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Source: CBRE EA Q2 2021.
Retail cap rates have been rising since Q1 2020, but by a lesser rate than during the Global Financial Crisis (GFC). As the economy reopened and retail fundamentals begin to improve, retail cap rates started to stabilize in Q1 2021 and are expected to go down slightly in the coming quarters.  

Office cap rates increased slightly during the pandemic, and we expect they will stabilize and then decline as companies bring employees back to the office. Apartment and industrial weathered the crisis and the cap rates are expected to compress further.


Source: CBRE EA Q2 2021.

Total industrial returns pushed by e-commerce growth stay strong throughout the forecast, and it’s the only sector that had positive total returns during the pandemic. Apartment total returns turned positive in Q2 2021, and apartment is expected to have a strong recovery in the next year.

Slower growth in NOI and higher cap rates led to a decline in total returns for retail and office in the first half of 2021. Total retail returns are expected to turn positive in Q3 2021 as the economy recovers, and office returns are expected to turn positive at the beginning of 2022.

The overall decline in total returns was smaller than during the GFC, and strong growth is expected this year and next.