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Vent: People keep overestimating cap rates on small retail strip centers
I keep seeing brokers slap 7% caps on 3-tenant strips with one national credit tenant and two mom and pops. Then they wonder why the deals sit for 6 months. I just closed a 5,200 sq ft center near Columbus, Ohio that actually traded at 8.25% because the other two tenants had local leases expiring in 2 years. Nobody wants to underwrite that risk at a 7. Has anyone else seen this mismatch between asking caps and actual closed deals?
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