North America Cap Rate Survey - H1 2019 PDF

A CBRE RESEARCH PUBLICATION
CBRE NORTH AMERICA

CAP RATE SURVEY
Fir s t HAL F 2 0 1 9
NORTH AMERICA cap rate survey | FIRST HALF 2019
overview MAPs office industrial retail multifamily hotel CANADA appendix
U.s. OVERVIEW
• Capitalization rates for U.S. commercial real estate assets were broadly Office
unchanged in H1 2019. All property types across nearly all classes and
• Office cap rates for stabilized CBD properties decreased slightly to 6.67% in
segments changed by less than 10 basis points (bps) either up or down.
H1 2019. Class AA properties in Tier II markets registered the largest decrease
Multifamily and industrial cap rates tightened the most.
(-12 bps).
• Cap rates for office and hotel properties have continued to remain largely flat
• Stabilized suburban office cap rates remained at 7.91%, supported by improving
(a pattern that has held the past few years), while multifamily and industrial cap
market fundamentals, but spreads to CBD cap rates are near their highest levels
rates trended down slightly. Retail cap rates have been rising since 2016 but
this cycle.
were relatively unchanged in H1 2019.
• Returns on cost for CBD value-add acquisitions dropped by 1 bp, while suburban
• CBRE expects cap-rate stability in the second half of 2019. The sentiment of
returns increased by 2 bps.
CBRE professionals is generally uniform across property types, segments, classes
and market tiers, with only the hotel sector having mixed sentiment, albeit a • Cap rates should remain stable for both CBD and suburban properties over
largely stable outlook. the next six months with approximately 90% of survey respondents expecting no
change. The stable outlook is supported by widening spreads to U.S. Treasury
yields, as well as persistently strong office demand.
FIGUR E 1a : U. S. stabili z e d cap rates b y propert y t y pe
Industrial
%
9
• Industrial cap rates and returns on cost remained at historically low levels in H1
2019. The average rate for acquisitions of stabilized industrial assets for all tiers
and classes fell by 5 bps to 6.27%. Class A cap rates declined 5 bps to 5.00%, the
8
lowest level since the Cap Rate Survey began in 2009.
7 • Strong market fundamentals—low vacancy, robust e-commerce-driven tenant

demand and rent growth—continue to attract investors to industrial assets,
6 increasing values and leading to sustained cap rate compression. Due to high
competition for stabilized properties, investors remain interested in industrial assets
with a higher risk profile.
5
H1 2013 H2 2013 H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 H2 2017 H1 2018 H2 2018 H1 2019 Retail
Office Industrial Hotel Multifamily Retail • Retail cap rates for stabilized neighborhood/community centers remained
Source: CBRE Research, Q2 2019. Note: Retail excludes High Street. stable at 7.48% in H1 2019. As in H2 2018, store closure announcements
CBRE Research © 2019 CBRE, Inc. | 1

OVERVIEW cont.
disproportionally affected the power center segment, the average cap rate for Hotel
which increased by 6 bps to 8.45% in H1 2019. High street cap rates were • The average U.S. hotel cap rate remained stable in H1 2019 at 8.28%.
relatively stable at 4.76%.
• The most dramatic increases occurred among full-service and economy
• Demand for high-quality retail assets was strong. Stabilized cap rates for Class A classes in Tier I cities. Cap rates in Tier I suburban locations for full-service hotels
product in all three retail sectors were the lowest, ranging from 4.76% to 7.16%. increased by 20 bps to 8.02% in H1.
• Expectations for cap rate movement across retail segments is relatively uniform. • Every market class in Tier III cities recorded declines in hotel cap rates, led by
Approximately 80% of survey respondents expect stable cap rates for stabilized a 10-bp drop in the economy class.
power centers and 13% expect increases of less than 25 bps in H2 2019. For
neighborhood/community center properties, 86% of respondents expect stable
cap rates, while 8% anticipate similarly slight increases.
Multifamily
• Multifamily cap rates and expected returns on cost remained at historically low SURVEY METHODOLOGY
levels in H1 2019.
CBRE’s North America Cap Rate Survey reflects the knowledge and
• Cap rates for urban infill stabilized assets averaged 5.20% and expected returns
collaboration of CBRE Research, Capital Markets and Valuation &
on cost for infill value-add acquisitions averaged 5.95%.
Advisory Services professionals, who provided their estimation of cap rate
• Suburban stabilized assets priced at 5.49% on average, while expected returns ranges based on recent transactions and interactions with active investors
on costs averaged 6.23%. in their markets.
• Cap rates for stabilized assets and expected returns on cost were relatively stable At the heart of the survey are current cap rates for stabilized acquisitions,
in H1 2019. The changes were modest (-10 bps or less across classes), but the expected returns on cost for value-add acquisitions, cap rate trends since
slight compression reflected more pricing power than expected for sellers at the the previous survey and expectations of cap rate movements over the next
beginning of the year. six months. This survey also includes a dynamic map tool for all classes
and segments of stabilized assets. Use the links at the top of each page to
• Cap rate spreads between Class A and Class B and between Tier I and Tier II access this feature.
market groupings remained tight, indicating that many investors are finding
better opportunities in lower-quality assets and in secondary and tertiary markets.

OVERVIEW CONT.
FIGURE 1b: U. S. national-level C ap Rates and e xpecte d returns on cost b y propert y t y pe , segment and class
STABILIZED PROPERTY ACQUISITIONS VALUE-ADD PROPERTY ACQUISITIONS

SPREAD OVER 10-YEAR SPREAD OVER 10-YEAR
cap rate TREASURY rate (bps) expected return on cost TREASURY rate (bps)
H1 2019 H2 2018 CHANGE H1 2019 H2 2018 H1 2019 H2 2018 CHANGE H1 2019 H2 2018
PROPERTY TYPE SEgment CLASS (%) (%) (bps) (%) EOP (%) EOP (%) (%) (bps) (%) EOP (%) EOP
2.00 2.69 2.00 2.69
all 6.67 6.71 -4 467 402 8.43 8.44 -1 643 575
aa 5.24 5.28 -4 324 259 - - - - -
cbd A 6.05 6.10 -5 405 341 7.41 7.40 1 541 471
B 6.91 6.94 -3 491 425 8.23 8.25 -2 623 556
C 8.66 8.68 -2 666 599 9.91 9.93 -2 791 724
office
ALL 7.91 7.92 -1 591 523 9.56 9.54 2 756 685
AA 6.34 6.36 -2 434 367 - - - - -
suburban A 7.11 7.11 0 511 442 8.29 8.28 1 629 559
B 8.31 8.33 -2 631 564 9.53 9.52 2 753 683
C 9.75 9.75 0 775 706 10.92 10.90 2 892 821
ALL 6.27 6.31 -5 427 362 7.35 7.41 -6 535 472
A 5.00 5.05 -5 300 236 5.95 6.01 -6 395 332
industrial all
B 5.86 5.93 -7 386 324 6.95 7.05 -9 495 436
C 7.99 8.01 -2 599 532 9.20 9.22 -2 720 653
ALL 7.48 7.48 0 548 479 9.45 9.31 15 745 662
neighborhood/ A 5.95 5.95 0 395 326 - - - - -
community center B 7.39 7.39 0 539 470 8.66 8.53 14 666 584
C 9.19 9.18 1 719 649 10.29 10.13 16 829 744
ALL 8.45 8.40 6 645 571 10.26 10.14 11 826 745
retail A 7.16 7.12 5 516 443 - - - - -
power center
B 8.34 8.29 5 634 560 9.51 9.40 10 751 671
C 9.86 9.78 8 786 709 11.04 10.91 13 904 822
high street A 4.76 4.83 -7 276 214 - - - - -
(FIGURE 1: continues on next page)
Source: CBRE Research Q2 2019, U.S. Department of the Treasury. EOP = end of period.
Notes: H1 Treasury yield as of June 28, 2019. Some numbers may not total due to rounding.Retail Class A, return on cost for value add was not reported for this survey due to the limited properties represented by this category.

