{"id":1004769973,"date":"2025-08-28T03:50:12","date_gmt":"2025-08-28T11:50:12","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004769973"},"modified":"2025-08-29T04:59:32","modified_gmt":"2025-08-29T12:59:32","slug":"are-cap-rates-starting-to-compress","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/are-cap-rates-starting-to-compress\/","title":{"rendered":"Are Cap Rates Starting to Compress?"},"content":{"rendered":"\n

The uncertainty that real estate investors face regarding U.S. trade policy, the trajectory of interest rates and the nation\u2019s long-term fiscal health is amply reflected in CBRE\u2019s H1 2025 cap rate survey<\/a>. The survey of more than 200 CBRE real estate professionals found that capitalization rates have declined slightly and that yields seem to be at\u2014or even beyond\u2014their cyclical peak.<\/p>\n\n\n

\n
\"Tom<\/a>
Tom Edwards, CBRE\u2019s global president of valuation & advisory services. Image courtesy of CBRE<\/em><\/figcaption><\/figure><\/div>\n\n\n

In parallel with those trends, the outlook for total commercial real estate sales volume<\/a> this year has decreased slightly.<\/p>\n\n\n\n

The survey is based on 3,600 cap rate estimates across more than 50 metro areas, as of early June.<\/p>\n\n\n\n

\u201cInvestor confidence is shifting, with the multifamily sector now emerging as the top choice for investors, surpassing the industrial sector. Retail holds firm in third place, followed by hotels, as the office segment navigates evolving preferences,\u201d Tom Edwards, CBRE\u2019s global president of valuation & advisory services, told Commercial Property Executive<\/em>.<\/p>\n\n\n\n

The report noted the volatility of 10-year Treasury yields in the first half, peaking at almost 4.8 percent in mid-January and then falling to around 4.3 percent by mid-March. Further gyrations followed the stock market\u2019s reaction to more severe-than-expected tariffs and Moody\u2019s downgrading the U.S. credit rating, ending with a 10-year yield of 4.2 percent at the end of June.<\/p>\n\n\n\n

\n\n\n\n

READ ALSO<\/strong>: CRE Pushes Toward Recovery<\/a><\/p>\n\n\n\n

\n\n\n\n

\u201cDespite this volatility, the all-property cap rate estimate declined slightly, falling 9 basis points,\u201d CBRE stated. \u201cIn a departure from the past few surveys, different property types largely moved in unison. This may be a sign we are past the peak of cap rates, despite the ongoing macroeconomic uncertainty, and entering a new period of property yield compression.\u201d<\/p>\n\n\n\n

Nearly one-quarter of the retail, industrial and hotel respondents believe that cap rates are past their peak and will begin to decrease over the second half of 2025.<\/p>\n\n\n\n

Although yields on average held steady in the first half, CBRE reported, \u201cThere were several outlier office estimates, particularly among Class B and C properties, where cap rates expanded considerably.\u201d<\/p>\n\n\n\n

In addition, even though the average office cap rate estimate has not increased, the average spread between the survey respondents\u2019 lower and upper estimates has been widening, \u201creflecting uncertainty for office pricing.\u201d<\/p>\n\n\n\n

\"Chart<\/a>
Real estate cap rate and bond yields, period average. Chart courtesy of CBRE Econometric Advisors<\/em><\/figcaption><\/figure>\n\n\n\n

Multifamily tops, office at the bottom<\/h2>\n\n\n\n

As to the anticipated effects on commercial real estate sales volume from the fallout of the Trump administration\u2019s tariffs, more than half of the survey participants expect slightly lower sales volume, and one in six anticipate that volume will be significantly lower.<\/p>\n\n\n\n

Asked to rank how they expect the five major commercial real estate sectors to perform, respondents (in contrast to the previous survey) were most optimistic for multifamily, which surpassed industrial. Retail was in third place, followed by hotel and finally office in the last place.<\/p>\n","protected":false},"excerpt":{"rendered":"

Despite economic uncertainty, some asset types point to early signs of stabilization, according to CBRE\u2019s latest report.<\/p>\n","protected":false},"author":882,"featured_media":1004770017,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21808,21748,21783,23891,21742,21747,21749,51037],"tags":[32789],"class_list":["post-1004769973","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured","category-industrial","category-investment","category-national","category-latest","category-office","category-retail","category-trends","tag-cbre"],"acf":[],"yoast_head":"\nAre Cap Rates Starting to Compress? - Commercial Property Executive<\/title>\n<meta name=\"description\" content=\"A CBRE survey for the first half of 2025 found that capitalization rates have declined and that yields seem to be at their cyclical peak.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/are-cap-rates-starting-to-compress\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Are Cap Rates Starting to Compress?\" \/>\n<meta property=\"og:description\" content=\"A CBRE survey for the first half of 2025 found that capitalization rates have declined and that yields seem to be at their cyclical peak.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/are-cap-rates-starting-to-compress\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2025-08-28T11:50:12+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-08-29T12:59:32+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2025\/08\/Tom-Edwards.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"800\" \/>\n\t<meta property=\"og:image:height\" content=\"620\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Scott Baltic\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/are-cap-rates-starting-to-compress\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/are-cap-rates-starting-to-compress\/\",\"name\":\"Are Cap Rates Starting to Compress? - Commercial Property Executive\",\"isPartOf\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/are-cap-rates-starting-to-compress\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/are-cap-rates-starting-to-compress\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2025\/08\/Tom-Edwards.jpg\",\"datePublished\":\"2025-08-28T11:50:12+00:00\",\"dateModified\":\"2025-08-29T12:59:32+00:00\",\"author\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/#\/schema\/person\/61ac1450f3ffaa0e850b834c28526555\"},\"description\":\"A CBRE survey for the first half of 2025 found that capitalization rates have declined and that yields seem to be at their cyclical peak.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/are-cap-rates-starting-to-compress\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.commercialsearch.com\/news\/are-cap-rates-starting-to-compress\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/are-cap-rates-starting-to-compress\/#primaryimage\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2025\/08\/Tom-Edwards.jpg\",\"contentUrl\":\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2025\/08\/Tom-Edwards.jpg\",\"width\":800,\"height\":620,\"caption\":\"Tom Edwards, CBRE\u2019s global president of valuation & advisory services. 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