Cap Rate Compression Across Real Estate Sectors in Phoenix

CBRE has released a cap rate survey for H2 2022. The report focuses largely on national trends, but certain markets – including Phoenix and Greater Los Angeles – are highlighted throughout.

  • Industrial assets are hot and arguably efficiently priced, as the significant growth of e-commerce has elevated property values in the logistics hubs best positioned to benefit. There is little concern about the burgeoning development pipeline. This is exemplified by very low cap rates in Riverside, Calif. and Phoenix. Supply-constrained port markets such as Greater LA, also have some of the lowest cap rates in the U.S. (pg. 12)
  • Cap rates for Class A stabilized apartment properties in infill Phoenix have been dropping from 3.25%-3.75% in the first half of 2021 to 3%-3.5% in the second half of 2021. The same holds true for suburban properties. (pg. 24)
  • Aside from New York City, Greater Los Angeles (5.5%-7.5%) and Phoenix (5.5%-6%) had the lowest cap rates for full-service resort hotel properties (pg. 25)
  • Cap rates for stabilized Class-A office properties in Phoenix have been fairly steady with a slight downward trend (5.75%-6.75 in H1 2021 to 5.5%-6.75% in H2 2021) (pg. 29)
  • Cap rates for stabilized Class-A office properties in Greater LA are trending down from 4.25%-5.25% in the first half of 2021 to 4%-5.5% in the second half of the year (pg. 29)
  • Cap rates for Class-A neighborhood retail centers in Phoenix have declined from 5.75%-6.5% in H1 2021 to 5.5%-6.5% in the second half (pg. 33)
View full report HERE

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