And winner for “Shortest Article on Commercial Real Estate” goes to…

Wall Street Journal’s “Real Estate Journal”, with this tiny gem Capitalization Rates for Offices Sink to Low.  Weighing at at a whopping 4 lines, it’s almost hard to believe there is any useful data contained within.  Actually, there isn’t.

Although the explanation of capitalization rate – or “cap rate” – is handy for the beginning real estate professional, the quoted cap rate for central business district (CBD) office properties tells the reader absolutely nothing about which property types were considered, if it includes mixed-use buildings or only pure office towers, what they define as the CBD for the value quoted, or what the rate dropped from (historic values for the last month, quarter or year).  I’m sure that there are other things missing, but these immediately struck me as odd.  Seems like they were struggling to provide anything newsworthy, but the real estate analyst was out sick today.  It’s almost like if I commented on a short article about commercial real estate, simply to have provided my readers with a post for the day, without actually providing any insight or value to them.  Oh, wait…


3 Responses

  1. Jacob:

    Now that you’ve said it…well, it was a “thin” story, but I do think there is still something to be learned. First, I tend to respect data from Real Capital Analytics. Nothing is perfect, as they themselves would acknowledge, but they do the best they can in an imperfect world. See

    In addition, I think the chart is useful because it does give at least a flavor of the crazy rise in prices we’ve seen in many markets. As someone who grew up in the days of 10 caps, I am still astonished at the 2007 market. You are 100% correct, though in saying that, absent more, cap rates can be garbage in, garbage out. Proceed at your own risk. 🙂

    But I can’t disagree with you that it did seem like the real estate beat writer took a day off. The WSJ should have done better. And keep up the great work!

  2. It is strange thats all the writer could find to write on for that day. I would agree that the chart is the most useful part of it. Here’s a commercial market news blog that might be useful.

  3. It’s funny, because until you both mentioned the chart, I completely missed it. Since the chart blends in so well to the site and is located where my eyes expect to see advertisements, I really had to re-examine the article to see the added value of the chart. I concur that it makes the article a bit more useful, but the entire package still leaves something to be desired.

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