Average retail cap rates increased 55 basis points in the 2nd quarter of 2009 to 8.12 percent, based on CBRE’s Valuation & Advisory Services (VAS) database. The 55 basis point gain is the largest quarterly increase the company has ever measured. Retail cap rates are now up 100 basis points from where they were in the second half of 2007.

According to the firm, “Larger properties sold in this quarter compared to the first quarter, an indication that more sophisticated institutional investors were buying. The triple net leased drug store cap rate sales during the quarter averaged 7.5 percent, with the remaining cap rates averaging 8.3 percent, a 78 basis point spread. Our preliminary review of closed sales and escrows in the 3rd quarter indicate cap rates are continuing to rise.”

In addition, the regional picture is somewhat mixed due to the lower number of sale transactions in the firm’s dataset. The overall lack of deals skews the numbers a bit. The East and South regions actually showed declines in cap rates in this quarter compared to the last. In contrast, the West had a massive increase of 106 basis points to 8.20 percent. The data points CBRE used in its dataset update are closed transactions, adjusted for assumed financing, and are used to reflect overall market trends. Overall, cap rates in the West are now about 150 basis points above where they were in the second half of 2007.