.8 0.4 1.3 0.3 1.0 

Ind - Flex 10.3 10.2 9.8 8.6 8.5 8.3 9.2 9.2 8.9 0.4 0.6 0.2 0.4 

Ret - Reg Mall 9.3 9.8 9.3 7.6 8.0 7.7 8.2 8.7 8.4 0.4 1.6 0.4 0.9 

Ret - Pwr Center 9.2 9.9 9.4 7.8 8.2 7.9 8.4 8.8 8.5 0.6 1.8 0.2 1.0 

Ret - Neigh/ 

Comm. 

South 

Region 

U.S. 

National 

Value 

South 

Value 

National 

Rent 

9.3 10.0 9.6 7.8 8.3 8.0 8.4 8.9 8.7 0.5 1.5 0.3 1.1 

Apartment 8.4 9.1 8.4 6.7 7.2 6.7 7.4 7.8 7.3 3.5 3.3 3.5 3.4 

Hotel 10.7 10.7 10.7 8.6 8.8 8.8 9.4 9.5 9.5 1.1 1.8 1.4 1.8 

Average 9.5 9.9 9.5 7.9 8.2 7.9 8.5 8.8 8.6 0.9 1.6 0.8 1.2 



South 

Rent 


WINTER 2012 | VOL 40 | NO 4 

SAN DIEGO 


Estimate 


San Diego Investment Criteria | First-Tier 1 Investment Properties 




West 

Region 

U.S. 


Estimate 

West 

Region 

U.S. 


Estimate 

Offc - CBD 8.8 9.2 9.3 7.0 7.3 7.6 7.7 8.1 8.3 1.0 0.9 0.8 1.0 

Offc - Suburban 9.5 9.7 9.6 7.8 7.9 8.1 8.3 8.5 8.6 0.1 0.4 0.1 0.6 

Ind - Warehouse 8.9 9.1 9.4 7.3 7.5 7.9 7.9 8.1 8.5 1.1 1.3 0.8 1.0 

Ind - R&D 9.5 9.6 9.7 7.7 7.8 8.2 8.2 8.4 8.8 0.4 0.1 0.3 0.1 

Ind - Flex 9.6 9.8 9.8 8.0 8.0 8.3 8.5 8.6 8.9 0.4 0.3 0.2 0.0 

Ret - Reg Mall 8.7 9.4 9.3 7.1 7.6 7.7 7.7 8.2 8.4 0.4 -0.1 0.4 0.5 

Ret - Pwr Center 9.1 9.6 9.4 7.4 7.7 7.9 8.0 8.3 8.5 0.6 0.5 0.2 -0.4 

Ret - Neigh/ 

Comm. 

West 

Region 

U.S. 

National 

Value 

West 

Value 

National 

Rent 

9.2 9.6 9.6 7.4 7.8 8.0 8.0 8.3 8.7 0.5 0.3 0.3 0.4 

Apartment 7.6 8.2 8.4 5.7 6.2 6.7 6.5 6.9 7.3 3.5 4.0 3.5 4.0 

Hotel 10.5 10.6 10.7 8.5 8.7 8.8 9.1 9.2 9.5 1.1 1.0 1.4 1.8 

Average 9.1 9.5 9.5 7.4 7.7 7.9 8.0 8.3 8.6 0.9 0.9 0.8 0.9 



SAN FRANCISCO 


Estimate 

San Francisco Investment Criteria | First-Tier 1 Investment Properties 

West 

Rent 



West 

Region 

U.S. 


Estimate 

West 

Region 

U.S. 


Estimate 

Offc - CBD 8.3 9.2 9.3 6.7 7.3 7.6 7.3 8.1 8.3 1.0 0.9 0.8 1.0 

Offc - Suburban 9.2 9.7 9.6 7.6 7.9 8.1 8.0 8.5 8.6 0.1 0.4 0.1 0.6 

Ind - Warehouse 8.8 9.1 9.4 7.2 7.5 7.9 7.8 8.1 8.5 1.1 1.3 0.8 1.0 

Ind - R&D 9.4 9.6 9.7 7.8 7.8 8.2 8.2 8.4 8.8 0.4 0.1 0.3 0.1 

Ind - Flex 9.6 9.8 9.8 8.0 8.0 8.3 8.5 8.6 8.9 0.4 0.3 0.2 0.0 

Ret - Reg Mall 8.3 9.4 9.3 6.8 7.6 7.7 7.3 8.2 8.4 0.4 -0.1 0.4 0.5 

Ret - Pwr Center 8.9 9.6 9.4 7.3 7.7 7.9 7.8 8.3 8.5 0.6 0.5 0.2 -0.4 

Ret - Neigh/ 

Comm. 

West 

Region 

U.S. 

National 

Value 

West 

Value 

National 

Rent 

8.9 9.6 9.6 7.2 7.8 8.0 7.8 8.3 8.7 0.5 0.3 0.3 0.4 

Apartment 7.5 8.2 8.4 5.6 6.2 6.7 6.3 6.9 7.3 3.5 4.0 3.5 4.0 

Hotel 10.3 10.6 10.7 8.3 8.7 8.8 8.9 9.2 9.5 1.1 1.0 1.4 1.8 

Average 8.9 9.5 9.5 7.3 7.7 7.9 7.8 8.3 8.6 0.9 0.9 0.8 0.9 



West 

Rent 



SEATTLE 



Estimate 

Seattle Investment Criteria | First-Tier 1 Investment Properties 

WINTER 2012 | VOL 40 | NO 4 



West 

Region 

U.S. 


Estimate 

West 

Region 

U.S. 


