Current Average Cap Rates for Commercial Real Estate in 2026
Cap rates across commercial real estate have stabilized in 2026 after two years of expansion driven by rising interest rates. With the 10-year Treasury holding at approximately 4.6% in Q1 2026, the spread between cap rates and risk-free rates remains compressed by historical standards — particularly for industrial and multifamily. Here are the current average cap rates by property type, market tier, and asset class, sourced from CBRE, CoStar, Cushman & Wakefield, and Colliers Q4 2025/Q1 2026 data.
Current Cap Rates by Property Type — National Averages (Q1 2026)
National average cap rates across major commercial real estate property types as of Q1 2026:
| Property Type | Average Cap Rate | Range | YOY Change |
|---|---|---|---|
| **Industrial / Logistics** | 5.9% | 4.8–7.5% | +15 bps |
| **Multifamily (Garden)** | 5.4% | 4.5–7.0% | +10 bps |
| **Multifamily (High-Rise)** | 5.1% | 4.2–6.5% | +8 bps |
| **Retail (Grocery-Anchored)** | 6.4% | 5.8–7.0% | Flat |
| **Retail (Unanchored Strip)** | 7.5% | 6.5–9.0% | +10 bps |
| **Retail (Power Center)** | 8.2% | 7.0–10%+ | +20 bps |
| **Office (Class A CBD)** | 7.2% | 5.5–9.0% | +40 bps |
| **Office (Suburban)** | 8.8% | 7.0–12%+ | +60 bps |
| **Self-Storage** | 6.0% | 5.2–7.5% | +15 bps |
| **Net Lease (Inv. Grade)** | 5.8% | 5.0–6.8% | +10 bps |
| **Net Lease (Non-Inv. Grade)** | 7.2% | 6.0–9.0% | +15 bps |
| **Medical Office** | 6.2% | 5.5–7.5% | Flat |
Sources: CBRE Capital Markets Q4 2025, CoStar Property Intelligence Q4 2025, Cushman & Wakefield MarketBeat Q4 2025, Stan Johnson Company NNN Report, CBRE 2026 US Real Estate Outlook.
Cap Rates by Market Tier — Gateway vs. Secondary vs. Tertiary
Cap rates vary significantly by market tier — the premium investors pay for gateway market liquidity and depth compresses cap rates by 75–200 bps versus secondary markets.
**Gateway Markets (Top 6: NYC, LA, SF, Chicago, Boston, DC)**
| Property Type | Gateway Cap Rate | National Average | Premium |
|---|---|---|---|
| Industrial | 4.8–5.5% | 5.9% | 40–110 bps |
| Multifamily Class A | 4.2–5.2% | 5.1% | 0–90 bps |
| Office Class A | 5.5–7.0% | 7.2% | 20–170 bps |
| Retail (grocery-anchored) | 5.8–6.3% | 6.4% | 10–60 bps |
**Secondary Markets (Austin, Nashville, Denver, Phoenix, Atlanta, Seattle)**
| Property Type | Secondary Cap Rate | National Average |
|---|---|---|
| Industrial | 5.8–6.5% | 5.9% |
| Multifamily Class A | 5.0–6.0% | 5.1% |
| Office Class A | 7.0–8.5% | 7.2% |
| Retail (grocery-anchored) | 6.3–6.8% | 6.4% |
Note: Sun Belt secondary markets (Phoenix, Tampa, Austin) have seen modest cap rate expansion in multifamily due to elevated new supply entering lease-up in 2025–2026. Rent growth has decelerated from 10%+ in 2021–2022 to 1–3% currently, which has widened expected yields.
**Tertiary Markets (Indianapolis, Columbus, Raleigh, Salt Lake City, Kansas City)**
| Property Type | Tertiary Cap Rate | Premium vs. Gateway |
|---|---|---|
| Industrial | 6.0–7.0% | +75–200 bps |
| Multifamily | 5.5–7.0% | +75–200 bps |
| Office | 7.5–10%+ | +50–300 bps |
| Retail | 6.5–8.5% | +20–220 bps |
Tertiary market investors accept lower liquidity and smaller tenant pools in exchange for higher current yields. The tradeoff: harder exits, particularly in stressed market conditions.
Industrial Cap Rates — The Tightest Asset Class in 2026
Industrial remains the most competitively priced commercial real estate asset class — a position it has held since 2020, supported by e-commerce demand, supply chain reshoring, and the structural shift to distributed warehousing.
**National Industrial Cap Rate Distribution (Q1 2026)**
- Top 25% of transactions: Below 5.2%
- Median: 5.9%
- Bottom 25% of transactions: Above 6.8%
**Key Variables Driving Industrial Cap Rate Variation**
1. **Location vs. population center**: Infill last-mile (sub-50 miles from major metro) trades 75–150 bps tighter than regional distribution (50–150 miles out).
