Cap Rates Approach Stability: CBRE


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Chris Ludeman, global president of CBRE Capital Markets. The firm expects cap rates to stabilize in most markets.

LOS ANGELES—Cap rates continued narrowing across key markets and property types in the first half of this year, according to CBRE’s latest survey of investment trends in the US and Canada. However, CBRE sees the rate of compression slowing down compared to previous surveys, thus signaling that the capital markets cycle is “close to reaching stabilization in terms of pricing.” The survey predicts that cap rates will remain stable in the year’s second half in about 75% of the 56 US and Canadian markets it covers.

That being said, CBRE’s North America Cap Rate Surveyfor January through June of this year also found “considerable variation” within the theme of stabilization in cap rate pricing. In the office sector, first example, cap rates on class A CBD assets declined in nine markets during the first half of 2015, while rising in 16 and remaining stable in 17. That led CBRE to post an average increase of six basis points for these properties, while cap rates on class B and C assets compressed during the same time period…

Cap Rates Approach Stability: CBRE

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