According to CBRE’s H1 2025 Cap Rate Survey, cap rates have declined slightly, and yields appear to be at or beyond their cyclical peak. Uncertainty over tariffs has slightly reduced the outlook for total sales volume in 2025.
The data underpinning this report was derived from deals that occurred during the first five months of 2025. While market conditions are fluid, CBRE believes the CRS provides a useful base and unlocks important truths about how investor sentiment is changing. The CRS generates key insights from 3,600 cap rate estimates across more than 50 geographic markets.
More than 200 CBRE real estate professionals completed the H1 2025 CRS, providing real-time market estimates during early June. Given the rapidly changing macro environment, survey results may not reflect recent external events or current market conditions.
Cap Rates Decline Slightly During the First Half of 2025
Treasury yields were extremely volatile during the first half of 2025. The 10-year yield peaked at nearly 4.8 percent in mid-January before declining steeply to around 4.3 percent by mid-March. The tariffs announced on April 2 were higher and more universal than expected. In response, the stock market immediately sold off and Treasury yields briefly plummeted, before reversing course and climbing rapidly after the tariffs were paused and Moody’s downgraded the U.S. credit rating. The stock market has since recovered and, as of the end of June, the 10-year yield was 4.2 percent.
Despite this volatility, the all-property cap rate estimate declined slightly, falling 9 basis points (bps). In a departure from the past few surveys, different property types largely moved in unison. This may be a sign that the economy is past the peak of cap rates, despite the ongoing macroeconomic uncertainty, and entering a new period of property yield compression.
Most Respondents Believe that Cap Rates Have Peaked
Every CRS asks respondents to estimate the direction of cap rates and the magnitude of the expected change during the next six months, and expectations have changed between the past two CRS surveys. The share of respondents citing ‘No Change’ increased across all sectors.
Nearly a quarter of retail, industrial, and hotel respondents believed that the economy is past the peak and believe cap rates will start to decline over the next six months.
Minimal Changes for Cap Rate Estimates
On average, yields have held steady over the past six months. The median change for all property types was minimal. There were several outlier office estimates, particularly among Class B and C properties, where cap rates expanded considerably.
Although the average office cap rate estimate did not increase, the average spread between respondents’ lower and upper estimates (for example, 6 percent-7 percent had a spread of 1.0) continued to widen, reflecting uncertainty for office pricing.
Tariffs Reduced Outlook for CRE Sales Volume
CBRE asked CBRE Capital Markets and Valuation professionals if the tariffs announced on April 2 affected their outlook for CRE sales volume this year. More than half of respondents said they expect slightly lower sales volume, and another 16 percent expected them to be significantly lower.
Additionally, CBRE asked respondents to rank how they expect the sectors to perform from best to worst. In a change from the previous survey, respondents were most optimistic for the multifamily sector, which surpassed industrial. Retail remained in third place, followed by hotel, and finally office, ranking last.
