By Tyler Deckard, Michael Leahy, Matt Mowell                       

Office investment activity is slowly reviving, with most capital targeting higher quality buildings with stronger occupancy levels and better NOI prospects. Meanwhile, the Class B&C segments continue to struggle.

CBRE’s Cap Rate Survey (CRS)¹ provides insight into the upward drift of yields for marginal properties. The graphic below shows the percentages of Class B & C office properties with an estimated double-digit cap rate across the past five surveys. While the percentage reached a new high in H2 2024 (72%), the increase was far less pronounced than even a year earlier. This provides more evidence that the office market is finding a new equilibrium. 

¹The CRS asks CBRE capital markets and valuation professionals to estimate office yields by market, submarket type, risk profile and class across 36 geographic markets.

Figure 1: Estimates for Office Yields by Market, Submarket Type, Risk Profile, and Class