Estimate 

Offc - CBD 8.4 9.2 9.3 6.7 7.3 7.6 7.4 8.1 8.3 1.0 0.9 0.8 1.0 

Offc - Suburban 9.2 9.7 9.6 7.5 7.9 8.1 8.1 8.5 8.6 0.1 0.4 0.1 0.6 

Ind - Warehouse 8.6 9.1 9.4 7.1 7.5 7.9 7.7 8.1 8.5 1.1 1.3 0.8 1.0 

Ind - R&D 9.2 9.6 9.7 7.6 7.8 8.2 8.1 8.4 8.8 0.4 0.1 0.3 0.1 

Ind - Flex 9.5 9.8 9.8 7.9 8.0 8.3 8.4 8.6 8.9 0.4 0.3 0.2 0.0 

Ret - Reg Mall 8.6 9.4 9.3 6.9 7.6 7.7 7.5 8.2 8.4 0.4 -0.1 0.4 0.5 

Ret - Pwr Center 8.9 9.6 9.4 7.3 7.7 7.9 7.9 8.3 8.5 0.6 0.5 0.2 -0.4 

Ret - Neigh/ 

Comm. 

West 

Region 

U.S. 

National 

Value 

West 

Value 

National 

Rent 

8.9 9.6 9.6 7.3 7.8 8.0 7.9 8.3 8.7 0.5 0.3 0.3 0.4 

Apartment 7.6 8.2 8.4 5.7 6.2 6.7 6.4 6.9 7.3 3.5 4.0 3.5 4.0 

Hotel 10.3 10.6 10.7 8.2 8.7 8.8 8.9 9.2 9.5 1.1 1.0 1.4 1.8 

Average 8.9 9.5 9.5 7.2 7.7 7.9 7.8 8.3 8.6 0.9 0.9 0.8 0.9 



ST. LOUIS 


Estimate 

St. Louis Investment Criteria | First-Tier 1 Investment Properties 

West 

Rent 



Midwest 

Region 

U.S. 


Estimate 

Midwest 

Region 

U.S. 


Estimate 

Offc - CBD 9.2 9.6 9.3 7.7 8.2 7.6 8.3 8.8 8.3 1.0 -0.2 0.8 -0.2 

Offc - Suburban 9.7 9.7 9.6 8.3 8.5 8.1 8.7 8.9 8.6 0.1 -0.9 0.1 -0.7 

Ind - Warehouse 9.1 9.4 9.4 7.8 8.3 7.9 8.3 8.9 8.5 1.1 0.8 0.8 0.5 

Ind - R&D 9.6 9.8 9.7 8.3 8.6 8.2 8.8 9.2 8.8 0.4 -0.1 0.3 -0.2 

Ind - Flex 9.6 9.7 9.8 8.4 8.6 8.3 8.9 9.1 8.9 0.4 0.2 0.2 0.0 

Ret - Reg Mall 8.8 9.0 9.3 7.7 8.2 7.7 8.1 8.6 8.4 0.4 -0.5 0.4 -0.7 

Ret - Pwr Center 9.0 9.0 9.4 7.9 8.1 7.9 8.4 8.5 8.5 0.6 -0.4 0.2 -0.4 

Ret - Neigh/ 

Comm. 

Midwest 

Region 

U.S. 

National 

Value 

Midwest 

Value 

National 

Rent 

9.3 9.5 9.6 8.1 8.4 8.0 8.7 9.0 8.7 0.5 -0.7 0.3 -0.9 

Apartment 8.3 8.6 8.4 6.8 7.3 6.7 7.3 7.7 7.3 3.5 2.9 3.5 2.8 

Hotel 10.6 10.6 10.7 9.1 9.4 8.8 9.6 9.8 9.5 1.1 0.5 1.4 0.7 

Average 9.3 9.5 9.5 8.0 8.4 7.9 8.5 8.9 8.6 0.9 0.2 0.8 0.1 



Midwest 

Rent 


WINTER 2012 | VOL 40 | NO 4 

TAMPA 


Estimate 


Tampa Investment Criteria | First-Tier 1 Investment Properties 




South 

Region 

U.S. 


Estimate 

South 

Region 

U.S. 


Estimate 

Offc - CBD 9.1 9.8 9.3 7.3 7.9 7.6 7.9 8.5 8.3 1.0 1.9 0.8 1.1 

Offc - Suburban 9.8 9.9 9.6 8.0 8.1 8.1 8.6 8.7 8.6 0.1 0.7 0.1 0.3 

Ind - Warehouse 9.4 9.8 9.4 7.6 8.2 7.9 8.3 8.9 8.5 1.1 1.2 0.8 0.8 

Ind - R&D 9.8 10.0 9.7 8.1 8.4 8.2 8.7 9.0 8.8 0.4 1.3 0.3 1.0 

Ind - Flex 10.1 10.2 9.8 8.4 8.5 8.3 8.9 9.2 8.9 0.4 0.6 0.2 0.4 

Ret - Reg Mall 9.0 9.8 9.3 7.3 8.0 7.7 7.9 8.7 8.4 0.4 1.6 0.4 0.9 

Ret - Pwr Center 9.5 9.9 9.4 7.8 8.2 7.9 8.4 8.8 8.5 0.6 1.8 0.2 1.0 

Ret - Neigh/ 

Comm. 

South 

Region 

U.S. 

