HOW TO CALCULATE A DISCOUNT RATE

Globe St.

CRE practitioners frequently discuss the calculation and application of capitalization rates in making investments, however, there is not much posited on the discount rate used in CRE financial analysis. As you recall, the capitalization rate is determined by two methods; the net operating income divided by property value or by a formula. The formula is the risk-free rate plus a risk premium less a growth rate.

OTAY MESA HOUSING PROJECT WITH 450 TOWNHOUSES GETS CITY APPROVAL

San Diego Union Tribune

The Candlelight project is located in one of the few undeveloped areas of San Diego County, about a mile from the U.S.-Mexico border on vacant land. Although the plan had previously been approved, changes to the unit types required a new vote. Environmental concerns, and plans for mitigation efforts, have kept the project in the planning stages, off and on, for roughly 12 years. After Thursday’s vote, the developer anticipates starting work on the site in September, with the first homes opening in late 2025.

EYE ON CRE CAPITAL MARKETS: THE REARVIEW MIRROW AND A LOOK FORWARD

Connect CRE

A short time ago, obtaining capital to build, buy or refinance was easy. Money was ridiculously cheap thanks to low interest rates and lenders lined up to support real estate projects. What a difference a few years make. These days, banks have vastly reduced their CRE exposure. Property valuations are in turmoil, making financing challenging to determine. Higher-for-longer interest rates have jacked up the cost of capital. Additionally, the banking industry is circling the wagons as it tightens restrictions and calls for less leverage in deals.

NET LEASE COULD GET RELIEF UNDER TAX BILL

Globe St.

The House has passed the Tax Relief for American Families and Workers Act of 2024 bill. There are a number of parts to it, and nothing will happen until the Senate passes it, after which President Biden would have to sign it — or offer a veto that would then be overridden. But if all that happens, the business tax relief section includes an extension to 2025 of 100% bonus depreciation. That “would temporarily restore 100 percent bonus depreciation for equipment and other short-lived capital assets,” as the Tax Foundation noted.

HOUSING COSTS LEAD TO INFLATION UPTICK, CONSUMER SPENDING RISES, OFFICE ATTENDANCE HOLDS STEADY

Costar

Lingering high costs for rent and other shelter-related expenses played a large role in February’s

rise in annual inflation to 3.2% from the prior month’s 3.1%, according to the latest Labor Department data. The government said shelter and gasoline costs accounted for 60% of February’s 0.4% monthly rise in consumer price. The shelter category posted increases of 0.5% from the previous month and 5.7% from February 2023.

FEATURED PROPERTIES

At Lee & Associates, our reach is international but our expertise is local market implementation. With offices across the nation and Vancouver, Canada, Lee & Associates is one of the largest and fastest growing commercial real estate organizations in North America. 

Founded in 1979, our experience and expertise offers extensive local market knowledge, seasoned agents, industry leading technology, and a commitment to achieving our clients long-term real estate goals and successes. Lee & Associates understands real estate and accountability, and provides an integrated approach to leasing, operational efficiencies, capital markets, property management, valuation, disposition, development, research, and consulting.

Commercial Real Estate Questions? 

Please Contact:

Steve Malley

smalley@lee-associates.com

858.453.9990

www.lee-associates.com/sandiego