We’re not going to violate our cap, our self-imposed cap is there for a reason. We wanted to have integrity and it mitigates risk.And at the same time, as you know, it’s a number that can move as the company grows. So it’s not a constraint on our growth, yet it is a mitigant on the risk, and we’ll just have to see what happens with leasing, especially with the larger spaces as we move forward.Caitlin Burrows Perfect. Thank you.Operator Our next question comes from Vince Tibone from Green Street. Vince, go ahead.Vince Tibone Good morning. I wanted to follow up on your cap rate commentary embedded in the development pipeline and crop margins. I’m just curious, is the higher stabilized cap rate, the result of transaction you’ve seen and a little bit more pricing visibility?
Or is it still is the best estimate at this point in time?Peter Baccile Yes. There haven’t been a lot of data points a lot of trades. Again, when I guess a year ago, we said to be intellectually honest, we felt like with the change in the capital markets and the increase in cost of capital and the lack of construction financing, et cetera, that cap rates clearly have to have moved. And you’ve seen some transactions and one of our peers announced one recently at a pretty decent yield. So that’s really just a judgment on our apartments to try to be intellectually on us with where we think cap rates really are.Vince Tibone No, I appreciate that, and I figured that was the case. I just wanted to confirm. And then also somewhat related. I was wondering if you could talk about some recent trends in the development land market.
And in particular, I’m curious where you would estimate the Phoenix plan sell price relative to the peak, presumably about a year ago? Like do you — just how far off do you think that price was from the peak or kind of broader development land values.Johannson Yap This is Jojo. The pricing is basically to a data center buyer and the data center metrics, land price is totally different from the industrial pricing. So we’re very happy to be selling at the data center, although we will — I will tell you that we are not data center experts, and we do not make trends on data center prices, whether that grows even more from the platform flatten out, that’s not our business. Our business is creating value we create a lot of value there. In terms of industrial, industrial overall are on the country a price has moderated because of the higher yield requirements and the higher cost of capital.
So that is a trend across all markets, including Phoenix.Vince Tibone No, that’s really helpful color. Anything you draw out there for a range of how much land would have fallen and I agree with your broader points. Is there any way you can quantifying that?Johannson Yap Are you asking about a data point on data center pricing or…Vince Tibone Well, I guess is for more traditional industrial development. Do you think pricing is off 10%, 30%? Any kind of rough range would just be your thoughts on.Johannson Yap Okay. In terms of national pricing, it really depends on the market. When the market in the middle part of the country on a percentage basis has come down less than the coastal markets, and it’s a simple reason why because the land in the sell part of the market represents a smaller portion of total investment.
So if your total investment comes down, therefore your per square foot is less. In the global markets, the land upon the repeat is a higher portion of total investment. So if I were to force to give a range, the range would be anywhere from 10% to 40% delta.Vince Tibone No, I appreciate those numbers and taking a stab on it. Thank you.Operator [Operator Instructions] And we will continue with a question from Mike Miller from JP Morgan.Michael Mueller So two questions. First, are you seeing any trends for tenants wanting to sign either longer or shorter spaces than normal? And secondly, I guess around lease income, we just assume that the $0.04 of annual income goes away in 2Q, 2025? Or is it something more to it than that?Peter Schultz Mike, it’s Peter Schultz.
I’ll take the first part of the question. No, we’re not seeing any material change in terms from tenants, newer renewal. Our average lease term has ticked up a little bit, but I wouldn’t say it’s material.Scott Musil And then Mike, it’s Scott. On the $0.02 per share related to the ground lease, the option holder has the ability to buy the land over the next two years. If they do buy the land, you’re right, the ground lease income goes away. The benefit that we have, though, is we’ll get sales proceeds and a distribution from the joint venture to First Industrial, we will use those proceeds to pay down our line of credit, which we’re assuming roughly a 6.5% all-in via the model. So the paydown of the line of credit decreases our interest expense, which almost offsets the loss of the ground lease rent pickup.
So that’s how we look at that.Michael Mueller Got it. Okay, that’s helpful. Thank you.Operator And we’ll proceed with a question from John Petersen from Jefferies. John, please go ahead.John Petersen Great. A lot of talk about development. That’s where you focus most of your capital deployment in recent years. But curious what you’re seeing or expect to see in the acquisition market — and what it kind of takes. We hear a lot about a pretty wide bid-ask spread. What do you guys — do you expect that bid-ask spread to narrow as the year progresses and see more acquisition opportunities — and then maybe one way to kind of also frame that question is last year, you did300 million of acquisitions at a 3.9% cap rate. If you were to do those same acquisitions today, what kind of cap rate would you be willing to pay?Johannson Yap Overall, let me address that in terms of the market for more acquisitions.
We’re not forecasting that. We’re not seeing a lot of distressed tie sales a lot of the quality product that we may have considered are still — the bid-ask spread is really, really high. Owners because of the strong fundamentals in all the markets, owners who have good product has elected really not to sell that much. So we don’t — we’re not forecasting a significant amount of cap rate — a significant amount of deals of great product that we would pursue.In terms of cap rates, we’ve already mentioned to you, our view is that if you look at the start of 2022 from today, cap rates have increased roughly 120 basis points, a little bit over 120 basis points to date.John Petersen Okay. All right. That’s very helpful. And then I guess within your markets and your properties, do you guys have a view of — or what are you guys seeing in terms of market rent growth the first four months of this year?
Or maybe just talk about the cadence of rent growth you’re seeing this year versus what we were seeing last year?Peter Baccile Jojo?Johannson Yap Okay. First, market rents grew from Q4 to Q1. It’s different market by market. The coastal markets continue to grow faster than the non-wholesale markets. In terms of year-over-year, we expect 2023 market growth to moderate versus ’22.In 2022, market statistics from different sources stated that the rent growth was anywhere from 15 to low 20s in terms of percentage. We internally are forecasting 5 to 10 this year.John Petersen Okay. That’s helpful. Thank you very much. Operator And we have a question now from Vikram Malhotra from Mizuho. Please, Vikram, go ahead. Vikram Malhotra Thanks so much for taking the questions.
I just maybe building off of that market and question, just maybe just leading into SoCal. There’s been some debate amongst the brokerage community. Some of the data would show there’s maybe a lot of dispersion amongst the broader the submarkets within SoCal and then some differences between demand for large box versus small. Can you maybe unpack this a little bit? What are you seeing that may be similar to what brokers are calling out and maybe what’s different?Johannson Yap Well, in terms of what we’re seeing in the market in our portfolio is doing really well. We’ve been able to push rents strong activity. We’ve been getting on — the only tenants we lose in our SoCal portfolio as the tenants that are expanding or else, everything is almost on renewal.
Of course, when they’re exciting, we couldn’t accommodate their growth. In terms of rent growth, we’re seeing, again, activity from — we’re seeing positive brand growth from all size ranges. I would say that business is right now, of course, given all the things that they’re seeing in the macro economy are watching rents as well. But for larger format buildings, the only thing I will add is that some tenants have gone a little bit further in L.A. So there’s continued activity to the I-10 corridor all the way to 12-month banning. There’s some large format building happening in high desert that’s basically what we call IENorth. And then basically, there’s also be south on the 215 Corridor. So I-215 South. That’s still a comment I would see that’s different from — in the last six months.
