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The H2 2023 Cap Rate Survey (CRS) by CBRE indicates tighter lending standards and distress expected, but yields could be nearing their peak. |
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Digging into the data: Collected from over 250 industry professionals, this dataset of 3,600 cap rate estimates across more than 50 U.S. markets offers a critical look at investor sentiment during a period marked by investment caution and pricing dislocation. H2 2023 saw cap rates rise from 6.4% to 7%, propelled by bond market fluctuations with yields peaking at 5% then retracting to below 4%, indicating widespread cap rate growth across property sectors. |
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Zoom in: Stabilized cap rate estimates for properties in 2H23 show expansion, especially in commodity office assets. Class C urban properties saw a notable increase of over 100 bps, while suburban yields generally rose by less than 50 bps. Multifamily and neighborhood retail pricing remained relatively stable. |
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➥ THE TAKEAWAY |
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Expectations and projections: Survey respondents across property types largely expect no significant change in cap rates over the next six months. In the office sector, a higher share predicts further devaluations due to uncertainty. Expectations for cap rate increases in 1H24 decreased, possibly reflecting a more accommodative Fed policy and declining bond yields. |
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