National Retail Cap Rate Report
During first quarter 2021, the average cap rate for all retail transactions tracked by CBRE Valuation & Advisory Services recorded a slight increase of 4 basis points. The overall first quarter average was 6.66%, remaining strong even amidst the COVID-19 pandemic. Year over year, the average has remained stable, with first quarter 2021 equaling first quarter 2020. Among the six regions CBRE identifies, the average decreased in three (Northeast, South Central, and Southeast) and increased in three (Midwest, Mountain, and Pacific West). The Pacific West region achieved the lowest cap rates for retail properties (averaging 6.23% in first quarter 2021), followed by South Central (6.38%), Southeast (6.55%), Mountain (6.48%), Northeast (6.49%), and Midwest (7.38%).
The data for first quarter 2021 is considered a positive signal for retail properties overall, although regional data suggests more slightly mixed results. Cap rates have been relatively stable overall since 2017; thus, this quarter’s increase in the Midwest, Mountain, and Pacific West regions may not reflect a change in trend, but may be outliers based on the inventory that traded. Nearly all data points for two consecutive quarters indicate that the pandemic has not had a significant effect on retail property pricing. Sales reported as closed during the past quarter were negotiated after the pandemic’s start and reflect willing buyer and seller knowledgeable of its impact. Most of the sales reported during the past quarter have been single-tenant net-leased properties or grocery- and other-essential-business-anchored centers that have remained in demand without rent roll uncertainty that has surrounded other property types. As more types of retail properties trade, especially large-format retail (power and lifestyle centers and malls), cap rates will likely reflect some revision in pricing, even as single-tenant and essential-anchored centers will remain stable.
Source: Valuation VIEW
Data points are confirmed closed transactions adjusted for assumed financing and reflect overall market trends.
U.S. Retail Cap Rate Trends
Retail Valuation Practice
CBRE is the largest national provider of real estate appraisal services in the country with more than 800 licensed appraisers in the United States. CBRE's retail valuation practice has drawn from this large talent pool with more than 50 licensed appraisers who specialize in retail valuation. These appraisers form the core of our retail valuation team and ensure an experienced professional is responsible for each assignment.
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