CBRE notes that capitalization rates (cap rates) were broadly stable in the first half of 2019 in its recently published survey for income producing commercial real estate (retail, office, industrial, multifamily and hotel) as of June 30, 2019. Suburban multifamily cap rates tightened most across lower-quality properties and declined 6 basis points (bp) overall. Infill multifamily cap rates decreased 5 bp. Industrial cap rates also compressed 5 bp, a marginally slower pace than in the second half of 2018. Office cap rates compressed more mildly.
Retail cap rates for neighborhood and community shopping centers were unchanged, while cap rates for power centers edged up 6 bp and high-street retail declined 7 bp. Recent store closures are negatively impacting retail sentiment, compounded by the effects of Amazon. Hotel cap rates edged up modestly.