National 

Value 

South 

Value 

National 

Rent 

9.6 10.0 9.6 7.9 8.3 8.0 8.5 8.9 8.7 0.5 1.5 0.3 1.1 

Apartment 8.5 9.1 8.4 6.6 7.2 6.7 7.2 7.8 7.3 3.5 3.3 3.5 3.4 

Hotel 10.6 10.7 10.7 8.4 8.8 8.8 9.2 9.5 9.5 1.1 1.8 1.4 1.8 

Average 9.5 9.9 9.5 7.7 8.2 7.9 8.4 8.8 8.6 0.9 1.6 0.8 1.2 



TOLEDO 


Estimate 

Toledo Investment Criteria | First-Tier 1 Investment Properties 

South 

Rent 



Midwest 

Region 

U.S. 


Estimate 

Midwest 

Region 

U.S. 


Estimate 

Offc - CBD 9.5 9.6 9.3 7.9 8.2 7.6 8.6 8.8 8.3 1.0 -0.2 0.8 -0.2 

Offc - Suburban 9.9 9.7 9.6 8.5 8.5 8.1 9.0 8.9 8.6 0.1 -0.9 0.1 -0.7 

Ind - Warehouse 9.4 9.4 9.4 8.1 8.3 7.9 8.7 8.9 8.5 1.1 0.8 0.8 0.5 

Ind - R&D 9.9 9.8 9.7 8.6 8.6 8.2 9.1 9.2 8.8 0.4 -0.1 0.3 -0.2 

Ind - Flex 10.0 9.7 9.8 8.7 8.6 8.3 9.2 9.1 8.9 0.4 0.2 0.2 0.0 

Ret - Reg Mall 9.0 9.0 9.3 7.9 8.2 7.7 8.4 8.6 8.4 0.4 -0.5 0.4 -0.7 

Ret - Pwr Center 9.3 9.0 9.4 8.1 8.1 7.9 8.6 8.5 8.5 0.6 -0.4 0.2 -0.4 

Ret - Neigh/ 

Comm. 

Midwest 

Region 

U.S. 

National 

Value 

Midwest 

Value 

National 

Rent 

9.6 9.5 9.6 8.3 8.4 8.0 8.9 9.0 8.7 0.5 -0.7 0.3 -0.9 

Apartment 8.5 8.6 8.4 7.0 7.3 6.7 7.5 7.7 7.3 3.5 2.9 3.5 2.8 

Hotel 10.8 10.6 10.7 9.2 9.4 8.8 9.7 9.8 9.5 1.1 0.5 1.4 0.7 

Average 9.6 9.5 9.5 8.2 8.4 7.9 8.8 8.9 8.6 0.9 0.2 0.8 0.1 



Midwest 

Rent 



TUCSON 



Estimate 

Tucson Investment Criteria | First-Tier 1 Investment Properties 

WINTER 2012 | VOL 40 | NO 4 



West 

Region 

U.S. 


Estimate 

West 

Region 

U.S. 


Estimate 

Offc - CBD 9.0 9.2 9.3 7.4 7.3 7.6 7.9 8.1 8.3 1.0 0.9 0.8 1.0 

Offc - Suburban 9.7 9.7 9.6 8.1 7.9 8.1 8.6 8.5 8.6 0.1 0.4 0.1 0.6 

Ind - Warehouse 9.2 9.1 9.4 7.5 7.5 7.9 8.1 8.1 8.5 1.1 1.3 0.8 1.0 

Ind - R&D 9.7 9.6 9.7 8.1 7.8 8.2 8.6 8.4 8.8 0.4 0.1 0.3 0.1 

Ind - Flex 9.8 9.8 9.8 8.3 8.0 8.3 8.8 8.6 8.9 0.4 0.3 0.2 0.0 

Ret - Reg Mall 8.9 9.4 9.3 7.3 7.6 7.7 7.8 8.2 8.4 0.4 -0.1 0.4 0.5 

Ret - Pwr Center 9.3 9.6 9.4 7.8 7.7 7.9 8.2 8.3 8.5 0.6 0.5 0.2 -0.4 

Ret - Neigh/ 

Comm. 

West 

Region 

U.S. 

National 

Value 

West 

Value 

National 

Rent 

9.3 9.6 9.6 7.7 7.8 8.0 8.2 8.3 8.7 0.5 0.3 0.3 0.4 

Apartment 8.2 8.2 8.4 6.4 6.2 6.7 7.0 6.9 7.3 3.5 4.0 3.5 4.0 

Hotel 10.2 10.6 10.7 8.4 8.7 8.8 9.0 9.2 9.5 1.1 1.0 1.4 1.8 

Average 9.3 9.5 9.5 7.7 7.7 7.9 8.2 8.3 8.6 0.9 0.9 0.8 0.9 



WASHINGTON, D.C. 


Estimate 

Washington, D.C. Investment Criteria | First-Tier 1 Investment Properties 

West 

Rent 



East 

Region 

U.S. 


Estimate 

East 

Region 

U.S. 


Estimate 

Offc - CBD 8.1 8.7 9.3 6.6 7.2 7.6 7.2 7.8 8.3 1.0 1.6 0.8 1.2 

Offc - Suburban 9.0 9.3 9.6 7.5 7.9 8.1 8.0 8.5 8.6 0.1 0.0 0.1 0.0 

Ind - Warehouse 8.9 9.3 9.4 7.4 8.0 7.9 8.0 8.5 8.5 1.1 1.1 0.8 0.9 

Ind - R&D 9.3 9.5 9.7 7.9 8.2 8.2 8.4 8.8 8.8 0.4 0.6 0.3 0.6 

Ind - Flex 9.4 9.4 9.8 8.0 8.1 8.3 8.5 8.7 8.9 0.4 0.5 0.2 0.5 

Ret - Reg Mall 8.3 9.0 9.3 6.8 7.4 7.7 7.5 8.2 8.4 0.4 0.7 0.4 1.0 

Ret - Pwr Center 8.8 9.1 9.4 7.3 7.7 7.9 8.0 8.5 8.5 0.6 0.6 0.2 0.9 

Ret - Neigh/ 

Comm. 