FIGURE 1b: U.S. National-level Cap Rates and expected returns on cost by property type , segment and class cont.
STABILIZED PROPERTY ACQUISITIONS VALUE-ADD PROPERTY ACQUISITIONS

SPREAD OVER 10-YEAR SPREAD OVER 10-YEAR
cap rate TREASURY rate (bps) expected return on cost TREASURY rate (bps)
H1 2019 H2 2018 CHANGE H1 2019 H2 2018 H1 2019 H2 2018 CHANGE H1 2019 H2 2018
PROPERTY TYPE SEgment CLASS (%) (%) (bps) (%) EOP (%) EOP (%) (%) (bps) (%) EOP (%) EOP
2.00 2.69 2.00 2.69
ALL 5.20 5.25 -5 320 256 5.95 6.00 -5 395 331
A 4.69 4.70 -2 269 201 5.37 5.40 -3 337 271
infill
B 5.12 5.18 -6 312 249 5.86 5.92 -6 386 323
C 5.82 5.91 -9 382 322 6.62 6.68 -6 462 399
multifamily
ALL 5.49 5.55 -6 349 286 6.23 6.29 -6 423 360
A 4.99 5.01 -2 299 232 5.64 5.68 -4 364 299
suburban
B 5.37 5.43 -6 337 274 6.09 6.15 -6 409 346
C 6.12 6.22 -10 412 353 6.97 7.04 -7 497 435
ALL 8.01 7.98 3 601 529 - - - - -
LUXURY 7.05 7.04 1 505 435 - - - - -
cbd FULL SERVICE 7.75 7.69 6 575 500 - - - - -
SELECT SERVICE 8.04 8.03 1 604 534 - - - - -
ECONOMY 9.20 9.17 4 720 648 - - - - -
hotel
ALL 8.55 8.50 5 655 581 - - - - -
LUXURY 7.61 7.59 2 561 490 - - - - -
suburban FULL SERVICE 8.26 8.18 8 626 549 - - - - -
SELECT SERVICE 8.53 8.50 3 653 581 - - - - -
ECONOMY 9.74 9.69 5 774 700 - - - - -
Source: CBRE Research Q2 2019, U.S. Department of the Treasury. EOP = end of period.
Notes: H2 Treasury yield as of June 28, 2019. Some numbers may not total due to rounding. Retail Class A, return on cost for value add was not reported for this survey due to the limited properties represented by this category.

u.s. Office | Overview
CBD Suburban
Cap rates for stabilized CBD office properties remained relatively stable in H1 2019, Suburban stabilized office cap rates remained remarkably steady at 7.91% in H1
down by just 4 bps to 6.67%, reflecting favorable investment sentiment and strong tenant 2019, virtually unchanged from last year. The property sector continues to benefit from
demand for space. Cap rates were relatively unchanged across all classes of stabilized CBD improving market fundamentals, but investor sentiment still favors CBD properties
properties, with only small decreases ranging between 2 and 5 bps. The spread between as evidenced by a near cyclical-high spread (123 bps) between suburban and CBD
stabilized Class A and Class B remained tight at 86 bps, essentially unchanged for the past stabilized cap rates.
three years.
Since H1 2018, stabilized cap rates for Tier I markets have trended slightly higher
Tier I cap rates were stable at 5.57%, while Tier II cap rates decreased by 5 bps to while those for Tier II markets fell and Tier III markets held steady. As a result, spreads
7.14%—the largest decline by tier in H1 2019. The spread between Tier I and Tier II between Tier I and Tier II markets have declined to multi-year lows. Upward pressure on
cap rates has gradually tightened since H2 2016, narrowing to 157 bps from 181. Tier I cap rates has originated from Class A, B and C properties, as Class AA cap rates
The biggest cap rate declines in Tier II markets were in Class AA and A properties, have declined over the past two years.
possibly reflecting a shift by investors into high-quality properties in secondary
F I GU R E 2 : U. S. o f f ice cbd - cap rates f or stabilized properties
markets.
Metro tier class H1 2019 (%) H2 2018 (%) change (BPS)
Most Tier I cap rates remained stable in H1 2019, but Washington, D.C. had increases all 6.67 6.71 -4
for Class AA and A assets. Declines in Tier II cap rates were biggest in Houston, Dallas/Ft. AA 5.24 5.28 -4
ALL A 6.05 6.10 -5
Worth and Philadelphia—all with cap rates 25 to 50 bps lower in various classes of CBD
B 6.91 6.94 -3
stabilized offices. As in previous surveys, San Francisco had the nation’s lowest average cap
C 8.66 8.68 -2
rate for stabilized Class A assets at 4.75%. AA 4.59 4.58 1
A 5.20 5.21 -1
The expected average return on cost for CBD office value-add acquisitions remained I
B 5.76 5.80 -4
stable at 8.43% in H1 2019. The rate has ranged between 8.38% and 8.43% since H1 C 7.38 7.38 0
2017. The spread between Tier I and Tier II markets is the tightest it has been since H2 AA 5.67 5.79 -12
2014, reflecting slightly higher returns on cost in Tier I markets. A 6.28 6.35 -7
II
B 7.58 7.60 -3
Approximately 90% of survey respondents anticipate CBD office stabilized and value- C 8.90 8.91 0
AA 6.83 6.79 5
add cap rates will remain stable in H2 2019. Persistent strength in CBD office demand
A 7.64 7.68 -3
and expectations for stable or decreasing interest rates support this outlook. Only 6% of III
B 8.51 8.51 0
respondents expect a modest increase of less than 25 bps. C 10.11 10.13 -2
Source: CBRE Research, Q2 2019. Notes: Some numbers may not total due to rounding. Data is subject to historical revisions.

U.s. Office | Overview CONT.
Significant cap rate movement occurred in several key metros. In Tier I markets, F I G U R E 4 : U. S. o f f ice cbd - historical cap rates by class
Washington, D.C. stabilized suburban cap rates had increases in all classes since H2 2018.
%
In Tier II markets, Portland was a standout with declining cap rates across all classes of
10
stabilized suburban offices. Philadelphia also had declines in Class A, B and C properties.
9
FIGURE 3: U.S. office cbd - class a cap rates, h1 2019 - Tier I & II metros
8
N. CA: San Francisco 7

NY: New York City
Boston 6
Seattle
S. CA: Orange County 5
S. CA: Los Angeles
H1 2013 H1 2014 H1 2015 H1 2016 H1 2017 H1 2018 H1 2019
N. CA: Oakland
tier i Average
Class A Class B Class C
Washington, D.C.
Portland Source: CBRE Research, Q2 2019. Data for stabilized acquisitions. Note: data is subject to historical revisions.
Denver
Austin
S. FL: Miami1
San Diego F I GU R E 5 : U. S. o f f ice cbd - historical class a cap rates by tier
Chicago
all markets Average
Raleigh-Durham
%
Phoenix 8.5
Minnespolis/St. Paul
Atlanta
tier ii Average 7.5
Philadelphia
N. CA: San Jose
Houston 6.5
Charlotte
Dallas/Ft. Worth
5.5
NY; Fairfield County, CT
Tier III Average
3% 4% 5% 6% 7% 8% 4.5
Tier I Tier II Tier III All Markets H1 2013 H1 2014 H1 2015 H1 2016 H1 2017 H1 2018 H1 2019
1
Covers the three-county Miami area. Tier I Tier II Tier III
Source: CBRE Research, Q2 2019. Data for stabilized acquisitions. Notes: data is subject to historical revisions. Markets represent
metropolitan areas. For larger metros, tier designation is based on the U.S. Census Bureau’s combined statistical area (CSA) definitions.
Note that MSAs retain the same tier designation as the CSA to which they belong. See tier methodology for further explanation. Source: CBRE Research, Q2 2019. Data for stabilized acquisitions. Note: data is subject to historical revisions.

Class AA suburban stabilized cap rates were relatively stable in H1, dropping by just 2 value-add acquisitions, pricing also should remain stable in H2 2019. A favorable
bps. Class A, B and C rates also were stable. More than half of the Class A Tier I and II outlook for suburban office market fundamentals and interest rates support these views.
markets surveyed had sub-7% cap rates.
The expected return on cost for suburban value-add acquisitions rose slightly by 2 bps FIGURE 7: U.S. office SUBURBAN - class a cap rateS, h1 2019 - Tier I
& II Metros
in H1 2019. The bulk of the increase was attributable to Tier I markets, whose returns
on cost rose 5 bps to 9.37% in H1 2019. The Tier II and Tier III averages of 9.58% and S. FL: Miami1
9.83% were nearly unchanged. Returns on cost for Class A, B and C properties held S. CA: Orange County
S. CA: Los Angeles
steady in H1 2019, except in Tier I markets, where returns on costs fell in all classes. Seattle
San Diego
Suburban stabilized cap rates should remain stable in H2 2019, according to 88% N. CA: Oakland
N. CA: San Jose
of survey respondents. Only 7% expect further tightening (1 to 24 bps). For suburban
Phoenix
N. CA: San Francisco
FIGURE 6: U.S. office SUBURBAN - cap rates for stabilized properties Charlotte
Austin
Metro tier class h1 2019 (%) H2 2018 (%) change (BPS) Atlanta
all 7.91 7.92 -1 Houston

Portland
aa 6.34 6.36 -2
Washington, D.C.
All A 7.11 7.11 0
Tier II Average
B 8.31 8.33 -2 Tier I Average
C 9.75 9.75 0 Raleigh-Durham
AA 6.07 6.09 -2 Denver
All Markets Average
A 6.92 6.83 8
I Minneapolis/St. Paul
B 8.15 8.10 5
NY: N. New Jersey
C 9.56 9.50 6 Boston
AA 6.36 6.39 -3 Dallas/Ft. Worth
A 6.89 6.95 -7 Philadelphia
II Tier iII Average
B 8.24 8.35 -12
Chicago
C 9.73 9.78 -5
AA 7.03 6.97 6 5% 6% 7% 8% 9%
A 7.79 7.82 -3 Tier I Tier II Tier III All Markets
III
B 8.68 8.68 0
C 10.08 10.08 0
1
Covers the three-county Miami area.
Source: CBRE Research, Q2 2019. Data for stabilized acquisitions. Notes: data is subject to historical revisions. Markets represent
Source: CBRE Research, Q2 2019. Notes: Some numbers may not total due to rounding. Data is subject to historical revisions. Note that MSAs retain the same tier designation as the CSA to which they belong. See tier methodology for further explanation.


