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The Cap Rate Math Nobody Tells You About Denver's Old Bakeries
Looked at a 4,200 sq ft retail spot on South Broadway last month and the broker kept quoting a 5.8 cap rate like it was gospel. Turns out he was using the seller's pro forma rent, not the actual lease, which was $14 per sq ft lower than what he claimed. I ran the real numbers on a napkin at the coffee shop next door and got closer to a 4.2, which killed the deal for me. Why do so many brokers here pitch these fantasy numbers on old buildings with one tenant? Has anyone else caught this on their own deals around Denver?
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