Intelligent Investment

Double-digit Office Cap Rates Start to Plateau

Chart of the Week

March 19, 2025 2 Minute Read

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Office investment activity is slowly reviving, with most capital targeting higher quality buildings with stronger occupancy levels and better NOI prospects. Meanwhile, the Class B&C segments continue to struggle.

CBRE’s Cap Rate Survey (CRS)1 provides insight into the upward drift of yields for marginal properties. The graphic below shows the percentages of Class B & C office properties with an estimated double-digit cap rate across the past five surveys. While the percentage reached a new high in H2 2024 (72%), the increase was far less pronounced than even a year earlier. This provides more evidence that the office market is finding a new equilibrium.

1 The CRS asks CBRE capital markets and valuation professionals to estimate office yields by market, submarket type, risk profile and class across 36 geographic markets.

Figure 1: Estimates for Office Yields by Market, Submarket Type, Risk Profile, and Class

Chart showing the rising percentage of cap rates above 10% in the commercial real estate market from H2 2022 to H2 2024.

Source: CBRE Econometric Advisors.

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