F I G U R E 8 : U . S . o f f ice suburban - historical cap rates F I G U R E 1 0 : U. S. o f f ice C B D R ate tren d s - si x month outloo K
b y class
# Responses Stabilized Value-Add
%
160
10
140
9 120
100
8
80
7 60
40
6
H1 2013 H1 2014 H1 2015 H1 2016 H1 2017 H1 2018 H1 2019 20
Class A Class B Class C 0

-3: Decrease -2: Decrease -1: Decrease No Change 1: Increase 2: Increase 3: Increase
Source: CBRE Research, Q2 2019. Data for stabilized acquisitions. Note: data is subject to historical revisions. (50+ bps) (25-49 bps) (1-24 bps) (1-24 bps) (25-49 bps) (50+ bps)
Source: CBRE Research, Q2 2019.
F I G U R E 1 1 : U. S. o f f ice suburban Rate trends - si x month outloo K

FIGURE 9: U. S. office suburban - historical class A cap rates
by Tier # Responses Stabilized Value-Add
160
%
8.5 140
120
7.5 100
80
6.5 60
40
5.5 20
H1 2013 H1 2014 H1 2015 H1 2016 H1 2017 H1 2018 H1 2019 0

Tier I Tier II Tier III (50+ bps) (25-49 bps) (1-24 bps) (1-24 bps) (25-49 bps) (50+ bps)
Source: CBRE Research, Q2 2019. Data for stabilized acquisitions. Note: data is subject to historical revisions. Source: CBRE Research, Q2 2019.

U.s. OFFICE CBD | F I G UR E 1 2 : Ke y rates
Class AA Class A Class B Class C

expected expected expected
cap rates cap rates Return on Cost cap rates Return on Cost cap rates Return on Cost
for Stabilized for Stabilized for Value-Add for Stabilized for Value-Add for Stabilized for Value-Add
properties (%) CHANGE1 properties (%) CHANGE1 properties (%) CHANGE1 properties (%) CHANGE1 properties (%) CHANGE1 properties (%) CHANGE1 properties (%) CHANGE1
Boston 4.25 - 5.00 q 4.50 - 5.25 q 6.00 - 6.75 q 4.75 - 5.75 tu 7.00 - 8.00 q — —
Chicago 4.75 - 5.50 tu 5.50 - 6.50 tu 7.25 - 7.75 tu 6.50 - 7.50 tu 8.00 - 9.00 tu 7.75 - 8.75 tu 8.50 - 10.50 tu
N. CA: Oakland 4.50 - 5.75 tu 4.50 - 5.75 tu 6.25 - 7.25 tu 6.00 - 7.00 tu 8.00 - 9.00 tu 8.00 - 9.00 tu 9.00 - 10.00 tu
N. CA: San Francisco 4.00 - 4.50 tu 4.50 - 5.00 tu 6.00 - 6.50 tu 5.00 - 6.00 tu 6.50 - 7.00 tu 6.00 - 6.50 tu 7.00 - 8.50 tu
N. CA: San Jose 4.50 - 5.25 tu 6.00 - 7.00 tu 7.00 - 8.00 tu 6.25 - 7.25 tu 7.75 - 8.75 tu 7.50 - 8.50 tu 8.75 - 9.75 tu
TIER I
NY: Fairfield County, CT — 6.75 - 7.50 q 8.75 - 9.25 tu 8.00 - 8.50 tu 9.75 - 10.25 tu 9.25 - 9.75 tu 10.75 - 11.25 tu
NY: New York City 4.50 - 4.75 tu 4.75 - 5.00 tu 6.25 - 6.50 tu 5.00 - 5.25 tu 6.00 - 6.50 tu — —
S. CA: Los Angeles 3.50 - 4.50 tu 4.50 - 5.50 tu 5.00 - 6.00 tu 5.50 - 6.50 tu 6.50 - 7.50 tu 6.50 - 7.50 tu 7.50 - 8.50 tu
S. CA: Orange County 3.50 - 4.50 tu 4.50 - 5.50 tu 6.00 - 7.00 tu 5.50 - 6.50 tu 7.00 - 8.00 tu 7.00 - 7.50 tu 8.00 - 9.00 tu
Seattle 4.25 - 4.75 tu 4.75 - 5.25 tu 6.00 - 7.25 tu 5.50 - 6.50 tu 6.75 - 7.75 tu 6.75 - 8.50 tu 7.75 - 9.25 tu
Washington, D.C. 4.50 - 4.75 p 5.00 - 5.50 tu 6.25 - 7.25 p 5.00 - 5.75 tu 7.00 - 8.00 tu 6.25 - 7.25 tu 7.50 - 8.75 tu

Atlanta 5.25 - 6.00 tu 5.75 - 6.75 tu 6.50 - 7.25 tu 7.25 - 8.25 tu 7.50 - 8.50 tu 8.50 - 9.75 tu 8.75 - 10.75 tu
Austin 5.00 - 5.50 tu 5.50 - 6.00 tu 7.50 - 8.50 tu 6.25 - 7.25 tu 8.25 - 9.25 tu 7.25 - 7.75 tu 9.75 - 10.25 tu
Charlotte 5.50 - 6.25 tu 6.25 - 7.00 tu 8.00 - 8.75 tu 6.75 - 8.00 tu 8.75 - 9.25 tu 8.25 - 9.00 tu 10.00 - 11.00 tu
Dallas/Ft. Worth 5.50 - 6.50 q 6.50 - 7.50 tu 8.50 - 10.25 tu 8.50 - 10.25 tu 9.75 - 11.25 tu 9.75 - 12.25 tu 11.00 - 14.25 tu
Denver 4.75 - 5.25 tu 5.25 - 5.75 tu 6.00 - 7.00 q 6.25 - 7.25 tu 6.75 - 7.75 tu 7.50 - 9.50 tu 8.00 - 9.50 tu
Houston 5.50 - 6.00 q 6.25 - 6.75 q 8.00 - 9.00 tu 7.50 - 8.00 tu 9.00 - 10.00 tu 9.00 - 9.50 tu 11.25 - 12.00 tu
TIER II
Minneapolis/St. Paul 5.00 - 5.50 tu 5.75 - 6.75 tu 7.50 - 8.50 p 7.75 - 8.50 tu 9.25 - 10.00 tu 9.00 - 10.00 tu 11.00 - 12.00 tu
Philadelphia 6.00 - 6.25 tu 6.25 - 6.75 q 8.00 - 9.00 tu 7.00 - 7.50 q 8.50 - 9.50 tu 7.50 - 8.00 tu 9.00 - 10.00 tu
Phoenix 5.25 - 6.25 tu 5.75 - 6.75 tu 7.50 - 8.25 tu 6.75 - 7.50 tu 8.50 - 9.00 tu 9.00 - 10.00 tu 12.00 - 13.00 tu
Portland 4.75 - 5.25 tu 5.00 - 6.00 tu 6.00 - 7.00 tu 6.00 - 7.00 tu 7.00 - 8.00 tu 7.00 - 8.00 tu 8.00 - 10.00 tu
Raleigh-Durham 5.50 - 6.00 tu 6.00 - 6.50 tu 7.00 - 8.00 tu 6.50 - 7.00 tu 7.50 - 8.00 tu 7.00 - 8.00 tu 8.75 - 10.00 tu
S. FL: Miami 2 — 5.00 - 6.50 tu 6.00 - 7.50 tu 6.00 - 7.00 tu 7.00 - 8.00 tu 7.25 - 8.25 tu 8.25 - 9.25 tu
San Diego 5.50 - 6.00 tu 5.75 - 6.25 tu 6.25 - 7.25 tu 6.50 - 7.50 tu 7.50 - 8.50 tu 7.25 - 7.75 tu 8.25 - 9.25 tu
p INCREASE q Decrease tu STABLE — N/A
1
Compared with H2 2018. Changes less than 15 bps considered stable. 2Covers the three-county Miami area. Source: CBRE Research, Q2 2019. Notes: Data is subject to historical revision. Markets represented by metropolitan areas. For larger metros, tier designation is based
on the U.S. Census Bureau’s combined statistical area (CSA) definitions. Note that MSAs retain same tier designation as the CSA to which they belong.

U.s. OFFICE CBD | F IG URE 1 2 : Ke y rates cont.

