CBRE’s midyear broker survey—drawing from over 200 industry professionals—suggests that cap rates may have reached their ceiling in early 2025, despite the turbulence in Treasury yields.

Market metrics: The 10-year Treasury yield swung widely this year, starting at 4.79% in January, dipping to 4.01% by April, and ending midyear at 4.24%. Even with that volatility, average cap rates across all property types edged down 9 basis points to 6.84%. The movement was uniform across sectors, hinting at the early stages of yield compression.

Sentiment shift: Compared with prior surveys, expectations have cooled considerably. A majority of respondents now anticipate little to no change in cap rates: 67% for downtown office, 70% for suburban office, and nearly 74% for suburban multifamily. Industrial (64.5%) and hotel (50%) showed similar flat expectations. The results signal a pause in the upward cap rate cycle that has dominated the last two years.

Class dynamics: While median cap rates stayed level, the gap between the high and low ends of estimates widened—especially for Class B and C properties. Investors remain cautious with non-core assets, applying higher risk premiums that keep upward pressure on yields.

Macro influences: Broader policy concerns are creeping into market outlooks. More than half of respondents (57%) slightly reduced their 2025 transaction forecasts due to tariff risks, while 16% made deeper cuts. Only a small fraction (3%) grew more optimistic, underscoring how geopolitical uncertainty continues to weigh on deal flow.

Key takeaway: Cap rates may have plateaued, but the commercial real estate market isn’t in the clear. Stabilization in some areas contrasts with persistent headwinds—from policy uncertainty to a widening divide between core and non-core assets—that could restrain transaction activity in the months ahead.