2.26.19: CBRE Reports on Cap Rates at Yearend 2018

CBRE notes that capitalization rates (cap rates) were little changed in the second half of 2018 in its recently published survey for income producing commercial real estate (retail, office, industrial, multifamily and hotel) as of December 31, 2018. The industrial sector registered small declines in cap rates, while office, multifamily and hotel cap rates were generally stable. This pattern is similar to the first half of 2018, when cap rates were little changed with slight increases or decreases in pricing depending on asset type. The multifamily and industrial sectors registered small declines in cap rates, while the office and hotel sectors were stable in the first half of 2018.

Retail cap rates increased in the second half of 2018 across all retail segments. Recent store closures are negatively impacting retail sentiment, compounded by the effects of Amazon.

CBRE says the general outlook for cap rates and returns on cost in the first half of 2019 are for stable pricing. However, the sentiment of survey participants varied by property type, segment and metro-tier grouping. Retail sentiment remains slightly negative and historically low cap rates for multifamily concern participants.

Summary of Cap Rates – 12/31/18 vs 6/30/18

Property Type Sector Cap Rate 12/31/18 Cap Rate 6/30/18
Office CBD 6.71% 6.63%
Suburban 7.91% 7.91%
Industrial All 6.34% 6.41%
Retail Neighborhood 7.50% 7.40%
Power 8.42% 8.29%
High Street 4.83% 4.77%
Multifamily Infill 5.26% 5.21%
Suburban 5.56% 5.53%
Hotel CBD 7.97% 7.94%
Suburban 8.49% 8.48%


This entry was posted in CMBS, CMBS Conduit Loans, Commercial Lending, Commercial Real Estate Loans, Michael D. Sneden, News & Recent Closings, The Banker's Mortgage Conduit, Valuexpress and tagged , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s