Cap rates for highly desirable assets have compressed as the COVID-19 pandemic winds to a close, as limited supply and investor optimism drives up prices in certain regions of the US. 

Despite contracting yields, the margins for well-positioned assets remain wide when compared to other low-risk investment options, according to a report from Marcus & Millichap.

"Strengthening economic tailwinds should boost commercial real estate fundamentals this year, inciting recovery speculation among investors and spurring buyer activity," the report notes. "At the same time, the recovery has thus far been uneven, with some cities, states and property types jumping ahead of others, generating a broad range of valuation variance."

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