2. **Clear height**: 36ft+ clear height is the current logistics standard. Assets with 28ft or less clear height trade at a 50–100 bps discount.
3. **Dock door ratio**: Modern distribution requires 1 dock door per 10,000–15,000 sq ft. Undersized dock ratios compress buyer pools and expand cap rates.
4. **Tenant quality and lease term**: Investment-grade single-tenant with 10+ years remaining trades 100–150 bps tighter than multi-tenant with near-term rollover.
5. **Power availability**: EV charging infrastructure and high-amp electrical service are emerging requirements. Properties with 2,000+ amp service trade at slight premium over equivalent assets needing power upgrades.
**2026 Trend**: Colliers national industrial report shows spec pipeline deliveries moderating from the 2022–2024 peak. New industrial starts fell 40% YOY in 2025, suggesting vacancy will stabilize and rent growth will resume in 2027–2028. This supports current cap rate stability — buyers are not pricing in material cap rate expansion from further rental income deterioration.
Multifamily Cap Rates — Regional Variation and Supply Impact
Multifamily cap rates are more regionally dispersed than any other major property type, driven by new supply pipelines, rent control law differences, and local job market strength.
**Multifamily Cap Rates by Region (Q1 2026)**
| Region | Class A Cap Rate | Class B Cap Rate | Supply Pressure |
|---|---|---|---|
| **Northeast (NYC, Boston)** | 4.2–5.0% | 5.0–6.0% | Low (constrained permitting) |
| **West Coast (LA, SF, Seattle)** | 4.8–5.8% | 5.5–6.5% | Low to moderate |
| **Sun Belt (Phoenix, Tampa, Austin)** | 5.2–6.2% | 5.8–6.8% | High (record deliveries) |
| **Midwest (Chicago, Minneapolis, Indianapolis)** | 5.5–6.5% | 6.0–7.0% | Moderate |
| **Southeast (Atlanta, Charlotte, Raleigh)** | 5.0–6.0% | 5.5–6.5% | High |
| **Mountain West (Denver, Salt Lake City)** | 5.3–6.3% | 5.8–6.8% | Moderate |
**Sun Belt Supply Headwind**: CoStar Q4 2025 data shows 380,000+ apartment units delivered nationally in 2025, with concentration in Sun Belt markets. Phoenix, Tampa, Austin, and Charlotte are absorbing 5–10 years of typical supply in 3 years. Net absorption has remained positive but rent growth has turned slightly negative in several submarkets (-1% to -3% in some Austin/Tampa submarkets). Cap rates in these markets have widened 50–75 bps from their 2022 compression-era lows.
**Rent Control Markets**: Multifamily in New York City (Rent Stabilization), San Francisco (local RSO), Los Angeles (AB 1482 + local), and New Jersey (various municipal controls) trade with an additional 50–150 bps premium above market-rate equivalents, priced around the legally capped income growth ceiling.
Office Cap Rates — The Most Distressed Asset Class in 2026
Office cap rates in 2026 reflect the most bifurcated market in commercial real estate. The "flight to quality" that emerged post-pandemic has widened the spread between top-tier and commodity office to 300–500 bps — a gap unprecedented in modern CRE history.
**Office Cap Rates by Quality Tier (National, Q1 2026)**
| Office Tier | Cap Rate | Vacancy Backdrop |
|---|---|---|
| **Trophy Class A (top 10% of buildings)** | 5.5–6.5% | 8–12% vacancy |
| **Class A (top 25%)** | 6.5–8.0% | 12–18% vacancy |
| **Class B (mid-market)** | 8.5–11.0% | 18–25% vacancy |
| **Class C / Suburban commodity** | 10–15%+ (where it trades) | 25–35%+ vacancy |
National office vacancy: 19.8% (Cushman & Wakefield Q4 2025) — the highest on record.
**The "Zombie Office" Problem**: A significant share of Class B/C office inventory does not transact in the traditional market — it sits vacant with underwater loans that borrowers are extending or handing back to lenders. Distressed office sales are pricing at implied cap rates of 12–18%+ or selling for conversion value (residential, hotel, data center) rather than office income. These transactions should not be used as comparable cap rates for stabilized office valuation.
**Life Science and Medical Office Exception**: Lab/life science office in Boston (Kendall Square, Longwood), San Francisco (Mission Bay), and San Diego (Torrey Pines) continues to trade at 5.5–7.0% despite broader office headwinds, supported by NIH funding, pharmaceutical expansion, and GLP-1 drug manufacturing investment. Medical office (MOB) similarly resilient at 6.0–7.5% nationally.
**2026 Outlook**: CBRE projects office cap rates to remain stable-to-expanding through 2026 as the market works through lease expirations from pre-pandemic long-term leases. The next wave of office repricing likely occurs in 2027–2028 as 10-year leases signed in 2017–2018 roll.
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