The Best Ever CRE Show JF 3951: The Hidden Efficiency Gap in CRE, Apartment Trends, and Capital Flow Illusions with John Chang
Jun 29, 2025
Dive into the surprising inefficiencies of commercial real estate investing, especially within the apartment sector. Discover why markets like Chicago, despite solid fundamentals, have high cap rates and lesser capital flow compared to booming areas like Dallas. Explore the influence of investor behavior and herd mentality on asset values. Plus, uncover promising cash flow markets like Cincinnati and Milwaukee that offer strong yields amid rising interest rates.
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Chicago Shows Strong Revenue Growth
- Chicago apartments have had strong rent and revenue growth, outperforming the national average over five years.
- Yet, Chicago apartment cap rates remain about 7%, higher than many lower-performing, popular markets like Dallas-Fort Worth.
Dallas Growth Outpaces Fundamentals
- Dallas-Fort Worth has seen explosive job and population growth with significant new apartment development.
- However, this development growth has moderated fundamental apartment performance compared to Chicago.
Capital Follows Growth Over Fundamentals
- Capital flows heavily to growth markets like Dallas-Fort Worth, compressing cap rates there more than in Chicago.
- This drives stronger appreciation in Dallas despite Chicago's superior fundamentals.