CBRE’s H2 2021 Cap Rate Survey reveals a clear geographic pattern in multifamily cap rate compression. Cap rates have fallen the most in high-growth Sun Belt markets and are now at or below the level in supply-constrained gateway markets, which have traditionally seen greater net operating income (NOI) growth. But densely populated urban markets, like New York and Boston, are continuing to rebound from the dislocation of 2020 and yields are poised to fall as occupancy levels in these markets quickly recover.

FIGURE 1: H2 2021 cap rate levels relative to the average of previous Cap Rate Survey