Cap Rates Jump 72 Basis Points in 6 Months

October 27, 2022

Article by: Leslie Shaver

• Data is backing up what many multifamily buyers and sellers already know —cap rates are rising for apartments around the country.
• A new report from CBRE says that going-in cap rates rose 33 basis points to 4.09% in the third quarter. In the second quarter, they jumped 39 bps (their biggest increase in a quarter ever) — marking a 72 bps increase over six months. Still, they are below their fourth-quarter 2019 level of 4.16%.
• Exit cap rates, or the rate used to estimate a property’s value at the end of the holding period, increased 21 bps in the third quarter versus 30 in the second quarter. However, the current 4.63% exit cap rate sits below pre-pandemic levels. Internal rate of return targets passed the pre-pandemic average, rising 35 basis points to 6.39%.

Read the full article: https://bit.ly/3fi0QZz