Our H1 2023 Cap Rate Survey results provide clues about how asset pricing has evolved during the year’s first six months.

As a subscriber of CBRE EA, you have exclusive access to the underlying data of the H1 2023 Cap Rate Survey (CRS). The CRS captures more than 3,000 cap rate estimates across more than 50 geographic markets to generate key insights from a wealth of data.

As a subscriber of CBRE Econometric Advisors, you have exclusive access to the underlying data of our recently published H2 2022 Cap Rate Survey. The survey, reflecting 3,600 cap rate estimates, sheds light on how investor sentiment is changing amid uncertain market conditions.

CBRE’s U.S. Cap Rate Survey reflects the input of hundreds of our Capital Markets and Valuations professionals on how sentiment and pricing are changing across multiple dimensions of commercial real estate nationwide.

CBRE’s H2 2021 Cap Rate Survey reveals a clear geographic pattern in multifamily cap rate compression.

A gap in buyer and seller expectations led to low transaction volume in 2020. However, due to ample liquidity and investors’ mostly positive outlook on commercial real estate (CRE) fundamentals, the cap rates in 2020 remained relatively stable across the apartment, industrial and office sectors. Assuming widespread availability of a vaccine in 2021 and mass immunization, we expect commercial real estate to rebound and generate solid income, despite the office and retail sectors potentially facing lengthier impacts.

With the pandemic continuing to affect the U.S. economy, investors are wondering what's in store for commercial real estate. Our investment performance forecast viewpoint explores the outlook for each property sector, cap rates, the lending market and more.

The Federal Reserve has raised the federal funds rate 25 bps, to a target range of 1.25% to 1.50%. This was the Fed’s fourth 25-bps increase since December 2016 and was widely anticipated given the economy’s recent near-3% quarterly growth, robust job growth, record-low unemployment, modest wage gains and rising consumer and producer prices.

Across the range of likely macroeconomic scenarios, appreciation returns—the mainstay of CRE returns over the past five years—are on hold for the next three years.

At its latest meeting, the Fed kept the federal funds rate at 1.0%-1.25%. An increase is expected in December, with economic conditions generally good. Commercial real estate fundamentals remain strong, and a Q4 rebound in economic growth should keep them healthy at least through H1 2018.

Most FOMC members agree that rates will need to head higher in the next few years, but how quickly is a source of great debate. Don't be surprised to see even greater indecision as uncertainty rises later in the cycle.

Upward pressure on cap rates is expected, muted by strong capital flows from foreign and domestic institutional investors. CRE fundamentals remain strong overall, and improved business and consumer confidence may lead to enhanced late-cycle tenant demand.

With the new administration at the reins and macroeconomic indicators sending mixed signals, investors are wondering what the future promises for the direction of the U.S. economy commercial real estate. This seems to be certain in investors’ minds: interest rates are likely to increase—at least in the medium term, if not in the long run. What would such increases imply for CRE, and particularly for CRE values?

How will rising U.S. interest rates affect cap rates? It depends.