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Four-tier framework for identifying the highest-quality comparable properties.
Practical example showing how to adjust comparable properties to derive the subject property's implied value.
| Property | Cap Rate |
|---|---|
| Comp A | 6.15% |
| Comp B | 6.08% |
| Comp C | 6.25% |
| Implied Value | 6.16% |
Start with comparable sales prices. Apply +/- adjustments for differences in location, tenant quality, lease term, and condition. Net adjustments typically cluster around ±5-10%. Average three adjusted comps to establish the subject's implied cap rate or price per sf.
Weight comps by "match quality"—highest confidence in deals closest in time, location, and property characteristics.
Start with CoStar/CBRE search filters: property type, location radius (3-5 miles), and transaction date (<12 months). Pull 10-15 potential comps, then manually filter to 5-8 highest quality matches. Prioritize recent arm's length transactions of similar size (GLA ±20%), credit quality, and lease structures. Discard outlier deals (distressed, special use, off-market).
Real-world example of comp analysis for a single-tenant NNN investment.
Analysis: Subject's 6.20% cap rate sits slightly above the three-comp average of 6.17%, suggesting fair to slightly attractive entry point. Comps exhibit ±16 bps variance, indicating reasonable market consensus. Recommended offer: 6.10-6.25% cap rate range, depending on confidence in Walgreens credit quality.
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Data and analysis on this page are for informational purposes only and do not constitute investment, financial, or tax advice. Figures may be estimated from publicly available sources and should be verified with primary data providers (CoStar, MSCI RCA, CBRE, FRED) before use in investment decisions. Past performance does not guarantee future results.