Cap Rate Crunch

Byers are weighing sinngle-tenant NNN deals against mixed-use properties, with cap rates ranging from 5.5% to 7.2%. A recent deal in San Antonio caught attention, with a single-tenant NNN property offering a 6.1% cap rate and $2.5M price tag, resulting in a $153,000 annual net operating income. However, byuers walked away due to the tenant's short lease term and lack of rental escalations. In contrast, a mixed-use property in Denver boasted a 6.8% cap rate, with a $1.8M price and $122,400 annual net operating income. The deciding factor was the mixed-use property's diverse tenant base and 10% annual rental increases, making it a more attractive option for scaled portfolio growth.