CBRE’s Insight & Research recently dropped its “U.S. Cap Rate Survey H2 2021” (CRS) and, after “reading the room” with hundreds of expert interviews, along with 3,600 capitalization-rate estimates across 50 markets … their first slide nails it:

As the U.S. heals from the pandemic, investor demand for real estate has grown to new heights

(In case any experts share this article, a working definition of cap rate: “Declining cap rates generally indicate an increase in property values and as such are a good gauge of regional real estate market movements.”)

The comprehensive report is obviously national, but for this article, let’s cherry-pick some California highlights from this CRS (emphasis ours):

• Industrial assets are hot … as the significant growth of e-commerce has elevated property values in the logistics hubs best positioned to benefit. There is little concern about the burgeoning development pipeline. This is exemplified by very low cap rates in Riverside, Calif. and Phoenix. Supply-constrained port markets such as Greater LA, also have some of the lowest cap rates in the U.S.

• Aside from NYC, Greater LA (5.5 – 7.5 percent) and Phoenix (5.5%-6%) had the lowest cap rates for full-service resort hotel properties

• Cap rates for stabilized Class-A office properties in Greater LA are trending down from 4.25%-5.25% in the first half of 2021 to 4%-5.5% in the second half of the year

The full report from CBRE is here, as well as above.