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Research Outline
Prepared for Daniel L. | Delivered March 22, 2020
IRR: Residential and Commercial Projects
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Goals
To determine the typical rates of return generated by various classes of housing projects in the US.
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Early Findings
Housing Spaces
The average rate of return or cap rate for multi-family housing properties in the US was
5.11 percent
for infill housing and 5.37 percent for suburban housing in the second quarter of 2019.
Affordable housing properties typically generate an annual return of
6.6 percent
for-profit investors who invest in this sort of housing, according to a report by the NREI.
Commercial Spaces
The cap rates for retail spaces were
7.47 percent
for neighborhoods,
8.54 percent
for power, and
4.78 percent
for high streets in the second half of 2019, according to a recent report by CBRE.
In 2019, hotels located in central business districts (CBD) generated, on average,
7.99 percent
return on investment, while those located in the suburbs generated
8.55 percent.
The cap rate for industrial buildings was
6.13 percent
in the second quarter of 2019.
Office spaces located in central business districts (CBD) generated, on average,
6.65 percent
return on investment, while those located in the suburbs generated
7.88 percent
.
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