Report: Investor Demand, Economic Growth Expected to Maintain CRE Pricing

Demand from domestic and foreign investors, combined with moderate economic growth is anticipated to keep cap rates for U.S. commercial real estate stable in 2020, according to CBRE’s North America Cap Rate Survey. The report, which quizzes CBRE professionals, indicated that cap rates tightened in H2 2019 among industrial, multifamily and suburban office sectors, while hotel and retail cap rates were generally unchanged.

As for the outlook, cap rates among the office sector will continue to remain unchanged, while some moderate tightening could occur on the industrial side. Multifamily cap rates are also anticipated to tighten in 2020, while hotel numbers could remain flat.

The cap rate on CRE, overall, is expected to remain unchanged, as “continued moderate economic growth will keep interest rates low, and sustain demand for commercial real estate,” according to CBRE Global Chief Economist Richard Barkham.

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