I joined a stock club in the late 80s, and as a novice investor asked the group a question… What happens when the Dow Jones Industrial Average exceeds 10,000? Those present thought my question was silly, and they answered “impossible”.

At about the same time, when asked to quote an appraisal price for a 40,000 acre integrated farming operation, I replied $12,000. That same answer (impossible!) was blurted out by another appraiser in the room.

Well, the Dow Jones is currently in the stratosphere and I got that appraisal job, but most of the time I’m right there along with the naysayers. I did not appreciate the extent of the financial meltdown in 2007, but finally realized what a long slog recovery was going to be by about 2010.

So it’s a surprise to me that in 2017 we see investment grade cap rates applied to many “just above average” properties in secondary markets, and recently leased to national and regional tenants. Too much money chasing mediocre deals!

The growing bubble is leased-fee driven and is anything but impossible.

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