CBRE recently published its survey of capitalization rates (cap rates) for income producing commercial real estate (retail, office, industrial, multifamily and hotel) as of June 30, 2018. CBRE notes that cap rates were little changed in the first half of the year, 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. Retail cap rates showed larger increases overall, likely impacted by negative sentiment in the retail sector from the effects of Amazon.
CBRE says the general outlook for cap rates and returns on cost in the second half of 2018 is for stable pricing. However, the sentiment of survey participants varied by property type, segment and metro-tier grouping. The consensus is that if rates do change in the second half of 2018, they are more likely to increase modestly.
Summary of Cap Rates – 6/30/18 vs 6/30/17