Albuquerque 8.50 - 9.00 tu 8.25 - 9.00 q 9.25 - 10.00 tu 8.75 - 9.75 tu 10.25 - 12.25 tu 10.00 - 12.00 tu 11.25 - 13.50 tu
Baltimore 6.75 - 7.25 tu 7.50 - 8.50 tu 8.50 - 9.25 tu 8.25 - 9.50 tu 8.75 - 10.00 tu 9.75 - 10.50 tu 9.50 - 10.25 tu
Cincinnati — 7.00 - 8.50 q 8.00 - 9.00 tu 8.00 - 9.00 tu 9.00 - 9.50 tu 9.00 - 10.00 tu 9.50 - 10.50 tu
Cleveland 7.75 - 8.25 tu 8.00 - 8.75 tu 8.75 - 9.75 tu 8.50 - 9.50 tu 9.75 - 10.75 tu 9.75 - 11.75 tu 10.75 - 12.75 tu
Columbus — 7.50 - 8.50 tu 8.25 - 9.75 tu 8.50 - 9.50 tu 9.75 - 10.75 tu 10.00 - 11.50 tu 11.00 - 12.00 tu
Detroit — 8.50 - 9.25 q 9.00 - 9.75 tu 9.00 - 10.00 tu 9.25 - 10.25 tu 11.50 - 12.50 tu 11.75 - 12.75 q
Indianapolis — 7.50 - 8.50 tu 8.50 - 9.25 tu 8.25 - 9.00 tu 9.25 - 10.25 tu 9.50 - 11.00 tu 10.00 - 11.00 tu
Jacksonville — 7.50 - 8.50 q 8.50 - 9.50 q 8.50 - 9.50 tu 10.50 - 11.00 tu 10.00 - 11.00 tu 10.50 - 13.00 tu
Kansas City — 7.25 - 7.75 tu 8.50 - 9.00 tu 8.75 - 9.75 tu 9.75 - 10.75 tu 10.50 - 11.50 tu 11.00 - 12.00 tu
TIER III
Las Vegas 7.00 - 7.50 tu 7.00 - 7.50 tu 7.75 - 8.75 tu 7.25 - 8.25 tu 9.00 - 10.00 tu 9.00 - 11.00 tu 10.00 - 12.00 tu
Memphis — 8.50 - 9.00 tu 9.50 - 10.50 tu 9.00 - 10.00 tu 10.50 - 11.50 tu 11.00 - 13.00 tu 10.00 - 14.00 tu
Nashville 6.00 - 6.50 tu 6.25 - 6.75 tu 8.00 - 9.00 tu 7.00 - 8.00 tu 8.50 - 9.00 tu 8.25 - 8.75 tu 9.00 - 10.00 tu
Oklahoma City — 7.25 - 8.00 tu 8.25 - 9.25 tu 7.75 - 10.00 tu 8.25 - 9.50 tu 9.00 - 10.00 tu 9.75 - 11.00 tu
Orlando 6.50 - 6.75 tu 6.50 - 6.75 tu 6.50 - 7.00 tu 7.00 - 7.50 tu 7.25 - 7.75 q 8.00 - 8.50 tu 8.50 - 9.00 tu
Pittsburgh 6.50 - 7.00 tu 6.75 - 7.25 tu 8.25 - 9.25 tu 8.00 - 8.50 tu 9.75 - 11.75 tu 10.00 - 12.00 tu 12.00 - 14.00 tu
Sacramento 5.75 - 6.75 tu 6.00 - 7.00 tu 7.00 - 8.00 p 6.75 - 7.50 tu 7.75 - 8.50 tu 7.50 - 8.50 tu 8.50 - 9.50 tu
Salt Lake City 5.50 - 6.00 tu 6.00 - 6.50 tu 6.00 - 6.75 q 6.50 - 7.00 tu 6.75 - 7.25 tu 7.25 - 8.25 q 7.50 - 8.50 tu
San Antonio 6.25 - 6.75 tu 6.50 - 7.50 tu 8.00 - 9.00 tu 8.00 - 9.00 tu 9.00 - 11.00 tu 9.00 - 11.00 tu 9.50 - 12.00 tu
St. Louis — 9.25 - 9.75 tu 9.75 - 10.25 tu 9.75 - 10.00 tu 10.00 - 10.50 tu 10.50 - 11.50 tu 11.25 - 12.00 tu
Tampa — 6.50 - 7.00 tu 7.00 - 8.00 tu 7.25 - 8.00 tu 7.75 - 9.00 tu 8.25 - 8.75 tu 8.75 - 9.75 tu
1
Compared with H2 2018. Changes less than 15 bps considered stable.
Notes: Data is subject to historical revision. Markets represented by metropolitan areas. For larger metros, tier designation is based on the U.S. Census Bureau’s combined statistical area (CSA) definitions. Note that MSAs retain same tier designation as the CSA to which they belong.

U.s. OFFICE CBD | FIGURE 1 3 : forecast trend s - six month outlook

expected expected expected Increase
properties properties properties properties properties properties properties Decrease
Boston — —
stable
Chicago
N. CA: Oakland — N/A

Forecasts represent the opinions of CBRE
N. CA: San Jose professionals of where rates are likely to
T IER I
trend in H2 2019.
NY: Fairfield County, CT — Source: CBRE Research, Q2 2019.
Notes: Data is subject to historical
NY: New York City — — revision. Markets represented by
metropolitan areas. For larger metros,
S. CA: Los Angeles tier designation is based on the U.S.
Census Bureau’s combined statistical
S. CA: Orange County area (CSA) definitions. Note that MSAs
retain same tier designation as the CSA
Seattle to which they belong.
Washington, D.C.

properties properties properties properties properties properties properties
Atlanta
Austin
Charlotte
Dallas/Ft. Worth
Denver
Houston
T IE R II
Minneapolis/St. Paul
Philadelphia
Phoenix
Portland
Raleigh-Durham
S. FL: Miami 2 —
San Diego

U.s. OFFICE CBD | FIGURE 13: forecast trend s - six month outlook C O N T.

Albuquerque
Baltimore
Cincinnati —
Cleveland
Columbus —
Detroit —
Indianapolis —
Jacksonville —
Kansas City —
T IE R III
Las Vegas
Memphis —
Nashville
Oklahoma City —
Orlando
Pittsburgh
Sacramento
Salt Lake City
San Antonio
St. Louis —
Tampa —
Increase Decrease STABLE — N/A
Forecasts represent the opinions of CBRE professionals of where rates are likely to trend in H2 2019.

U.s. OFFICE SUBURBAN | F IG URE 1 4 : Ke y rates

Boston 6.75 - 7.25 tu 6.75 - 7.75 p 7.50 - 8.50 tu 8.50 - 9.50 tu 10.00 - 11.00 tu — —
Chicago 6.75 - 7.25 q 7.50 - 8.75 q 9.00 - 10.75 q 8.75 - 10.50 tu 10.75 - 12.75 tu 11.00 - 13.25 tu 12.25 - 14.00 tu
N. CA: Oakland 5.50 - 6.50 tu 6.00 - 6.50 tu 7.00 - 8.00 tu 6.00 - 7.00 tu 8.00 - 9.00 tu 8.00 - 9.00 tu 9.00 - 10.00 tu
N. CA: San Francisco 5.25 - 6.25 tu 6.00 - 7.00 tu 7.00 - 8.00 tu 6.50 - 7.75 tu 7.75 - 8.75 tu 8.00 - 9.00 tu 9.50 - 10.50 tu
N. CA: San Jose 5.25 - 6.50 tu 6.00 - 6.75 tu 7.00 - 7.75 tu 6.50 - 7.75 tu 7.75 - 9.00 tu 8.00 - 9.00 tu 9.50 - 10.50 tu
TIER I
NY: Fairfield County, CT — 8.25 - 8.75 tu 10.25 - 10.75 tu 9.00 - 9.50 tu 11.25 - 11.75 tu 10.00 - 10.50 tu 12.75 - 13.25 tu
NY: N. New Jersey 6.00 - 6.50 tu 7.00 - 7.50 tu 7.75 - 8.25 tu 8.25 - 8.75 tu 9.25 - 9.75 tu 9.50 - 10.00 tu 10.50 - 11.00 tu
S. CA: Los Angeles 4.75 - 6.25 tu 5.25 - 6.75 tu 6.25 - 7.75 tu 6.75 - 8.25 tu 7.25 - 8.75 tu 7.25 - 8.75 tu 8.25 - 9.75 tu
S. CA: Orange County 5.00 - 5.50 tu 5.50 - 6.50 tu 6.50 - 7.50 tu 6.75 - 7.75 tu 7.75 - 8.75 tu 7.75 - 8.75 tu 8.75 - 9.75 tu
Seattle 5.25 - 5.75 tu 6.00 - 6.50 tu 6.50 - 7.50 tu 7.00 - 7.50 tu 7.50 - 8.50 tu 7.50 - 8.25 tu 8.00 - 9.00 tu
Washington, D.C. 5.25 - 6.00 tu 6.50 - 7.25 p 7.75 - 9.00 p 7.50 - 8.50 p 9.00 - 10.25 p 9.50 - 10.50 p 10.25 - 11.50 p
1
2

U.s. OFFICE SUBURBAN | F IG URE 1 4 : Ke y rates cont.

