Commercial Real Estate: Going Granular

Empty floor front of modern building

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The fastest rate hike campaign since the 1980s is causing financial cracks seen in bank turmoil. That has raised concerns over U.S. commercial real estate due to the sector’s reliance on bank loans.

The chart shows the nominal capitalization rates for industrial, office and retail properties as implied by transaction values per quarter. Nominal cap rates are used to gauge the yield of property transactions.

Capitalization Rates By Real Estate Sector, 2008-2023 (BlackRock Investment Institute, with data from Green Street Advisors, May 2023)

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