Cap Rate Benchmarks by CRE Property Type and Market
Cap rates vary sharply by property type, market, and risk tier.
A cap rate is the unleveraged yield a buyer accepts on a property's stabilized net operating income, and every benchmark in this guide only means something once that yield gets read against two other numbers: the 10-year Treasury and the cost of debt. The market organizes itself into two broad tranches. Compressed yields, generally in the low-to-mid single digits, belong to institutional-grade pricing: de-minimis risk, investment-grade tenancy, and deep liquidity in major metros. Expanded yields, in the high single digits and above, belong to opportunistic and value-add pricing, compensating buyers for secondary-submarket exposure, heavy capital expenditure needs, or volatile tenant rollover.
The cap rate spread is the gap between a property's cap rate and the 10-year Treasury yield, and it is the premium an investor demands when moving capital out of risk-free government debt into an asset class that is illiquid and management-intensive by comparison. For core assets, a spread of roughly 200 to 300 basis points has historically held as the standard compensation for that trade. When a deal prices with a spread well below that range, it signals one of two things: the asset is overvalued relative to its risk, or the underwriting leans on aggressive trending of future NOI growth rather than in-place cash flow.
Every cap rate also has to pass a second test: the debt constant, which is the annual debt service divided by the loan amount. Buying at a cap rate below the mortgage constant produces negative leverage: the property's stabilized NOI, even at full occupancy, cannot cover debt service on its own. That condition is the central stress point for underwriters in 2026, and it reframes what a cap rate benchmark is actually for. A number on a table is not a price to look up and apply. It is a signal to test against the risk tranche an asset belongs to, the spread it implies over the risk-free benchmark, and whether the debt behind it produces positive or negative leverage from day one.
The wrong number to anchor a deal on: the national average cap rate
The U.S. average cap rate looks stable through the first half of 2026, and that stability is itself the problem. A national average sitting still can still mean a market repricing hard underneath it: compressing forces in some sectors and widening forces in others cancel out in the aggregate, producing a headline figure that describes no actual transaction.
CBRE's H1 2026 Cap Rate Survey makes the internal divergence explicit. The survey drew more than 3,600 cap-rate estimates from more than 50 U.S. markets, contributed by more than 200 capital markets and valuation professionals in late June, and it found cap-rate compression running deeper in the eastern U.S. than the national average would suggest. It found more compression among Class B, C, and value-add properties than among stabilized Class A assets, even as Class C properties also led in expectations of future cap-rate expansion. Average compression was greatest in neighborhood retail, then hotels and industrial, but the most bearish sentiment in the entire survey gathered around infill multifamily and lower-quality office.
What drives an apparently calm headline number is a partial decoupling from Treasury yield movements. Investors are pricing assets more on the durability of in-place cash flow than on pure rate sensitivity, but that decoupling runs unevenly across sectors and quality tiers, and that unevenness is what produces the pattern the CBRE survey captured: compression in some places, widening in others. For a sponsor or broker, the practical consequence is straightforward: an all-property average cannot serve as a pricing anchor for any specific transaction. The spread between primary-market Class A industrial and tertiary-market Class C office is so wide that the blended national figure describes neither one accurately. What follows is the granular reference that an aggregate number cannot provide: benchmarks broken out by sector, asset class, market tier, and in net lease retail's case, tenant credit.
Multifamily cap rate benchmarks by class and market tier
Multifamily remains one of the most compressed cap rate sectors in commercial real estate, because its cash flow holds up well and it draws the deepest institutional liquidity of any property type across market cycles. That compression, though, describes the sector only at its best. The range running from Class A urban towers to workforce housing in tertiary markets is wide enough that the single word "multifamily" tells an investor almost nothing about where a specific deal should price.
Q2 2026 benchmarks put workforce and Class C multifamily at 7.00% to 8.50%, a range that reflects the capex burden and rent-growth uncertainty you see in older, lower-rent stock. Senior housing and continuing-care retirement communities, by contrast, price at roughly 7.90% for core Class A product as of H1 2026, a yield that sits closer to value-add territory than to the compressed end of the multifamily spectrum despite the "core" label, a reminder that asset subtype can matter as much as class designation. At the market-tier level, tertiary-market Class C assets fall into that same 7.00% to 8.50% band, underscoring how much geography and asset quality converge at the wider end of the sector.