Atlanta 5.75 - 6.75 tu 6.25 - 7.25 tu 7.00 - 8.00 tu 7.25 - 8.50 tu 8.00 - 9.00 tu 8.50 - 10.25 tu 9.25 - 11.75 tu
Austin 6.00 - 7.00 tu 6.25 - 7.00 tu 7.50 - 8.25 tu 7.50 - 8.50 tu 8.50 - 9.75 tu 8.25 - 9.50 tu 9.75 - 10.75 tu
Charlotte 6.00 - 6.75 tu 6.25 - 7.00 tu 8.50 - 9.00 tu 7.50 - 8.75 tu 9.00 - 10.00 tu 8.50 - 9.75 tu 10.00 - 11.00 tu
Dallas/Ft. Worth 6.25 - 7.75 tu 7.00 - 7.75 tu 7.25 - 8.75 tu 8.25 - 10.25 tu 9.75 - 10.25 tu 10.25 - 13.25 tu 10.25 - 15.25 tu
Denver 5.75 - 6.25 tu 6.75 - 7.25 q 7.25 - 8.25 q 7.50 - 8.25 q 8.00 - 9.25 tu 8.75 - 9.75 tu 9.50 - 10.75 tu
Houston 5.75 - 6.25 q 6.50 - 7.00 q 8.00 - 9.00 tu 7.75 - 8.50 tu 9.00 - 10.00 tu 9.00 - 10.00 tu 11.00 - 12.00 tu
TIER II
Minneapolis/St. Paul — 6.75 - 7.75 p 9.00 - 10.00 p 8.25 - 9.25 p 10.00 - 11.00 p 10.00 - 11.00 tu 12.00 - 13.00 tu
Philadelphia 6.50 - 7.00 tu 7.50 - 8.00 q 9.00 - 10.00 tu 8.50 - 9.50 q 11.00 - 12.50 tu 10.00 - 11.00 q 11.50 - 13.00 tu
Phoenix 5.50 - 6.25 tu 6.00 - 7.00 tu 7.50 - 8.25 tu 7.25 - 8.25 tu 8.50 - 9.00 tu 9.00 - 10.00 tu 12.00 - 13.00 tu
Portland 6.00 - 6.50 tu 6.25 - 7.50 tu 8.00 - 9.00 tu 7.00 - 8.25 tu 8.00 - 9.50 tu 7.75 - 8.75 tu 9.50 - 10.50 tu
Raleigh-Durham 6.25 - 6.75 tu 6.75 - 7.25 tu 8.00 - 8.50 tu 7.00 - 8.00 q 8.50 - 9.00 tu 8.00 - 9.50 tu 9.50 - 10.00 tu
S. FL: Miami 2 — 5.50 - 6.25 tu 6.50 - 7.25 tu 7.50 - 8.50 tu 8.50 - 9.50 tu 8.50 - 9.50 tu 9.50 - 10.50 tu
San Diego 5.50 - 6.25 tu 6.00 - 6.50 tu 6.75 - 7.75 tu 7.00 - 7.50 tu 7.75 - 8.25 tu 7.50 - 8.25 tu 8.50 - 9.25 tu
1
2

U.s. OFFICE SUBURBAN | F IG URE 1 4 : Ke y rates cont.

Albuquerque 8.00 - 8.75 tu 8.25 - 9.00 tu 9.75 - 10.50 tu 9.00 - 9.75 tu 10.25 - 11.75 tu 10.25 - 12.00 tu 11.50 - 13.50 tu
Baltimore 6.75 - 7.50 tu 7.50 - 8.50 tu 8.50 - 9.25 tu 8.25 - 9.50 tu 8.75 - 10.00 tu 9.75 - 10.50 tu 9.50 - 10.25 tu
Cincinnati — 7.75 - 8.75 p 9.00 - 9.75 tu 8.25 - 9.25 tu 9.25 - 10.25 tu 9.00 - 10.00 tu 11.00 - 12.00 tu
Cleveland — 8.00 - 9.00 tu 9.00 - 9.50 tu 8.50 - 9.50 tu 10.00 - 11.00 tu 9.50 - 11.50 tu 11.50 - 12.50 tu
Columbus — 6.50 - 8.50 q 8.00 - 9.25 tu 8.50 - 10.00 tu 9.25 - 10.50 tu 10.00 - 12.00 tu 10.50 - 13.50 tu
Detroit — 8.25 - 9.50 tu 8.50 - 9.50 tu 9.00 - 10.00 tu 9.25 - 10.00 tu 10.00 - 12.00 tu 11.00 - 12.00 tu
Indianapolis — 8.00 - 9.00 tu 9.50 - 10.50 tu 9.00 - 10.00 tu 10.00 - 12.00 tu 10.00 - 11.00 tu 12.00 - 14.00 tu
Jacksonville — 7.00 - 8.00 q 9.50 - 10.00 tu 7.75 - 9.00 tu 9.50 - 10.50 tu 9.50 - 11.00 tu 11.00 - 13.00 tu
Kansas City 6.25 - 7.00 tu 7.25 - 7.50 tu 7.75 - 8.25 tu 8.50 - 9.00 tu 9.25 - 9.75 tu 9.25 - 10.25 tu 10.25 - 12.00 tu
TIER III
Las Vegas 7.00 - 7.50 tu 7.00 - 7.50 tu 7.75 - 8.75 tu 7.25 - 8.25 tu 9.00 - 10.00 tu 9.00 - 11.00 tu 10.00 - 12.00 tu
Memphis 7.00 - 7.50 tu 7.25 - 7.75 tu 8.50 - 9.00 tu 8.50 - 9.00 tu 10.25 - 10.75 tu 10.00 - 11.00 tu 11.50 - 13.00 tu
Nashville 6.00 - 6.75 tu 6.25 - 7.00 tu 8.25 - 9.00 tu 7.00 - 8.25 tu 8.50 - 9.25 tu 8.50 - 9.25 tu 9.50 - 10.50 tu
Oklahoma City — 7.25 - 8.75 p 8.25 - 9.75 p 7.50 - 9.00 tu 8.00 - 9.50 tu 9.00 - 10.00 tu 9.75 - 11.00 tu
Orlando 6.75 - 7.25 tu 7.25 - 7.50 tu 7.50 - 8.00 tu 8.00 - 8.50 tu 8.50 - 9.00 tu 8.50 - 9.00 tu 9.00 - 9.50 tu
Pittsburgh 7.00 - 8.00 tu 7.75 - 8.50 tu 9.25 - 10.25 tu 8.50 - 9.50 tu 10.00 - 12.00 tu 11.00 - 13.00 tu 11.00 - 13.00 tu
Sacramento 6.00 - 7.00 tu 6.50 - 7.25 tu 7.50 - 8.25 tu 7.25 - 7.75 q 8.25 - 8.75 q 7.75 - 8.75 q 9.25 - 9.75 q
Salt Lake City 6.25 - 6.75 tu 6.75 - 7.00 tu 7.00 - 7.50 tu 7.25 - 8.00 tu 7.50 - 8.50 tu 8.00 - 8.75 tu 8.50 - 9.00 tu
San Antonio 6.50 - 7.00 tu 6.75 - 7.75 tu 8.00 - 9.00 tu 8.00 - 9.50 tu 9.50 - 11.00 tu 9.00 - 11.00 tu 9.75 - 11.00 tu
St. Louis 7.50 - 8.00 tu 7.75 - 8.25 tu 9.00 - 9.50 tu 8.75 - 9.50 p 9.50 - 10.50 tu 9.50 - 10.50 tu 10.50 - 12.00 tu
Tampa 6.50 - 7.00 tu 7.25 - 7.75 tu 8.00 - 8.75 tu 8.25 - 9.00 tu 8.75 - 9.50 tu 9.00 - 10.00 tu 9.50 - 10.25 tu
1

U.s. OFFICE suburban | F IG URE 1 5 : forecast trend s - six month outlook

expected expected expected Increase
properties properties properties properties properties properties properties Decrease
Boston — —
stable
Chicago
— N/A
N. CA: Oakland

Forecasts represent the opinions of CBRE
N. CA: San Jose professionals of where rates are likely to
T IER I
trend in H2 2019.
NY: Fairfield County, CT — Source: CBRE Research, Q2 2019.
NY: N. New Jersey revision. Markets represented by
S. CA: Los Angeles tier designation is based on the U.S.
S. CA: Orange County area (CSA) definitions. Note that MSAs
retain same tier designation as the CSA
Seattle to which they belong.
Washington, D.C.

Atlanta
Austin
Charlotte
Dallas/Ft. Worth
Denver
Houston
T IE R II
Minneapolis/St. Paul —
Philadelphia
Phoenix
Portland
Raleigh-Durham
S. FL: Miami 2 —
San Diego

U.s. OFFICE suburban | F IG URE 1 5 : forecast trend s - six month outlook cont.

Albuquerque
Baltimore
Cincinnati —
Cleveland —
Columbus —
Detroit —
Indianapolis —
Jacksonville —
Kansas City
T IE R III
Las Vegas
Memphis
Nashville
Oklahoma City —
Orlando
Pittsburgh
Sacramento
Salt Lake City
San Antonio
St. Louis
Tampa

U.S. industrial | Overview
The growth of e-commerce, a historically low unemployment rate and strong consumer F I G U R E 1 6 : U. S. I n d ustrial - cap rates f or stabilized properties
sentiment are driving investor demand for industrial assets. Consequently, there was Metro tier class h1 2019 (%) h2 2018 (%) change (BPS)
continued cap rate compression in H1 2019, albeit at a slower pace than previously. ALL 6.27 6.31 -5
The average stabilized industrial cap rate for all classes and market tiers was 6.27% in a 5.00 5.05 -5
All
H1 2019, the lowest rate since CBRE began conducting the survey in 2009. B 5.86 5.93 -7
C 7.99 8.01 -2
Although cap rate decreases by class were somewhat modest on average, they A 4.45 4.47 -2
confirm investor preferences and purchasing activity for Class B assets in Tier II and I B 5.34 5.35 -1
Tier III markets, where the largest cap rate compression occurred (by 12 bps and C 7.57 7.57 -1
A 5.21 5.28 -7
14 bps, respectively). The average Class A cap rate dropped by 5 bps to 5.00%,
II B 6.05 6.17 -12
Class B ticked down by 7 bps to 5.86% and Class C declined by a marginal 2 bps
C 8.10 8.18 -8
to 7.99%. A 5.97 6.07 -10
III B 6.80 6.94 -14
The spread between stabilized Class A and Class B cap rates was 86 bps in H1 2019,
C 8.80 8.80 0
narrowing at a steady pace since H1 2016. The spread between Tier I and Tier II cap
rates for all classes fell to 60 bps in H1, the lowest level in 10 years. Investor interest Notes: Some numbers may not total due to rounding. Data is subject to historical revisions.
has been sustained by strong market fundamentals in most Tier II markets.

