In accordance with CBRE’s H1 2025 Cap Fee Survey, cap charges have declined barely, and yields seem like at or past their cyclical peak. Uncertainty over tariffs has barely diminished the outlook for complete gross sales quantity in 2025.
The information underpinning this report was derived from offers that occurred in the course of the first 5 months of 2025. Whereas market situations are fluid, CBRE believes the CRS supplies a helpful base and unlocks essential 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 In the course of the First Half of 2025
Treasury yields had been extraordinarily unstable in the course of the first half of 2025. The ten-year yield peaked at practically 4.8 % in mid-January earlier than declining steeply to round 4.3 % by mid-March. The tariffs introduced on April 2 had been increased and extra common than anticipated. In response, the inventory market instantly bought off and Treasury yields briefly plummeted, earlier than reversing course and climbing quickly after the tariffs had 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 %.
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, completely different property varieties largely moved in unison. This can be an indication that the financial 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 Imagine that Cap Charges Have Peaked
Each CRS asks respondents to estimate the route of cap charges and the magnitude of the anticipated change in the course of 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.
Almost 1 / 4 of retail, industrial, and resort respondents believed that the financial system is previous the height and consider cap charges will begin to decline over the following six months.
Minimal Modifications for Cap Fee Estimates
On common, yields have held regular over the previous six months. The median change for all property varieties was minimal. There have been a number of outlier workplace estimates, notably 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 % had a variety 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 yr. Greater than half of respondents stated they anticipate barely decrease gross sales quantity, and one other 16 % anticipated them to be considerably decrease.
Moreover, CBRE requested respondents to rank how they anticipate the sectors to carry out from finest to worst. In a change from the earlier survey, respondents had been most optimistic for the multifamily sector, which surpassed industrial. Retail remained in third place, adopted by resort, and eventually workplace, rating final.