The sharpest illustration of how fast multifamily pricing is moving comes from New York City. Stabilized multifamily there widened from a 4.5% to 5.0% range in the second half of 2025 to 5.0% to 5.5% in the first half of 2026, a direct reflection of the bearish sentiment the CBRE survey identified specifically in infill multifamily. A market long treated as the most liquid, most defensively priced multifamily environment in the country moved 50 basis points wider in just two quarters.
That widening matters for a second reason, and it ties directly to the debt constant introduced above. At the Class A end of multifamily, going-in cap rates in many deals sit below current estimated all-in financing rates. That gap means the unlevered yield on the asset is lower than the cost of the debt used to buy it, the textbook condition for negative leverage. Investors underwriting these deals are underwriting a bet on future rent growth and on terminal cap rates compressing further by the time of exit, a bet with a real payoff if the thesis holds and a real loss if it does not.
Industrial cap rate benchmarks by market and industrial subtype
Industrial cap rates track closely with multifamily at the national level, and that headline similarity conceals one of the widest internal ranges of any property type once the sector is broken out by subtype and market. Last-mile urban distribution, bulk distribution, cold storage, and multi-tenant flex product each carry distinct pricing, and the supply condition of the specific market, whether oversupplied Sun Belt or constrained coastal infill, pushes those subtype yields further apart still.
In Phoenix, Q2 2026 benchmarks show bulk distribution pricing at 5.50% to 6.25%, multi-tenant flex at 6.50% to 7.50%, cold storage at 6.00% to 7.00%, and last-mile/urban product at 5.25% to 6.00%, with the overall trend across these subtypes marked as widening. Secondary markets broadly show a noticeably wider and flatter set of ranges: bulk distribution at 6.00% to 7.50%, multi-tenant flex at 7.00% to 8.50%, cold storage at 6.50% to 8.00%, and last-mile/urban at 6.00% to 7.00%, with the trend across these markets holding stable.
The gap between Phoenix, where cap rates are widening, and compressing markets such as Dallas and Savannah within the same data set is the clearest evidence available that a single "industrial cap rate" figure cannot guide a transaction. Supply conditions alone are producing spreads of 100 basis points or more between otherwise comparable assets in different metros. National industrial vacancy sat at 4.8% as of Q2 2026, and that figure gives useful context for the compressing markets, but it explains little about why Phoenix, which carries its own supply overhang from recent development, is moving the opposite way from the national trend. The lesson for underwriters is that subtype and submarket supply dynamics, not the national industrial average, set the real price.
NNN retail cap rate benchmarks by tenant credit and lease structure
Single-tenant net lease retail prices on a different axis than multifamily or industrial. Tenant credit rating and remaining lease term drive pricing more directly than market tier does, so the gap between the tightest investment-grade ground leases and non-rated restaurant tenants can run several hundred basis points within the same property format, on the same kind of real estate, and in some cases in the same trade area.
Q2 2026 benchmarks make the mechanism concrete. A McDonald's corporate-guaranteed ground lease, rated BBB+ by S&P with a 20-year term and 5% rent bumps on 5-year steps, prices at 4.50% to 5.25%, with the trend holding stable. A Walgreens lease, now rated BB+ by S&P following a credit downgrade, with a 25-year term and flat or stepped rent, prices at 6.50% to 7.50%, with the trend actively widening. The two leases share a format, a long term, and a single corporate tenant structure. Credit quality alone accounts for almost all of the 200-basis-point-plus gap between them.
That divergence, set against compression in other high-credit tenants, states the core principle of NNN underwriting: cap rates track tenant credit in real time. A downgrade is a pricing event that moves the cap rate on every comparable lease in the market the moment it registers, and sponsors underwriting single-tenant retail need to treat the credit rating with the same weight they give the real estate itself.
