Cap rates may finally have stopped climbing, but few investors are ready to call what comes next. According to CBRE's H2 2025 U.S. Cap Rate Survey, yields across major property types held steady in the back half of last year, even as U.S. Treasury volatility lingered and questions mounted over trade policy, fiscal stability and the path of interest rates.
The survey, based on roughly 3,600 cap rate estimates from more than 200 CBRE capital markets and valuation professionals in over 50 U.S. markets, suggests that pricing has reached a cyclical plateau and that the next notable move is more likely to be compression than further expansion.
A peak in yields, not yet in uncertainty
CBRE's economists describe a market in which debt markets and pricing have started to normalize while macro risk remains elevated. The 10‑year Treasury yield, which swung sharply in early 2025, peaked around 4.5% in July before easing into a 3.9% to 4.2% range by year‑end, helped by lower inflation and expectations of continued economic growth.
Against that backdrop, the survey's all‑property cap rate estimate was essentially unchanged from the first half of the year, marking a pause after a prolonged period of repricing.
The pause is not purely theoretical. CBRE estimates that total commercial real estate transaction volume rose about 19% in 2025, a notable rebound that coincided with the stabilization in headline cap rates.
Several price indices tracked by the firm have stopped falling, and lenders—both banks and non‑banks—are re‑entering the market with higher loan‑to‑value ratios, lifting the CBRE Lending Momentum Index well above its prior five‑year average.
Together, those metrics support the survey's view that the market has moved from price discovery and distress triage into a new phase focused on selective risk‑taking and income.
Yet even as participants broadly agree that yields are at or near their cyclical peak, they do not agree on how quickly cap rate compression will follow. CBRE notes that the survey was conducted in early December and cautions that the results may not fully capture events that unfolded afterward, underscoring how quickly sentiment can shift when the macro narrative is unsettled.
Expectations converge on "no change"
Each edition of the CBRE Cap Rate Survey asks participants where they think cap rates will head over the next six months. In H2 2025, the single most common answer across all sectors was "no change," a notable shift from earlier in the cycle when "increase" dominated and signaled ongoing repricing. At the same time, a meaningful share of respondents now expect cap rates to decline rather than continue to expand.
That tilt is most visible in retail, industrial and hotels, where nearly half of respondents believe cap rates have already peaked and will start to move lower in the near term. For those sectors, views are almost evenly split between "no change" and "decrease," with relatively few respondents calling for further increases.
In contrast, expectations around CBD and suburban office, infill and suburban multifamily, as well as industrial, are more evenly balanced. This suggests a market that sees stability but is not yet prepared to broadly underwrite compression.
The pattern marks a subtle but important change from the first half of 2025. In earlier surveys, a much larger share of respondents anticipated further cap rate increases, particularly in office, reflecting ongoing uncertainty around leasing, obsolescence and refinancing risk.
By the end of the year, that directional pressure had largely subsided, even if actual trades still required concessions on pricing and business plans in certain assets and markets.
Multifamily ranges: selective tightening and coastal resilience
The regional cap rate data add granularity to the broader story of stabilization. In infill multifamily, Class A stabilized yields in major coastal markets mostly held their ranges or tightened slightly at the low end between H1 and H2.
Boston's Class A infill stabilized range, for example, moved from 4.5%–5% to 4.5%–4.75%, while New York City's shifted from 4.75%–5.25% to 4.5%–5% and Class A value‑add in New York compressed from 5.5%–6% to 5%–5.5%. Washington, D.C., held steady at 4.75%–5.5% for both stabilized and value‑add infill assets.
In the Midwest, Chicago's Class A infill stabilized cap rates were essentially unchanged at 5.25%–5.75%, with a modest tightening of the upper bound to 5.5%, while Detroit's stabilized range remained at 5.5%–6.25% and value‑add compressed slightly from 6.25%–7% to 6.25%–6.75%.
Secondary markets such as St. Louis showed some tightening, with Class A infill stabilized, moving from 6%–6.5% to 5.5%–6.0% and value‑add went from 6.5%–7.0% to 6.0%–6.5%.
The South and West tell a similar story. Atlanta's Class A infill stabilized and value‑add ranges held firm at 4.5%–5% in both half‑years, while Austin's stabilized range narrowed slightly at the upper end from 4.25%–5% to 4.25%–4.75%. Orlando's stabilized infill cap rates improved from 5%–6% to 4.75%–5.75%, with value‑add moved from 5.5%–6.5% to 5.25%–6%.
On the West Coast, Los Angeles maintained a 4.75%–5.5% range for stabilized infill multifamily, while Orange County's shifted higher from 4.25%–4.5% to 5%–5.25%. Inland Empire multifamily saw wider ranges, with stabilized estimates moving from 5%–5.25% to 5%–6%, indicating greater dispersion within that market.
Suburban multifamily shows broadly similar patterns, with many coastal and Sun Belt markets seeing modest tightening or stability in Class A ranges.
Boston's suburban Class A stabilized range moved from 5%–5.5% to 4.5%–5.0%, while Philadelphia's shifted from 5%–5.5% to 4.75%–5.25%.
Chicago's suburban Class A stabilized range edged down at the lower bound from 5.25%–5.75% to 5%–5.5% and Minneapolis moved from 5.25%–5.5% to 5%–5.5%, with value‑add tightening from 5%–5.5% to 4.75%–5.25%.
In the South, Austin's suburban Class A stabilized and value‑add ranges remained between 4.25%–5.0%, while Orlando saw notable tightening from 5.25%–6.5% to 4.75%–5.75% for stabilized assets and from 5.5%–6.5% to 5.25%–6% for value‑add.
