Strip mall valuations have exploded thanks to lower interest rates, according to the Wall Street Journal, but there are still underlying problems in the especially vulnerable sector. The increasingly popular real estate investment trusts that invest in such centers depend upon tenant leasing for cash flows. Strip mall tenants, which the Journal said are comprised heavily of mom-and-pop shops and tend to attract lower-income consumers, are highly dependent on a stronger economy. Moreover, considering the increased use of the Internet for shopping and the still slumping rents paid by new tenants in recent years, perhaps the 45 percent gain in valuations since 2009 is unwarranted. Valuations now sit just 10 percent below 2007 peaks. Though low interest rates remain a grounded reason for the increased valuation, if those rise before the economy becomes stronger, strip malls are likely candidates to crash again, the Journal warned. [WSJ]
Lower interest rates spark revival in valuations of strip malls
June 27, 2011 04:11PM
July 06, 2011 at 6:54 am, King said:
IJWTS wow! Why can’t I think of thngis like that?
July 07, 2011 at 10:33 pm, Lola said:
God help me, I put aside a whole afternoon to fugire this out.
July 07, 2011 at 10:34 pm, Buffie said:
I went to tons of links befroe this, what was I thinking?
June 27, 2011 at 4:32 pm, Tim Donohue/SCS said:
The lower the Cap rate the higher the price.
Cap rate is the T bill rate multiplied by.2 added to mortgage rate
multiplied by.8!
June 27, 2011 at 4:33 pm, Michael Miester said:
This is basic crap anyone who has Brokers License must know.
June 27, 2011 at 4:34 pm, Walter smith said:
The Bankfeld typese utilize IRR progressions so they can
appear knowledgable.
June 27, 2011 at 4:35 pm, Gerhard Lohr Sr. said:
Real Estate is a local product and should be operated and owned
locally
June 27, 2011 at 4:36 pm, Bernard Schneider said:
The credit worthiness of a local tenant should add upside to
Cap rate vs. Walgreens NNN lease.
June 27, 2011 at 4:37 pm, Vitacco & Acitelli said:
We own * manage 1000 dwelling units and we have a higher
IRR than any REIT.
June 27, 2011 at 4:38 pm, robert mattthew markowitz said:
What is the premium for the end cap units?
June 27, 2011 at 4:39 pm, Jeff Marmon said:
What happened to Homemart Development?
June 27, 2011 at 5:09 pm, Anonymous said:
this is non-sense. Nobody pays those low caps.