East 

Region 

U.S. 

National 

Value 

East 

Value 

National 

Rent 

8.8 9.2 9.6 7.3 7.7 8.0 8.0 8.5 8.7 0.5 0.9 0.3 0.9 

Apartment 7.6 8.0 8.4 5.9 6.3 6.7 6.6 7.1 7.3 3.5 3.6 3.5 3.8 

Hotel 10.4 10.8 10.7 8.1 8.5 8.8 9.1 9.6 9.5 1.1 1.2 1.4 1.3 

Average 8.9 9.2 9.5 7.3 7.7 7.9 7.9 8.4 8.6 0.9 1.1 0.8 1.1 



East 

Rent 


WINTER 2012 | VOL 40 | NO 4 

AEGON USA Realty Advisors 

AIG Asset Management 

AMLI Residential Properties, LLC 

Berwind Property Group 

Capright Property Advisors, LLC 

CB Richard Ellis 

Cushman & Wakefield 

Delta Associates 

DePaul University 

Dividend Capital 

Keystone Consulting Group, Inc. 

LaSalle Investment Management 

Lincoln Property Company 

Marcus & Millichap 

National Real Estate Advisors 

NewTower Trust Company 

PKF Consulting 

Principal Real Estate Investors 

RREEF 

NATIONAL RESPONDENTS - WINTER 2012 

Saltash Partners, LLC 

State Teachers Retirement System of Ohio 

The Townsend Group 

Trail Creek Capital 

Ullico Investment Advisors 



Utah Retirement Systems 

Weiser Realty Advisors, LLC 

This is a list of our institutional and national survey respondents 

who wished to be identified; it does not represent our entire list of 

quarterly survey respondents. 



REGIONAL RESPONDENTS - WINTER 2012 

Paul Aase 

Roberts Commercial Real Estate 

Alpharetta, GA 

Al Abbott 

Abbott & Associates, Inc. 

Houston, TX 

Greg Adams 

BDO Valuation Advisors, LLC 

Atlanta, GA 

Andrew Albro 

Standard Valuation Services 

Mineola, NY 

Ted Anglyn 

Anglyn Property Advisors, LLC 

Marietta, GA 

Joel Asmar 

Asmar Appraisal Company, Inc. 

Pensacola, FL 

James Babb, Jr. 

Property Analysts, Inc. 

Indianapolis, IN 

Kenneth Barnes 

McKee & Schalka 

Seattle, WA 

Mark Barrs 

Barrs Appraisal Services, Inc. 

Montgomery, AL 

Ryan Bauer 

Diversified R.E. Services, Inc. 

Minneapolis, MN 

Brad Beggs 

Development Strategies 

St. Louis, MO 

Scott Belke 

Belke Appraisal and Consulting Svcs., Inc. 

Kansas City, MO 

Charles Bertelle 

Bertelle & Associates, Inc. 

Coral Springs, FL 

David Berzon 

Levenfeld Pearlstein, LLC 

Chicago, IL 


Bob Bigner 

Bigner Appraisal 

Cincinnati, OH 

Paul Borysow 

Borysow Appraisal 

Chicago, IL 

William Bott 

Equity Appraisal Co., Inc. 

Springhouse, PA 

MacKenzie Bottum 

MacKenzie S. Bottum & Associates, Inc. 

Addison, TX 

Peter Bowes 

Bowes and Company 

Denver, CO 

Michael Bownik 

The Valuation Group 

Plymouth, MN 

Jeffrey Briggs 

American Appraisal Associates 

Dallas, TX 

Gregory Brown 

Brown Valuation Services, Inc. 

Fort Lauderdale, FL 

Stephen Bullock 

Bullock Commercial Appraisal 

Windham, NH 

Phillip Butler 

Phillip J. Butler & Associates, Inc. 

Naperville, IL 

Stephen Cashdan 

Mariscal, Weeks, McIntyre & Friedlander, P.A. 

Phoenix, AZ 

Kevin Casserly 

Casserly Appraisals 

Rogers, MN 

Richard Chaiken 

Appraisal Consultants Corp. 

Livingston, NJ 

Harrison Chavis 

Harrison Chavis & Associates 

Richmond, VA 

Sampson Child 

Sampson R. Child & Associates 

Excelsior, MN 

Leonard City 

Commerce Appraisal 

Los Angeles, CA 

Michael Clapp 

Michael S. Clapp & Assoc., Inc. 

Winston-Salem, NC 

Gary Cohen 

Global Lodging Consultants 

Corona Del Mar, CA 

Jonathan Cook 

The Cook Group 

Salt Lake City, UT 

Joe Creech 

Colliers International 

Seattle, WA 

Dwight Dahlen 

Dahlen & Dwyer & Foley 

St. Paul, MN 

Joseph D’Antoni 

Corporate Sciences, Inc. 

Pasadena, CA 

Robert Decker 

Decker Associates, Inc. 

Littleton, CO 

Daniel DeRango 

DeRango, Best and Associates 

Orlando, FL 

John Dickinson 

Dickinson, Lewis & Associates, LLC 

Raleigh, NC 

Robert Dodge 

Dodge Appraisal Company 

Ballwin, MO 

Dean Dodson 

Dodson Real Estate Analysis 

Roaring Spring, PA 

Dale Donerkiel 

DMD Appraisals, Inc. 

