In response to CBRE’s H1 2025 Cap Price Survey, cap charges have declined barely, and yields seem like at or past their cyclical peak. Uncertainty over tariffs has barely decreased the outlook for complete gross sales quantity in 2025.
The info underpinning this report was derived from offers that occurred through the first 5 months of 2025. Whereas market situations are fluid, CBRE believes the CRS supplies a helpful base and unlocks necessary truths about how investor sentiment is altering. The CRS generates key insights from 3,600 cap fee estimates throughout greater than 50 geographic markets.
Greater than 200 CBRE actual property professionals accomplished the H1 2025 CRS, offering real-time market estimates throughout early June. Given the quickly altering macro setting, survey outcomes might not mirror latest exterior occasions or present market situations.
Cap Charges Decline Barely Throughout the First Half of 2025
Treasury yields have been extraordinarily unstable through the first half of 2025. The ten-year yield peaked at almost 4.8 p.c in mid-January earlier than declining steeply to round 4.3 p.c by mid-March. The tariffs introduced on April 2 have been larger and extra common than anticipated. In response, the inventory market instantly offered off and Treasury yields briefly plummeted, earlier than reversing course and climbing quickly after the tariffs have been paused and Moody’s downgraded the U.S. credit standing. The inventory market has since recovered and, as of the top of June, the 10-year yield was 4.2 p.c.
Regardless of this volatility, the all-property cap fee estimate declined barely, falling 9 foundation factors (bps). In a departure from the previous few surveys, totally different property sorts largely moved in unison. This can be an indication that the economic system is previous the height of cap charges, regardless of the continuing macroeconomic uncertainty, and getting into a brand new interval of property yield compression.
Most Respondents Consider that Cap Charges Have Peaked
Each CRS asks respondents to estimate the course of cap charges and the magnitude of the anticipated change through the subsequent six months, and expectations have modified between the previous two CRS surveys. The share of respondents citing ‘No Change’ elevated throughout all sectors.
Practically 1 / 4 of retail, industrial, and lodge respondents believed that the economic system is previous the height and imagine cap charges will begin to decline over the subsequent six months.
Minimal Adjustments for Cap Price Estimates
On common, yields have held regular over the previous six months. The median change for all property sorts was minimal. There have been a number of outlier workplace estimates, significantly amongst Class B and C properties, the place cap charges expanded significantly.
Though the typical workplace cap fee estimate didn’t improve, the typical unfold between respondents’ decrease and higher estimates (for instance, 6 percent-7 p.c had an expansion of 1.0) continued to widen, reflecting uncertainty for workplace pricing.
Tariffs Lowered Outlook for CRE Gross sales Quantity
CBRE requested CBRE Capital Markets and Valuation professionals if the tariffs introduced on April 2 affected their outlook for CRE gross sales quantity this 12 months. Greater than half of respondents stated they count on barely decrease gross sales quantity, and one other 16 p.c anticipated them to be considerably decrease.
Moreover, CBRE requested respondents to rank how they count on the sectors to carry out from greatest to worst. In a change from the earlier survey, respondents have been most optimistic for the multifamily sector, which surpassed industrial. Retail remained in third place, adopted by lodge, and at last workplace, rating final.