Office: elevated yields, firmer guardrails
Office, by contrast, continues to trade at elevated yields, though the survey data indicate that the most dramatic outward moves may be behind it. In downtown Boston, Class A stabilized office cap rates remained in the 7%–7.75% range, with the upper end moving slightly lower to 7.5%. Value-add narrowed from 7.75%–8.25% to 7.5%–8%.
New York City's Class A downtown stabilized range shifted upward at the lower bound from 5.25%–6.25% to 5.5%–6%, and value‑add moved from 6.25%–7.25% to 7%–7.75%, reflecting ongoing risk aversion for repositioning plays.
In Washington, D.C., downtown Class A stabilized cap rates improved from 8.25%–9.5% to 7.5%–9%, while value‑add moved from 9.5%–11% to 8.5%–10%.
Midwestern CBDs remain wide and elevated: Chicago's Class A stabilized range held at roughly 7.5%–9.5%, with minor adjustments, while Minneapolis moved higher at the upper bound from 10%–12.25% to 10.75%–13.5% and value‑add stayed in the low‑to-mid‑teens.
Suburban office cap rates mirror those dynamics. In Boston, Class A suburban stabilized yields remained in the 8%–9% range with identical value‑add spreads at 8.5%–9.5%. Philadelphia's suburban Class A stabilized range stayed wide at 10%–12%, with value‑add between 11%–13%.
Chicago's suburban Class A stabilized cap rates eased marginally at the lower bound from 9.75%–12.5% to 9.5%–12.25% and value‑add went from 10.75%–13.5% to 10.5%–13%.
In the Sun Belt, suburban Atlanta's Class A stabilized range ticked up from 8%–9% to 8.5%–9.5%, while Austin's widened at the upper end from 7.75%–8.5% to 7.75%–9.25%, suggesting that buyers are demanding more yield even as overall spreads stop expanding.
Industrial and retail: steady workhorses
Industrial remains relatively tight and stable across regions. Class A stabilized yields in key coastal and gateway markets such as Central and Northern New Jersey, New York City, Boston and the Baltimore/Washington corridor mostly held in ranges between 4.75% and 5.75%, with Class B consistently trading 50 to 100 basis points wide of Class A.
In Central New Jersey, Class A stabilized remained between 4.75%–5.25% and Class B ranged 5.5%–6%; New York City and Northern New Jersey shared similar ranges. In Philadelphia, Class A stabilized, edged up from 5%–5.5% to 5.25%–5.75% and Class B went from 5.75%–6.25% to 6%–6.5%.
Midwestern industrial markets such as Chicago, Columbus, Indianapolis and Kansas City also show modest shifts. Chicago's Class A stabilized range tightened from 5.25%–6% to 5%–5.75%, while Cincinnati's moved slightly lower at the upper end from 5.75%–6.5% to 5.75%–6.25%; Class B ranges in those markets narrowed by about 25 basis points at the upper end.
In the South, Atlanta's Class A industrial remained between 5%–5.5% with Class B at 5.5%–6.0%, while Dallas tightened from 5.25%–5.75% to 5%–5.5% for Class A and from 5.75%–6.25% to 5.5%–6% for Class B.
West Coast markets, including the Inland Empire, Los Angeles, Orange County, Oakland, Portland, Sacramento, Salt Lake City, San Diego and Seattle, posted broadly stable Class A ranges, generally between 5% and 5.75%, with incremental widening at the upper bound in a few locations such as the Inland Empire and Portland.
Retail neighborhood centers are another area of relative stability. In the East, Class A neighborhood center cap rates in New York City stayed between 4.5%–5.5%, while Boston's tightened at the lower end from 5.5%–6.25% to 5.25%–6.25% and Northern New Jersey's went from 5.5%–6.25% to 5.25%–6.25%.
Midwest ranges moved modestly lower across most markets; Chicago shifted from 6.5%–7.5% to 6%–7%, Cincinnati from 6.75%–7.75% to 6.25%–7.25% and Kansas City from 7%–8% to 6.25%–7.5%.
Southern and Western markets mostly held their first‑half ranges, with Atlanta, Austin, Charlotte and Dallas anchored between 5.5% and 6.25% and coastal California markets such as Los Angeles, Orange County, San Diego, San Francisco and San Jose steady between 5%–5.75%.
Hotels: wide spreads, slow movement
Hotel cap rates, reported across luxury, destination resort, city centers, other full‑service and limited‑service segments, remain wide and tiered by brand and location. City center luxury and destination resorts in New York City, Los Angeles, Boston and Las Vegas generally command lower yields than drive‑to and other limited‑service assets, with New York's luxury range between 5.0%–6.5% and city center full‑service at 5.25%–7.25%.
By contrast, limited‑service "other" hotels in markets such as Detroit are still priced at yields between 8.5%–11%. Across the board, the survey shows relatively stable hotel ranges between H1 and H2, with most adjustments within 25 to 50 basis points.
Next steps for investors
Taken together, CBRE's H2 2025 Cap Rate Survey depicts a U.S. commercial real estate market that has found its footing in pricing, even as investors debate the timing and pace of the next compression cycle.
Cap rates are not falling yet, but they are no longer lurching higher. Transaction and lending activity have improved and the wide‑angle view from more than 200 market professionals points to selective optimism in multifamily, industrial and retail, with office slowly emerging from the penalty box.
For investors already active in the market, the message is less about timing the exact turn in yields and more about positioning around sectors and markets where spreads have stabilized, risk is better understood and income growth can do more of the heavy lifting.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.