Cap rates showed signs of renewed stability in the second half of 2025 as volatility eased and investor sentiment strengthened, according to CBRE’s U.S. Cap Rate Survey H2 2025. CBRE notes that financing conditions are gradually improving, supported by increased lender participation and stronger price discovery. At the same time, asset selection remains critical as the recovery within each sector remains uneven. Current trends point to a more active investment landscape in 2026.
CBRE’s survey asks respondents to estimate the direction of cap rates and the magnitude of the expected change during the next six months. In the current survey, the most common response across all categories was “no change.” However, many respondents expect decreases. Nearly half of retail, industrial and hotel respondents believe the market is past the peak and that cap rates will start to decline over the next six months. Unlike the previous survey, opinions are split almost equally between those expecting declines and no change.
The volatility in U.S. Treasurys in early 2025 persisted through the summer, peaking around 4.5% in July. As the year drew to a close, volatility eased with yields ranging between 3.9% and 4.2%. Key factors likely included lower inflation and an expectation of continued economic growth according to CBRE.
Despite continued uncertainty, the all-property cap rate estimate held steady and commercial real estate appeared to enter a new cycle. Total transaction volume was up approximately 19% in 2025. Pricing has stabilized with several price indices no longer falling. Debt is becoming more available with higher LTVs and more lenders are entering the market. The CBRE Lending Momentum Index is well above the prior five-year average. Altogether, the market is primed for a period of positive returns and greater activity.
Key takeaways from the survey include:
Cap rates have stabilized: Across major property types, cap rates were largely unchanged, signaling that most pricing resets have already occurred and markets are nearing equilibrium.
Widespread belief that yields have peaked: Most respondents believe yields have reached their cyclical high, though opinions differ on how quickly cap rates may begin to compress.
Transaction activity is rebounding: Improved buyer/seller alignment on pricing and more debt capital availability are supporting an uptick in deal flow.
Retail and multifamily pricing most appropriate: Asset pricing is broadly viewed as appropriate given the risks and income growth potential in both sectors.
Office sentiment improves: While the sector remains challenged, more investors are constructive on office.
