There doesn’t appear to be any slowdown in the demand for this product type, particularly with the increasing use of technology and the growth of remote working.
A good sub-market for a value-add play should show a difference of several hundred dollars between the cost of renting a new, luxury apartment and the cost of renting an older unit.
Among the key factors affecting the sudden rise in TI allowances is a significant increase in new inventory that impacted supply and demand dynamics nationally.
The average retail cap rate for net lease properties during the second quarter of 2018 reached 6.2 percent, an increase of 10 basis points from first quarter and the biggest jump in seven years.