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Analysis

Cap Rates Adjust as the 10-Year Treasury Yield Fluctuates

The question is, by how much will they fall?

What happens to CRE cap rates when the 10-year Treasury yield changes? According to a CBRE Econometric Advisors review of data since 1995, there are some relationships over time with variations by property type.

On average, for every 100 basis points change in the 10-year yield, cap rates shift in the same direction. For example, higher yield, means higher cap rates, and lower yields lead to lower cap rates. From high to low, it’s been 78 basis points for retail; 75 basis points for multifamily; 70 basis points for office; and 41 basis points for industrial assets.

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Erik Sherman

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