- Retail remains a standout, with strong investor demand despite a slight price dip; cap rates held steady at 6.7%.
- Office sale prices increased 15.6% YoY, reflecting signs of stabilization amid return-to-office trends.
- Industrial assets continue to perform well, driven by e-commerce demand, with cap rates rising to 7.27%.
- Multifamily saw stable absorption but softening prices and widening bid-ask spreads as cap rates expanded.
Retail: Solid Demand Despite Slight Price Dip
According to Globe St, retail properties saw a modest year-over-year decline in median sale price—down 1.69% to $259.54 PSF — but investor demand remains robust.
Limited new development due to high construction costs is intensifying competition for existing assets. Cap rates held firm at 6.7%, signaling investor confidence in future appreciation and reliable income streams. Grocery-anchored centers and essential-service tenants remain especially attractive, pushing lease rates to a median of $18.89 PSF, with only a slight drop in effective rates.
Office: Stabilization Signals Emerge
The office sector is seeing signs of recovery, with investor appetite returning for Class A spaces in central business districts. National vacancy rates rose slightly to 14.1%, but fewer move-outs and policy-driven returns to the office suggest momentum may be shifting.
Sale prices climbed 15.6% YoY to $231.71 PSF, and cap rates dipped to 7.5%. Asking and effective rents hovered near parity at around $19 PSF, hinting at improving leasing fundamentals.
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Industrial: Resilience Holds Strong
Industrial continues to attract capital, even as sale prices dipped 1.4% YoY to $110.67 PSF. Cap rates rose slightly to 7.27%, reflecting tempered yield expectations amid broader economic uncertainty. Demand is especially strong for last-mile logistics facilities and properties near key transportation corridors, as e-commerce and supply chain optimization remain core drivers.
Multifamily: Demand Steady, But Pricing Adjusts
The multifamily sector maintained healthy absorption at 1.62% in March, but sale prices softened 2.5% YoY to $163.09 PSF. Cap rates expanded to 6.54% for sold properties, with asking rates at 7.11%, revealing a pricing gap between buyers and sellers. Higher interest rates and tighter financing have prompted investors to be more selective, often targeting value-add opportunities in fast-growing secondary markets.
Why It Matters
Across all CRE sectors, stabilization in pricing and cap rates suggests growing investor confidence despite economic headwinds. Sectors like retail and industrial continue to draw strong interest, while office and multifamily show early signs of rebalancing. As financing conditions and market fundamentals evolve, targeted asset selection will be key for investors seeking yield and growth.
What’s Next
With investor focus shifting toward assets offering long-term stability or operational upside, expect continued interest in essential retail, Class A office, and well-located industrial and multifamily properties. Market recalibrations may create new opportunities as bid-ask gaps narrow and sentiment improves heading into mid-2025.
