Understanding Cap Rate Comparables in Commercial Real Estate
Capitalization rates remain the primary pricing signal in commercial real estate transactions. With over 45,000 properties transacting in Q3 2025 alone—representing $150.6 billion in aggregate volume—having access to granular, deal-level cap rate data is critical for underwriting acquisitions and benchmarking portfolio performance.
Current Market Cap Rates by Property Type
| Property Type | Class A Cap Rate | Class B/C Cap Rate | Trend |
|---|---|---|---|
| Multifamily | 4.7%–5.2% | 5.5%–7.0% | Compressing |
| Industrial | 5.0%–6.0% | 6.5%–7.5% | Stabilizing |
| Office | 6.0%–8.0% | 8.0%–12.0% | Widening by class |
| Retail (Net Lease) | 5.0%–6.0% | 6.5%–9.0% | Stable |
Spread Compression and Pricing Signals
The average all-property cap rate in mid-2025 stands at approximately 6.84%, down 9 basis points from early 2025. Meanwhile, average interest rates sit at 6.57%, creating a historically narrow 23-basis-point spread. This compression signals that buyers are pricing in future rate cuts rather than current debt costs—a dynamic that demands careful comparable analysis before making offers.
Key Market Dynamics
- Multifamily dominance
- Multifamily transactions surged 51.1% year-over-year in Q3 2025, accounting for 34% of all single-asset sale volume. Median pricing reached $144/SF, up 17.3% annually.
- Industrial resilience
- Industrial volume grew 26.5% YoY with median pricing at $105/SF. Institutional-quality logistics assets trade tightest, especially in coastal markets.
- Office bifurcation
- Trophy office assets in prime CBDs are attracting capital at adjusted pricing, while suburban and Class B/C office see cap rates exceeding 10%. The 470 Park Avenue South sale at $492/SF—40% below its 2018 price—illustrates the repricing underway.
- Net lease stability
- Retail net lease volume reached $5.7B in H1 2025 with cap rates stabilizing near 6.8%. Essential tenants with long lease terms command sub-5% yields.
Geographic Variation
Texas, Florida, and Carolinas MSAs significantly outpaced the national 25.1% transaction volume increase in Q3 2025. In Houston, Class A multifamily trades at 4.9%–5.3%, while Dallas's Uptown and Frisco markets command 4.8%–5.2%. These Sun Belt markets continue to compress relative to gateway cities, though the gap is narrowing.