San Fernando, CA 

WINTER 2012 | VOL 40 | NO 4 

John (Jack) Donnelly 

John C. Donnelly, Inc. 

Bethesda, MD 

Roger Doverspike 

Doverspike & Associates, Inc. 

Temecula, CA 

James Drewry 

American Family Insurance 

Madison, WI 

Richard DuBay 

Appraisal Consultants Corp. 

St. Paul, MN 

Dennis Duffy 

Ratcliffe, Cali, Duffy, Hughes & Co. 

Washington, DC 

Donald Duncan 

The Duncan Appraisal Corporation 

Huntington Beach, CA 

Edmond Eslava 

The Appraisal & Consultant Group, Inc. 

Daphne, AL 

Jonathan Fischer 

NAI Global 

Englewood, NJ 

John Fisher 

O’Connor & Associates 

Houston, TX 

Kara Fishman 

Fishman Appraisal Services 

Lebanon, CT 

Robert Fletcher 

Fletcher Appraisal Services 

Sarasota, FL 

Wayne Froboese 

Froboese Realty Group 

Fallbrook, CA 

Chris Fruy 

American Realty Advisors 

Chicago, IL 

James Fuller 

Fuller Appraisal Services 

Waterford, MI 


WINTER 2012 | VOL 40 | NO 4 

Thomas Gallup 

Evaluation & Review Associates, Inc. 

Olney, MD 

Calvin Gardner 

Gardner Consulting Services, Inc. 

Orlando, FL 

Thomas Garrett 

Tommy Garrett Real Estate Services 

Grand Prairie, TX 

James Gavin 

Duff & Phelps, LLC 

San Francisco, CA 

James Gibbons 

Gibbons & Sidhu, Ltd. 

Chicago, IL 

Anthony Gibbons 

RE-SOLVE 

Bainbridge, WA 

C. Gordon Gilbert 

Gilbert Advising & Appraising, LLC 

Baltimore, MD 

John Gillick 

St. Louis County Department of Revenue 

St. Louis, MO 

Anthony Girasole 

Brisbane Consulting Group 

Niagara Falls, NY 

John Gordon 

GVA Kidder Mathews 

Bellevue, WA 

Michael Green 

Real Estate Analysts Limited 

St. Louis, MO 

Bruce Greenberg 

Bruce D. Greenberg, Inc. 

Tucson, AZ 

Joel Greenberg 

Consolidated Appraisal Services, Inc. 

Coral Springs, FL 

Carl Greenwood 

Greenwood & McKenzie 

Tustin, CA 

Stephen Griffith 

Bell, Griffith & Associates, Inc. 

Tallahassee, FL 

Sheldon Gross 

Sheldon Gross Realty, Inc. 

West Orange, NJ 

Russell Hamilton 

Hamilton & Jacobs, LLC 

Port Orange, FL 

Stephen Harrington 

Stephen Harrington Company 

Sacramento, CA 

Lillian Harrison 

Town of Brookline 

Brookline, MA 

Robert Hastings 

Colliers International 

Honolulu, HI 

Dale Hayter 

DWH Consulting 

Flowery Branch, GA 

Peter Helland 

Real Valuation Group, LLC 

St. Charles, IL 

Paul Hendricks 

Hendricks Appraisal 

Tucson, AZ 

Debora Hendrix 

Integra Realty Resources 

Columbia, SC 

Douglas Herold 


Sewickley, PA 

Jeff Hicks 

The Dohring Group 

Tampa, FL 

Richard Hoffman 

Appraisal Research Corporation 

Findlay, OH 

Austin Hollis 

Hollis Appraisals, Inc. 

Jacksonville, FL 

Michael Honeycutt 

Realty Trust Group, LLC 

Knoxville, TN 

Thomas Horner 

Ohio Real Estate Consultants, Inc. 

Dublin, OH 



Frank Hornstein 

Appraisal First Real Estate Appraisers, LLC 

Miami, FL 

Stephen Hosch 

Hosch Appraisal & Consulting, LLC 


Jared Huish 

Arizona Commercial Appraisers, PC 

Mesa, AZ 

Michael Husij 

Integral Property Tax Services 

Scottsdale, AZ 

Brian Iannarone 

Wells Fargo Bank 

Union, NJ 

Philip Isaacs 

Isaacs and Assoc., Inc. 

Oklahoma City, OK 

William James 

James Real Estate Services, Inc. 

Denver, CO 

Paul Johnson 

Johnson Realty Services 

Sea Girt, NJ 

Paul Johnson 

The Paul G. Johnson Company 

Phoenix, AZ 

Randall Johnston 

J.P. Weigand & Sons, Inc. 

Wichita, KS 

John Jordan 

Deverick & Associates, Inc. 

Dallas, TX 

Kerry Jorgensen 

Jorgensen Appraisal, Inc. 

Sandy, UT 

Daniel Kane 

Kane and Company 

Palatine, IL 

James Katon 


Charlotte, NC 

Charles Kelly 

Coldwell Banker Commercial 

Dallas, TX 

John Kenyon 

Houlihan Lokey 

South Salem, NY 

Stephen King 

Beaumont & Matthes, Inc. 

Orlando, FL 

William Kinn 

Kinn Real Estate Counselors 

New York, NY 

James Koelsch 

Valuation Services, Inc. 

