In what could be the end ofits upward trend as the coronavirus outbreak rages on, cap rates inPhoenix compressed across nearly all asset classes in the secondhalf of 2019. According to a new report from CBRE,multifamily, industrial, retail and hotels all saw reduced caprates. While the fundamentals for each asset class is different,the Phoenix market has benefitted from population and jobgrowth.

Apartment cap rates are the lowest in the market, in the low 5%range. In the second half of 2019, cap rates decreased by 9 basispoints to 5.11% for infill-stabilized assets and by 11 basis pointsto 5.37% for suburban assets. "Phoenix has consistently been thetop multifamily rent growth market nationally for the last twoyears," Matt Pesch, a broker at CBRE, tellsGlobeSt.com. "Investors are currently driving down currentyields with the expectation that this outperforming growth willcontinue into the future."

The low cap rates helped to drive investment sales volumes. "Thecurrent cap rate environment has certainly helped drive salesvolume," says Pesch. "As pricing has continued to move upward,we've seen more clients monetize their position much sooner thanthey underwrote at acquisition."