The gradual decline of stabilized industrial cap rates resumed for all classes in H1.
Of the 54 industrial markets surveyed, more than one-third have cap rates at or
The spread between the classes has also changed minimally since CBRE began
below 5.00% for stabilized Class A properties. As in previous surveys, Northern New
conducting its semiannual survey in 2009. The spread between average Class A and
Jersey had the nation’s lowest average cap rate for stabilized Class A assets—stable
Class C cap rates increased by 3 bps in H1 to 299 bps.
at 3.88%. The survey also found sub-4.50% cap rates for Class A assets in other
coastal, gateway markets, including Inland Empire, Los Angeles, Oakland, Orange Class A vs. Class B cap rates has a narrower spread of 86 bps, declining just 2 bps
County, San Francisco, San Jose and Seattle. in H1. This divergence of classes reflects continued demand for high-quality assets,
along with the growing strength of Class B assets, driven by strong user demand,
Expected overall returns on cost for value-add industrial acquisitions remained stable
stable supply, low vacancies and growing rents in most industrial hubs.
with just a 6 bps decrease to 7.35%. For Class A value-add acquisitions, the average
expected return on cost also fell 6 bps to 5.95%, while that for Class B fell 9 bps to Historically, cap rate averages by metro tier reveal a clear, sustained pricing premium
6.95%. Class C ticked down by a marginal 2 bps to 9.20%. The overall decline in for Class A assets in Tier I markets, which have been priced at an average of 75
value-add rates indicates a continued interest in properties with a higher risk profile, bps under Tier II and 151 bps under Tier III. The H1 2019 survey revealed further
largely driven by the intense competition for stabilized properties. compression of these spreads.

U.S. industrial | Overview cont.
Industrial cap rate spreads over the 10-year U.S. Treasury rate increased by 64 bps to F I G U R E 1 7 : U. S . I N D U S T R I A L - class a cap rate S , h 1 2 0 1 9 -
tier I & I I metros
reach 427 bps in H1, as the benchmark interest rate dropped. For Class A stabilized
acquisitions, the spread averaged approximately 300 bps in H1 2019, compared
NY: N. New Jersey
with 236 in H2 2018. The spread for value-add acquisitions also increased to 535
Seattle
bps—up 63 bps from H2 2018. For Class A, value-add expected returns on cost, the N. CA: San Jose
spread averaged 395 bps in H1 2019, compared with 332 bps in H2 2018. N. CA: San Francisco
S. CA: Orange County
N. CA: Oakland
Most survey respondents (95%) expect no change in cap rates for either stabilized or
S. CA: Los Angeles
value-add properties in H2 2019, with the remaining 5% expecting a small (less than S. CA: Inland Empire
25 bps) decrease. Although cap rates should remain stable, the underlying market Tier I Average
S. FL: Miami1
fundamentals—strong tenant demand, tight market conditions and rent growth—
Washington, D.C.
likely will keep industrial asset pricing competitive. Denver
Baltimore
San Diego
Portland
Houston
Dallas/Ft. Worth
Chicago
Atlanta
Philadelphia
PA 1-78 /81 Corridor
All Markets Average
Orlando
Las Vegas
Tier Ii Average
Boston
Indianapolis
Columbus
Louisville
Phoenix
Austin
Savannah
SE Wisconsin
Tier iiI Average
Memphis
1
Source: CBRE Research, Q2 2019. Data for stabilized acquisitions. Notes: data is subject to historical revisions. Markets represent metropolitan 3% 4% 5% 6%
areas. For larger metros, tier designation is based on the U.S. Census Bureau’s combined statistical area (CSA) definitions. Note that MSAs retain
the same tier designation as the CSA to which they belong. See tier methodology for further explanation. Tier I Tier II Tier III All Markets

U.S. industrial | Overview cont.
FIGURE 18: u. S. ind ustrial - historical cap rates b y class F I G U R E 2 0 : U. S. ind ustrial Rate trends - si x month outloo K
%
9
160
8
140
7
120
6
100
5
80
4
H1 2013 H1 2014 H1 2015 H1 2016 H1 2017 H1 2018 H1 2019 60

40
Source: CBRE Research, Q2 2019. Data for stabilized acquisitions. Note: data is subject to historical revisions.
20
FIGURE 19: U. S. ind ustrial - historical class a cap rates b y tier 0

(50+ bps) (25-49 bps) (1-24 bps) (1-24 bps) (25-49 bps) (50+ bps)
%
8 Source: CBRE Research, Q2 2019.
4
H1 2013 H1 2014 H1 2015 H1 2016 H1 2017 H1 2018 H1 2019
Tier I Tier II Tier III

U.S. industrial | F I G UR E 2 1 : key rates

cap rates Return on Cost cap rates Return on Cost cap rates Return on Cost
for Stabilized for Value-Add for Stabilized for Value-Add for Stabilized for Value-Add
properties (%) CHANGE1 properties (%) CHANGE1 properties (%) CHANGE1 properties (%) CHANGE1 properties (%) CHANGE1 properties (%) CHANGE1
Atlanta 4.50 - 5.00 tu 5.25 - 6.25 tu 5.50 - 6.00 tu 6.50 - 7.50 tu 8.00 - 9.00 tu 10.00 - 11.00 tu
Chicago 4.50 - 5.00 tu 6.00 - 6.50 tu 5.75 - 6.00 tu 7.00 - 8.00 tu 8.25 - 10.00 tu 9.00 - 12.00 tu
Dalllas/Ft. Worth 4.50 - 5.00 tu 5.00 - 5.75 tu 5.50 - 6.25 tu 6.00 - 6.75 tu 7.00 - 8.25 tu 8.00 - 11.00 tu
Houston 4.50 - 5.00 tu 5.00 - 5.75 q 5.50 - 6.25 tu 6.00 - 6.75 tu 7.75 - 8.75 tu 8.75 - 9.25 tu
N. CA: Oakland 3.75 - 4.25 tu 4.50 - 5.00 tu 4.50 - 5.00 tu 5.00 - 6.00 tu 6.00 - 7.25 tu 6.50 - 7.50 tu
N. CA: San Francisco 3.75 - 4.25 tu 4.50 - 5.00 tu 4.50 - 5.00 tu 5.00 - 6.00 tu 6.00 - 7.25 tu 6.50 - 7.50 tu
N. CA: San Jose 3.75 - 4.25 tu 4.50 - 5.00 tu 4.50 - 5.00 tu 5.00 - 6.00 tu 6.00 - 7.25 tu 6.50 - 7.50 tu
NY: Fairfield County, CT 5.75 - 6.25 q 8.00 - 8.50 tu 7.00 - 7.75 tu 9.00 - 9.50 tu 8.50 - 9.00 tu 9.75 - 10.50 tu
T IE R I
NY: N. New Jersey 3.75 - 4.00 tu 4.00 - 4.75 tu 4.25 - 5.00 tu 5.50 - 6.50 tu 7.00 - 8.00 tu 8.50 - 9.50 tu
PA I-87/81 Corridor 4.75 - 5.00 tu 5.50 - 6.00 tu 5.50 - 6.25 tu 6.25 - 6.75 tu 7.00 - 7.75 tu 8.25 - 9.75 tu
Phoenix 5.25 - 5.75 tu 5.75 - 6.25 tu 5.50 - 6.25 tu 6.50 - 7.25 q 7.00 - 8.00 tu 8.00 - 10.00 tu
S. CA: Inland Empire 3.75 - 4.25 tu 4.50 - 5.00 tu 4.50 - 5.00 tu 4.50 - 5.25 q 6.00 - 7.25 tu 6.50 - 7.50 tu
S. CA: Los Angeles 3.75 - 4.25 tu 4.50 - 5.00 tu 4.50 - 5.00 tu 4.50 - 5.25 q 6.00 - 7.25 tu 6.50 - 7.50 tu
S. CA: Orange County 3.75 - 4.25 tu 4.50 - 5.00 tu 4.50 - 5.00 tu 4.50 - 5.25 q 6.00 - 7.25 tu 6.50 - 7.50 tu
S. FL: Miami 2 4.25 - 4.75 tu 5.00 - 5.50 tu 5.00 - 5.50 tu 6.00 - 6.50 tu 6.50 - 7.25 tu 7.00 - 7.75 tu
Seattle 3.75 - 4.25 tu 4.50 - 5.00 tu 4.25 - 4.75 tu 5.00 - 6.00 tu 5.50 - 6.25 q 6.25 - 7.25 q
Washington, D.C. 4.50 - 4.75 tu 5.25 - 5.75 q 5.00 - 5.75 tu 6.00 - 6.75 tu 7.00 - 7.75 tu 7.75 - 9.00 tu
1
Compared with H2 2018. Changes less than 15 bps considered stable. 2Covers the three-county Miami area.