St. Petersburg, FL 

Daniel Kohlhepp 

Johns Hopkins Carey Business School 

DuBois, PA 

Trentin Krauss 

Smyers Appraisal 

Walnut Creek, CA 

David Lakvold 

The Lakvold Group, LLC 

Baton Rouge, LA 

Justin Landry 

Stirling Properties 

New Orleans, LA 

John Lansbury 

Metropolitan Commercial Valuations 

Washington, DC 

Russell Lauer 

The Lauer Appraisal Company 

St. Louis, MO 

Christopher Lauger 

Asset Insight of Nevada 

Las Vegas, NV 

Frank Leatherman 

Leatherman Real Estate Company 

Raleigh, NC 

Jay Lefevers 

Lefevers Baltutat Valuation Group 

Phoenix, AZ 

Christopher Lehman 

The Christopher Lehman Co. 

Austin, TX 

Paul Leis 

PJL Realty Advisors, Inc. 

Erdenheim, PA 



Jason Letman 

Consultus Asset Valuation, Inc. 

Englewood, CO 

Mark Levine 

University of Denver 

Denver, CO 

Carlton Lloyd 


Naples, FL 

Daniel Lupiani 

Lupiani & Associates 

River Forest, IL 

George Mann 

Collateral Evaluation Services 


Robert Martinek 

Ernst & Young 

Millstone Township, NJ 

Todd Mason 

Mason Partners 

Houston, TX 

Harold McCloud 

McCloud & Associates 

Parker, CO 

Scott McHenry 

Cobiz Bank 

Denver, CO 

Gerald McKim 

Ace Real Estate Appraisal 

Garland, TX 

Michael McNamara 



John Meltzer 

Meltzer Properties, Ltd. 

Ouray, CO 

Richard Merritt 

Elliott D. Pollack & Company 


April Metcalf 


McLean, VA 

Richard Michaud 

Michaud Company, Inc. 

New Haven, CT 


Charles Minor 

Roe Minor Realty Consultants 


Judith Mitchell 

Burd & Mitchell Appraisal Service, Inc. 

Arvada, CO 

Peter Moegenburg 

Moegenburg Research, Inc. 

Brookfield, WI 

Michael Mohn 

Kennedy & Mohn, P.S. 

Bothell, WA 

Scott Morey 

Froboese Realty Group 

Fallbrook, CA 

Michael Mullenix 

SunTrust Bank 

Orlando, FL 

James Murr 

Carey Realty Partners 

Columbus, OH 

George Naeter 

George N. Naeter & Associates 

Forney, TX 

Robert Nahigian 

Auburndale Realty Company 

Newton, MA 

Michael Naifeh 

MJN Enterprises, Inc. 

Tucson, AZ 

Bruce Nakaoka 

Tradewind Capital Group, Inc. 

Honolulu, HI 

William Narde 

Blackrock, Inc. 

New York, NY 

Paul Ness 

Ness Associates 

Lancaster, PA 

Steve Noble 

Noble Valuations, Ltd. 

Roanoke, VA 

James Norby 

J.C. Norby & Associates 

Eau Claire, WI 

William O’Brien 

City of New Haven 

New Haven, CT 

Ronald Oppedisano 

Disano Appraisal Consultants 

Chicago, IL 

Derek Orr 

Prudential Commercial Real Estate 


Alexander Paul 

Delta Associates 

Alexandria, VA 

Alonzo Pedrin 

REFFS, LLC 

Placentia, CA 

R. Paul Perutelli 


Brentwood, TN 

Gary Peterson 

Peterson Appraisal Group, Ltd. 

Chicago, IL 

Scott Pettifer 

Pettifer & Associates, Inc. 

Santa Ana, CA 

Wade Ragas 

Real Property Associates 

Metairie, LA 

Mark Rattermann 

RESource, LLC 

Indianapolis, IN 

K. Lynn Ray 


Addison, TX 

Mark Reiling 

Cassidy Turley 


Michael Rende 

Wieme, Rende & Associates 

Troy, MI 

John Renken 

The Renken Company 

Claremont, CA 

Thomas Rhodes 

Rhodes & Rickolt, P.A. 

Ocala, FL 

WINTER 2012 | VOL 40 | NO 4 

Mark Richey 

Idaho Land & Appraisal, LLC 

Boise, ID 

Howard Richter 

Howard B. Richter & Associates, Inc. 

Deerfield, IL 

William Rielly 

Kelly-Rielly-Nell & Associates, Inc. 

Pittsburgh, PA 

Thomas Rife 

Rife & Co. Appraisers 

Bentonville, AR 

R. Maurice Robinson 

Maurice Robinson & Associates 

El Segundo, CA 

James Rohrig 

Grubb & Ellis Landauer 

Dallas, TX 

Fred Rolison 

The Ross Group, Inc. 

Northbrook, IL 

Josh Rosen 

Waronker & Rosen, Inc. 

Miami, FL 

Rosalie Roszak 

Cal-Roz Associates 

Oro Valley, AZ 

Matthew Rufrano 

KTR Real Estate Advisors 

New York, NY 

John Satter 

Hilco Real Estate Appraisal 

Wilmette, IL 

Paul Schaffner 

Charles P. Thompson & Assoc., Inc. 

Eugene, OR 

William Schoenhut 

Star Valuation Services, LLC 

Berwyn, PA 

Robert Schwarz 

Harry L. Schwarz & Co. 

Dover, NJ 

Garth Scott 

Scott Appraisal Co. 

Madison, WI 


WINTER 2012 | VOL 40 | NO 4 

Paul Seevers 

Seevers Jordan Ziegenmeyer 

Rocklin, CA 

Jan Sell 

Sell & Associates, Inc. 

Tempe, AZ 

Bernie Shaner 

Shaner Appraisals, Inc. 

