Article submitted by Jim Allen, Sales and Leasing Agent at Saurage Rotenberg Commercial Real Estate

Article written by Paul Thornhill | June 28, 2016

In the past 18 months, there has been a continual compression of capitalisation rates, or cap rates, across Australia’s commercial property markets. So what exactly does this tell us about where the market is now and where we are headed in the next couple of years?

Let’s start with what a cap rate is. It is the ratio of net operating income of a property to its market value – the percentage return an investor would get if they purchased the property for cash.

I spoke with Dr David Higgins, Associate Professor, Property Investment at RMIT University, and asked him what drives cap compression.

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 Jim Allen earned his bachelor’s degree from Baylor University in Waco, Texas and his masters from Louisiana State University.  In addition to his multiple degrees he has taken numerous coursework in banking, marketing, accounting, and business law.  As a complement to his sales experience, Jim also has 25 years experience in commercial real estate financing.

Saurage Rotenberg Commercial Real Estate is a member of the Baton Rouge Area Chamber of Commerce (BRAC); the West Baton Rouge Chamber of Commerce; the Baton Rouge Better Business Bureau; the Louisiana Commercial Data Base (LACDB); and the International Council of Shopping Centers (ICSC). Several agents, on an individual basis, are members of the Society of Industrial and Office Realtors® (SIOR), the Certified Commercial Investment Member Institute(CCIM); the National Association of REALTORS® (NAR); and the Greater Baton Rouge Association of REALTORS® Commercial Investment Division (CID).