U.S. industrial | F I G UR E 2 1 : key rates

Austin 5.25 - 6.00 tu 6.00 - 7.25 tu 6.00 - 7.00 tu 6.25 - 7.75 tu 7.25 - 8.25 tu 8.25 - 9.50 tu
Baltimore 4.50 - 4.75 tu 5.25 - 5.75 q 5.00 - 5.75 tu 6.00 - 6.75 tu 7.50 - 8.00 tu 8.50 - 9.00 tu
Boston 5.00 - 5.50 q 6.50 - 7.00 q 5.75 - 6.50 q 6.50 - 7.25 q — —
Columbus 5.25 - 5.50 tu 6.75 - 7.50 tu 6.25 - 6.50 tu 7.75 - 8.75 tu 8.50 - 9.50 tu 9.00 - 9.50 tu
Denver 4.25 - 5.00 tu 5.00 - 5.50 tu 5.25 - 5.75 tu 6.25 - 6.75 tu 7.00 - 8.00 tu 8.00 - 8.75 tu
Indianapolis 5.25 - 5.50 tu 6.50 - 7.25 tu 6.25 - 6.50 tu 8.00 - 9.00 tu 8.50 - 9.00 tu 9.00 - 11.00 tu
Las Vegas 4.75 - 5.25 tu 5.75 - 6.25 tu 5.25 - 5.75 q 6.50 - 7.50 tu 6.50 - 7.25 tu 7.50 - 8.50 tu
T IE R II
Louisville 5.25 - 5.75 q 6.00 - 6.75 tu 6.00 - 6.50 q 7.25 - 8.00 q 8.00 - 9.00 q 10.00 - 11.00 q
Memphis 5.75 - 6.25 tu 6.25 - 7.00 tu 6.75 - 7.25 tu 7.75 - 8.25 tu 9.00 - 10.00 tu 10.00 - 11.00 tu
Minneapolis/St. Paul 5.50 - 5.75 tu 6.25 - 7.00 tu 6.50 - 6.75 tu 7.50 - 8.00 tu 7.75 - 8.50 tu 9.00 - 10.00 tu
Orlando 4.75 - 5.25 q 5.75 - 6.25 tu 5.75 - 6.25 q 6.75 - 7.75 tu 8.00 - 9.00 tu 10.00 - 11.00 tu
Philadelphia 4.50 - 5.25 tu 5.50 - 6.00 q 5.50 - 6.00 q 6.25 - 7.00 tu 7.25 - 8.00 tu 8.50 - 10.00 tu
Portland 4.50 - 5.00 tu 5.00 - 5.75 q 4.75 - 5.25 tu 6.00 - 6.75 q 6.25 - 7.00 q 7.00 - 8.00 tu
San Diego 4.50 - 5.00 tu 5.50 - 6.50 tu 5.00 - 6.00 tu 6.00 - 7.00 p 6.00 - 7.00 q 6.50 - 7.50 q
Savannah 5.50 - 6.00 tu 6.25 - 6.75 tu 6.25 - 6.75 tu 7.50 - 8.50 tu 9.00 - 11.00 tu 10.00 - 11.00 tu
SE Wisconsin 5.75 - 6.00 tu 7.00 - 7.25 tu 6.50 - 6.75 tu 7.75 - 8.25 tu 8.50 - 10.00 tu 10.00 - 11.50 tu
1

U.S. industrial | F I G UR E 2 1 : key rates cont.

Albuquerque 8.00 - 8.25 tu 8.25 - 8.75 tu 8.50 - 9.00 tu 8.75 - 9.25 tu 9.50 - 10.50 tu 9.75 - 10.75 tu
Charlotte 5.00 - 5.50 q 5.75 - 6.25 tu 5.75 - 6.25 q 6.75 - 7.25 q 8.00 - 9.00 tu 10.00 - 11.00 tu
Cincinnati 5.25 - 5.50 q 6.25 - 6.75 tu 6.00 - 6.25 tu 7.75 - 8.75 tu 8.50 - 9.50 tu 9.75 - 11.25 tu
Cleveland 6.50 - 7.00 tu 7.25 - 7.75 tu 7.00 - 7.25 q 8.75 - 9.75 tu 7.75 - 9.25 tu 9.75 - 11.75 tu
Detroit 6.00 - 6.50 tu 7.50 - 8.50 tu 7.25 - 7.50 q 9.00 - 10.00 tu 9.00 - 10.00 tu 10.50 - 12.00 tu
El Paso 6.50 - 7.25 q 7.50 - 8.50 tu 7.75 - 8.75 tu 9.50 - 10.00 tu 9.50 - 10.00 tu 11.50 - 12.00 tu
Honolulu 5.00 - 6.00 q 5.00 - 6.50 tu 5.00 - 6.25 tu 5.00 - 6.25 tu 4.25 - 5.00 tu 4.25 - 5.00 tu
Jacksonville 5.50 - 6.00 tu 6.00 - 6.75 tu 6.00 - 6.75 tu 7.50 - 8.50 tu 9.25 - 11.75 tu 10.50 - 13.00 tu
Kansas City 6.00 - 6.25 tu 7.25 - 7.75 tu 7.00 - 7.50 tu 8.00 - 9.00 tu 8.25 - 9.00 tu 9.50 - 10.50 tu
T IE R III
Nashville 5.00 - 5.50 q 5.75 - 6.25 tu 5.75 - 6.25 q 7.00 - 7.50 tu 8.00 - 9.00 tu 10.00 - 11.00 tu
Oklahoma City 6.00 - 7.50 tu 6.75 - 7.50 tu 7.50 - 7.75 tu 8.00 - 8.75 tu 9.00 - 9.25 tu 9.50 - 10.50 tu
Pittsburgh 5.25 - 6.00 q 6.75 - 7.25 q 6.50 - 7.00 q 7.50 - 8.00 q 9.50 - 10.50 tu 10.50 - 12.00 tu
Raleigh-Durham 5.75 - 6.50 tu 6.25 - 6.75 tu 6.25 - 6.75 tu 7.00 - 8.00 tu 8.25 - 9.25 tu 10.00 - 11.00 tu
Reno 5.00 - 5.50 tu 6.00 - 6.75 tu 5.50 - 6.00 tu 6.50 - 7.50 tu 6.50 - 7.25 tu 7.50 - 8.50 tu
Richmond 6.00 - 7.00 tu 6.50 - 8.00 tu 6.75 - 8.25 tu 7.50 - 9.00 tu 8.50 - 9.50 tu 9.00 - 12.00 tu
Sacramento 5.25 - 5.75 tu 6.00 - 6.75 tu 5.75 - 6.50 tu 6.75 - 7.75 tu 6.50 - 8.00 tu 7.50 - 8.50 tu
Salt Lake City 5.25 - 5.75 tu 6.00 - 6.50 tu 5.75 - 6.25 tu 6.50 - 7.25 tu 6.50 - 7.50 tu 7.00 - 8.00 tu
San Antonio 5.25 - 6.00 tu 6.00 - 6.75 tu 6.00 - 7.00 tu 7.25 - 8.25 tu 8.50 - 9.50 tu 9.00 - 12.00 tu
St. Louis 6.00 - 6.25 tu 7.25 - 7.75 tu 7.00 - 7.50 tu 8.25 - 9.50 tu 8.50 - 9.50 tu 9.00 - 10.50 tu
Tampa 5.25 - 5.75 q 6.00 - 6.75 tu 6.00 - 6.75 tu 7.50 - 8.50 tu 8.00 - 9.50 tu 10.00 - 11.00 tu
Tulsa 6.50 - 6.75 tu 7.25 - 7.50 tu 8.00 - 8.25 tu 8.50 - 8.75 tu 9.00 - 9.25 tu 9.50 - 9.75 tu
1

U.S. industrial | F IG URE 2 2 : forecast trend s - six month outlook

properties properties properties properties properties properties
Atlanta
Chicago
Dallas / Ft. Worth
Houston
N. CA: Oakland
N. CA: San Jose
NY: Fairfield County, CT
T IE R I
NY: N. New Jersey

PA I-87/81 Corridor
Phoenix
S. CA: Inland Empire
S. CA: Los Angeles
S. FL: Miami2
Seattle
Washington, D.C.

U.S. industrial | F IG URE 2 2 : forecast trend s - six month outlook cont.

Austin
Baltimore
Boston — —
Columbus
Denver
Indianapolis
Las Vegas
T IE R II
Louisville
Memphis
Orlando
Philadelphia
Portland
San Diego
Savannah
SE Wisconsin

U.S. industrial | F IG URE 2 2 : forecast trend s - six month outlook cont .