Overland Park, KS 

Timothy Sheehan 

T. W. Sheehan & Associates, LLC 

Cherry Hill, NJ 

Cynthia Shelton 

Colliers Arnold 

Orlando, FL 

John Sherman 

Sherman Appraisals 

Cheyenne, WY 

Steven Sherwood 

Valuation Plus, Inc. 

Mamaroneck, NY 

William Sirny 

North American Realty Advisors 

Milwaukee, WI 

Thomas Slack 

Appraisal & Consulting Services Group 

Overland Park, KS 

Ryan Smith 

Peregrine Realty Partners 

Los Angeles, CA 

Sanders Solot 

Alliance Bank 

Tucson, AZ 

Stephen Spraberry 

The Ambrose Group 

Dallas, TX 

Sheila Stewart 

Stewart Advisors, Inc. 

Houston, TX 

Lewis Stirling 

Stirling Properties 

New Orleans, LA 

Robert Strachota 

Shenehon Company 


Everett Strand 

Nicollet Partners 


Keith Strohl 

NPV Advisors, Inc. 

Newport Beach, CA 

Zillah Tarkoe 

Zillah Tarkoe Associates, Inc. 

Ft. Lauderdale, FL 

Gerald Teel 

The Gerald A. Teel Company, Inc. 

Houston, TX 

John Thistlethwaite 

John M. Thistlethwaite Interests, LLC 

Fort Wayne, IN 

Duane Thoms 

Thoms & Associates 


C. Richard Tobias 

Tobias Realty Advisors, LLC 

St. Petersburg, FL 

Mitchell Todd 

Beer-Wells-Todd Real Property Analysts 

Frisco, TX 

Timothy Tolson 


Addison, TX 

Stanley Tomkinson 

Bristol Realty Counselors, LLC 

Boulder, CO 

Wilburn Trotter 

Patrick O’Connor & Associates, LP 

Houston, TX 

Bonnie Tuerke 

Benchmark Appraisals, LLC 

West Friendship, MD 

Christopher Turner 

Keystone Mortgage Corporation 

El Segundo, CA 

Cary Ulman 

U.S. General Services Administration 

Chicago, IL 

Michael VanBuskirk 

Zimmer Real Estate Services, L.C. 

Kansas City, MO 



Alexis Victors 

Creative Real Estate Magazine 

Menlo Park, CA 

Kenneth Voss 

Kenneth Voss & Associates, LLC 

Atlanta, GA 

Michael Waldron 

Waldron & Associates, Inc. 

Orange, CA 

Clinton Wallace 

PF Appraisals 

Chicago, IL 

James Walsh 



David Walther 

Haginas Chapman & Shillings 

Houston, TX 

Frank Waltman 

Whitney National Bank 

Houston, TX 

Todd Warner 

ValuStreet, LLC 

Phoenix, AZ 

Russell Wehner 

Russ Wehner Realty Co. 

Denver, CO 

Michael Weinberg 

Michael J. Weinberg & Associates 

New York, NY 

Charles Weintraub 

Spaulding & Slye Investments 

Boston, MA 

John Weissler 

Weissler Appraisal Company 

San Antonio, TX 

Shawn Wilson 

Compass Real Estate Consulting, Inc. 

Lakeland, FL 

Michael Woods 

Pacific Coast Appraisal 

Agoura Hills, CA 

Edgar Woolslair 

Woolslair & Associates, Inc. 

Davie, FL 

G. Michael Yovino-Young 

Yovino-Young, Inc. 

Berkeley, CA 

Steven Zawaski 

Zawaski & Zawaski 

Western Springs, IL 



RERC SCOPE AND METHODOLOGY 

Report Methodology 

The RERC Real Estate Investment Survey summarizes the required 

rates of return (ex-ante), property selection criteria, and investment 

outlook of a representative sample of large institutional investors and 

regional respondents throughout the United States. We survey both 

regional and institutional investors across the nation quarterly, questioning 

them on specific investment criteria in their local marketplace 

and trends across the country. The results are collected, averaged, and 

then displaced in our quarterly report. 

Published quarterly, the data provides timely insight into yields, return 

criteria, and risk adjustments that institutional investors rely on when 

making acquisitions. The survey data is used by investors, developers, 

appraisers, and financial institutions to monitor changing market conditions 

and to estimate financial performance. 

Findings reflect ex-ante required returns, or goals, of investors contemplating 

acquisitions. Thus, the RERC survey acts as a barometer of 

current market perceptions and confidence among the nation’s top 

professionals. 

Readers should also recognize that underwriting assumptions and 

practices, as well as underlying definitions of key terms, will vary 

slightly among survey respondents. Therefore, the greatest benefit 

to an investor who is interpreting survey results over time is an 

appreciation of the trends of various measuring devices and contemplation 

of the relationship of one measuring device to another. It is 

equally important to keep in mind that the investment survey reports 

required returns, not actual or historical performance. Performance 

data is available from other sources. 

RERC Definitions 

Basis Point Spread (bps): The difference between the yield (as 

defined) and an alternative investment with a comparable life (10-Year 

Treasurys, Moody’s Baa, Moody’s Aaa). 

Going-In (Overall) Capitalization Rate: Going-in capitalization rate 

is usually defined as the first year NOI (before capital items of tenant 

improvements and leasing commissions and debt service but after 

real estate taxes) divided by present value (or purchase price). 

Holding period: Average period of time that a property type is held 

for investment. 

Marketing Time: The period of time between the offering of a property 

for sale and securing a bona fide buyer. 

Pre-tax Yield (IRR, Discount Rate): The pre-tax yield is the rate of 

interest that discounts the pre-income tax cash flows received on 

an unleveraged investment back to a present value that is exactly 

equal to the amount of the original equity investment. (It is in effect a 


WINTER 2012 | VOL 40 | NO 4 

time-weighted average return on equity and, as used here, is synonymous 

with the term “yield.”) 

