Beyond the Average:
What Cap Rates Really Reveal About CRE Opportunities
Average Cap Rates Offer a Benchmark, Not the Full Picture
- National apartment cap rate averages 6%, but varies from 4.7% to 7.2% by market and asset class
- Primary markets and Class A assets tend to command lower cap rates
- Averages help track broad trends but may not reflect individual deal realities
Market and Asset Type Influence Cap Rate Ranges
- Cap rate spreads narrow across market tiers; gap between primary and tertiary markets has halved since 2018
- Class and metro trends shape cap rate variance—e.g., hotels (6–11%), industrial (5–8.1%)
Granular Data Reveals Strategic Investment Opportunities
- Cap rate ranges signal where investors can find yield vs. stability
- Outliers and micro trends offer entry points others may overlook
- Success often comes from drilling past averages to uncover local dynamics
As of 1Q 2025
MT Retail = Multi-Tenant Retail
Includes sales $1 million and greater
Sources: Marcus & Millichap Research Services, CoStar Group, Inc., Real Capital Analytics
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