Development Spreads
Curious to get everyone's thoughts on what they are seeing / targeting in today's environment for industrial.
For spec we've historically targeted 150-200 bps over stabilized cap rates for a Yield on Cost, which is obviously gotten difficult to hit nowadays.
Currently we're working on an industrial build-to-suit for an investment grade tenant in a Tier 3 market, not quite sure how aggressive to get on this. Thinking an exit cap likely is in the 6.25-6.5% range.
So for those of you who do this fairly often what type of development spreads would you target in this situation?
I think 150 bps is still a good target. Is your land basis already locked in? We're seeing a little bit more leverage on the construction cost side as things have cooled off there.
Thanks, we were thinking 150 bps but a little worried on the rental rate being too high.
Yes we already own the land, came with an acquisition we made.
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