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CBRE Adapts P/E Ratio to CRE Valuation

The evaluation tool of public equities is flexible, it said.

By Erik Sherman | February 06, 2025 at 05:47 AM

The price-to-earnings ratio, or P/E, is a standard tool to estimate the price and value of a public company’s stock. CBRE just pointed out that the same calculation can help determine whether the price of a commercial real estate property would allow for a strong potential return.

The first step CBRE took was to take the current all-property cap rate to an implied P/E ratio of 17.7. Then they compared the figure to the “projected five-year forward average return.”

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