Renewal Probability: Percentage probability that is expected for an 

existing tenant to renew their lease after the expiration date. 

RERC Estimate vs. Survey Rates: In addition to the survey responses 

(survey rates) that RERC receives and analyzes each quarter, RERC also 

developed a model that incorporates unemployment, vacancy rates, 

and other financial and space market data. This modeled information, 

combined with the data received from the survey responses, is the 

RERC Estimate. 

RERC Portfolio Index (RPI): The RPI is RERC’s required return utilizing 

a weighted average based on the NCREIF Property Index. 

Reserves: Amount allocated for periodic replacement of long-lived 

building components during a property’s economic life. 

Terminal (Residual) Capitalization Rate: Terminal cap rate is the 

rate used to estimate resale or reversion value at the end of the holding 

period. Typically, it is the NOI in the year following the last year of 

the holding period that is capitalized. Similar to the going-in capitalization 

rate, but applied at the end of the holding investment period. 

Down Time: Number of months a space remains unleased at the 

expiration of a vacating tenant. 

Vacancy Loss: Percentage of total revenue uncollected due to space 

that remains vacant over a typical holding period. 

RERC Defined Regions 

West: Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, 

Nevada, New Mexico, Oregon, Utah, Washington, Wyoming 

Midwest: Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, 

Nebraska, North Dakota, Ohio, South Dakota, Wisconsin 

South: Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, 

Oklahoma, Tennessee, Texas 

East: Connecticut, Delaware, Kentucky, Maine, Maryland, Massachusetts, 

New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, 

Rhode Island, South Carolina, Vermont, Virginia, Washington 

D.C., West Virginia 

Note of Caution: It is imperative to exercise caution when interpreting 

required rates of return. RERC national return data shows a normal 

range of expected returns from all categories of investment-grade 

properties. Obviously, properties with greater investment risk will be 

at the high end of the scale. Rates obtained from this survey are not 

directly applicable to non-investment grade properties. 

We also note that investors generally strive to achieve a diversified 

portfolio; this motivation partially explains the variation in IRR 

requirements. Ranges and other data reflect the central tendencies 

of respondents, and unusually high and low responses have been 

eliminated. 


WINTER 2012 | VOL 40 | NO 4 

REAL ESTATE RESEARCH CORPORATION 

It was in 1931 – with the Great Depression well underway – that Real Estate 

Research Corporation (RERC) was founded. Recognized for monitoring 

key sections of the economy that influenced the real estate industry, 

RERC worked with some of the nation’s most well-known industrialists 

and government agencies involved with post-Depression and World 

War II building. Today we offer clients the following services. 

Independent Fiduciary Services - As a registered investment adviser with the 

Securities and Exchange Commission (SEC) and with its nearly 80 years of research, 

valuation, and consulting experience, RERC is ideally suited to provide a variety of real 

estate-related services for institutions that manage real estate assets for others: 

n Independent fiduciary services for a 180-property investment manager with 

gross asset values exceeding $12 billion. 

n Fairness opinions on dozens of major acquisitions totaling over $1 billion. 

n Valuation consultant for the second largest pension fund in the U.S. 

Valuation and Consulting Services - As one of its core businesses, RERC performs 

property-level, independent valuations and analyses founded in thoroughly 

researched market fundamentals. RERC’s valuation and consulting services feature: 

n Valuation and consulting expertise with office buildings, industrial properties, 

retail properties, apartments, hotels and hospitality-related property, and multiuse 

properties in all major U.S. markets. 

n Appraisal management services to include assisting with third-party appraiser 

selection, developing an approved vendor list, and coordinating appraisal 

assignments and rotations. 

Management and Valuation Information Systems - RERC’s management information 

system (MIS) and valuation management system (VMS) offer completely customizable 

technology solutions that offer clients real-time data and reporting to help 

manage their portfolios, track and store important files, and maintain information 

security. RERC’s web-based systems manage a variety of equity portfolios valued in 

excess of $50 billion. 

Research & Publications 

n The RERC DataCenter is a proprietary database that provides current and historical 

survey-based and transaction-based investment criteria, property volume 

and pricing averages, and library and querying functions. 

n The RERC Real Estate Report has been published for 40 years and is considered 

“the National Real Estate Authority.” The report is best known for its surveybased 

capitalization and pre-tax yield rates and expectations for 10 major property 

types on an institutional, regional, and metro basis. 



LEADERSHIP 


CFA, CRE, MAI, FRICS, CCIM 

Chairman & President 

312.587.1900 

riggs@rerc.com 

Richard A. Hanson 

Chief Executive Officer 

312.587.1800 

rhanson@rerc.com 

Del H. Kendall, CRE, MAI 

Managing Director 

713.661.8880 

dkendall@rerc.com 

Donald A. Burns, CRE, MAI 


770.623.4922 

dburns@rerc.com 

Kent D. Steele, CRE, FRICS, MAI 


630.430.3865 

ksteele@rerc.com 

William L. Corbin, MAI 


310.734.1401 

wcorbin@rerc.com 

Steven W. Thompson, MAI 


713.661.8880 

sthompson@rerc.com 

Brian T. Velky, CFA 


515.309.7600 

bvelky@rerc.com 

Real Estate Research Corporation 

205 North Michigan Avenue 

Suite 2200 

Chicago, I L 60601 

312.587.1800 

www.rerc.com 



The National Real Estate Authority 

Winter 2012 | VOL 40 | NO 4

RERC Real Estate Report - REDI-net.com

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