Albuquerque
Charlotte
Cincinnati
Cleveland
Detroit
El Paso
Honolulu
Jacksonville
Kansas City
Nashville
T IE R III
Oklahoma City
Pittsburgh
Raleigh-Durham
Reno
Richmond
Sacramento
Salt Lake City
San Antonio
San Diego
St. Louis
Tampa
Tulsa
Forecasts represent the opinions of CBRE professionals of where rates are likely to trend in H2 2019. Source: CBRE Research, Q2 2019.

U.S. retail | Overview
NEIGHBORHOOD/COMMUNITY CENTERS F I G U R E 2 3 : U. S. R E TAI L NE I GHB O RHO O D/ CO M M UNI T Y center -

cap rates f or stabili zed properties
Cap rates for stabilized grocery-anchored neighborhood/community center assets were
Metro tier class h1 2019 (%) h2 2018 (%) change (BPS)
unchanged in H1 at 7.48%, confirming firm pricing trends and strong investor interest. ALL 7.48 7.48 0
A 5.95 5.95 0
As in H2 2018, stabilized asset classes in Tier III markets had the highest average cap All
B 7.39 7.39 0
rates at 8.13%. Class A and Class B assets in Tier III markets had the largest increases C 9.19 9.18 1
of 10 bps and 11 bps, respectively. Given higher cap rates, there is a clear yield A 5.54 5.59 -5
advantage for Tier III markets. I B 7.00 7.02 -1
C 8.91 8.93 -1
Rates were stable across asset classes, showing little movement from H2 2018. Cap A 5.90 5.91 -1
rates for Class A and B stabilized assets were unchanged, while those for Class C II B 7.38 7.42 -4
assets increased by only 1 bp. The spread between asset classes also remained stable. C 9.18 9.16 2
A 6.73 6.63 10
Affluent suburban communities continued to support well-maintained shopping centers. III B 8.03 7.93 11
Orange County, Los Angeles, San Jose and San Francisco had the lowest cap rates in C 9.62 9.59 3
H1 2019 at 4.88%. The Tier II market of Baltimore had the highest rate at 6.75%. Source: CBRE Research, Q2 2019.
Notes: Some numbers may not total due to rounding. Data is subject to historical revisions.
Cap rates for value-add neighborhood/community centers averaged 9.45%, up by 15

bps from H2 2018. Class C value-add cap rates in Tier III markets remained the highest
at 10.59%, an increase of 1 bp from H2 2018. Since the first half of 2009, value-add
The Tier 1 average cap rate of 8.02% was unchanged from H2 2018. The Tier II and Tier III
rates have dropped by 205 bps to 9.45% from 11.50%.
averages of 8.47% and 9.05% were up by 13 bps and 1 bp, respectively. Tier II assets remain
Most survey respondents (86%) expect neighborhood/community center cap rates disproportionally affected by recent store closures. Despite a smaller increase, Tier III remains
will remain not change in H2 2019, with investors attracted to the return potential of a clear leader in yield advantage given the higher cap rate.
neighborhood/community centers in secondary and tertiary markets. Another 8% of
Average Class A and Class B cap rates increased marginally by 5 bps each to 7.16% and
respondents expect a slight increase of less than 25 bps.
8.34%, respectively. The largest increase was for Class C assets, up by 8 bps to 9.86%. The
increase for Class C assets is partially attributable to an 18-bp increase in Tier II Class C
POWER CENTERS
cap rates.
Big-box and other retailer closures continued to influence the perceived risk profile and The spread between stabilized Class A and Class B cap rates remained steady at 118
projected cap rates for power centers. Average cap rates for stabilized power centers rose 6 bps, essentially unchanged from the past three surveys. The spread between Tier II and III
bps to 8.45% in H1. markets for all classes compressed to 58 bps in H1 2019, the lowest level since H1 2016.

U.S. retail | Overview cont.
FIGURE 24: U. S. RETAI L NE IG H BORH OOD / C OMM U N I T Y center - F I G U R E 2 5 : U. S. retail neighborhoo d/ communit y center -
class a cap rateS, h 1 2 0 1 9 - tier I & II metros historical cap rates by class
%
N. CA: San Jose
S. CA: Los Angeles 9
Seattle
Portland
8
Austin
S. FL: West Palm Beach
7
S. FL: Miami
S. FL: Ft. Lauderdale
N. CA: Oakland
6
Dallas/Ft. Worth
Tier I Average 5
San Diego H1 2013 H1 2014 H1 2015 H1 2016 H1 2017 H1 2018 H1 2019
Denver
Washington, D.C.
Chicago Source: CBRE Research, Q2 2019. Data for stabilized acquisitions. Note: data is subject to historical revisions.
Atlanta
Tier II Average
All Markets Average F I GU R E 2 6 : U. S. retail neighborhoo d/ communit y center -
Sacramento
historical class a cap rates by tier
Orlando
Tampa %
Houston
7.0
NY: Faifield County, CT
NY: N. New Jersey
S. CA: Inland Empire 6.5
Boston
Philadelphia
Nashville 6.0
Phoenix
Las Vegas
5.5
Tier III Average
Baltimore
4.5% 5.0% 5.5% 6.0% 6.5% 7.0% 5.0
Tier I Tier II Tier III All Markets H1 2013 H1 2014 H1 2015 H1 2016 H1 2017 H1 2018 H1 2019
Source: CBRE Research, Q2 2019. Data for acquisition of stablized grocery-anchored neighborhood/community centers. Markets represent Tier I Tier II Tier III
metropolitan areas. For larger metros, tier designation is based on the U.S. Census Bureau’s combined statistical area (CSA) definitions. Note
that MSAs retain the same tier designation as the CSA to which they belong. See tier methodology for further explanation. Source: CBRE Research, Q2 2019. Data for stabilized acquisitions. Note: data is subject to historical revisions.

U.S. retail | Overview cont.
As in previous surveys, San Diego had the nation’s lowest average cap rate for stabilized Approximately 80% of survey respondents expect no change in cap rates for both
Class A assets – stable at 5.63%. The survey also found sub-6% cap rates for Class A power stabilized and value-add power center assets in H2 2019. Stabilized Class A centers
center assets in Sacramento and Seattle, followed by Boston with a 6.00% rate. should continue to fare well due to continued demand for prime box space driven by
discount retailers and mass merchandisers.
Of the 47 power center markets surveyed, six had average stabilized cap rates for Class B
power center assets of 7.50% or less. Honolulu had the lowest average Class A cap rate
High street
(5.25%), followed by San Diego, Seattle and Sacramento (all under 6%).
The expected average return on cost for power center value-add acquisitions increased High-street cap rates were relatively stable and remained the lowest of all retail
11 bps to 10.26%. The rate of average return has been increasing since H2 2016 when it property categories. Across market tiers, average rates decreased 7 bps to 4.76%.
was 8.27%. The increase was largely driven by lower-tier markets, especially Tier II Class Tier I assets decreased 9 bps in H1 to 4.70%. Tier II assets were unchanged at 5.00%.
B and Class C assets that increased by 28 bps and 36 bps, respectively, in H1 2019. Since H2 2015, Tier I rates have ranged from 4.08% to 4.79%, while Tier II rates
have ranged from 4.67% to 5.00%.
San Francisco and Los Angeles continued to have the lowest high-street cap rates at
FIGUR E 27: U. S. RETAI L power center - cap rates f or stabili z e d 4.00% and 4.13%, respectively. Both rates were unchanged from H2 2018. Chicago
properties
had the highest average rate at 5.50%.
ALL 8.45 8.40 6 Of the 10 markets tracked, nine recorded no cap rate changes in H1 2019. Survey
A 7.16 7.12 5 respondents expect no rate changes in H2 2019.
All
B 8.34 8.29 5
C 9.86 9.78 8
A 6.60 6.60 0
I B 7.94 7.93 1
C 9.52 9.53 0
F I G U R E 2 8 : U. S. R E TAI L HI gh street - cap rates f or stabilized
A 7.24 7.11 13
properties
II B 8.34 8.26 8
C 9.84 9.65 18 Metro tier h1 2019 (%) h2 2018 (%) change (BPS)
A 7.86 7.88 -3 ALL 4.76 4.83 -7
III B 8.92 8.87 5 I 4.70 4.79 -9
C 10.38 10.36 2 II 5.00 5.00 0
Source: CBRE Research, Q2 2019. Source: CBRE Research, Q2 2019.

Notes: Some numbers may not total due to rounding. Data is subject to historical revisions. Notes: Some numbers may not total due to rounding. Data is subject to historical revisions.

U.s. retail | Overview cont.
FIGURE 29: U. S. RETAI L power - class a cap rates, h 1 2 0 1 9 - T ier I F I G U R E 3 0 : U. S. retail power - historical cap rates by class
& II Metros
%
San Diego
11
Seattle
10
Sacramento
Boston 9
N. CA: San Jose
7
N. CA: Oakland 6
Tier I Average
Portland 5
NY: Fairield County, CT
H1 2013 H1 2014 H1 2015 H1 2016 H1 2017 H1 2018 H1 2019
NY: N. New Jersey
Austin Class A Class B Class C
Washington, D.C.
S. FL: Miami
Philadelphia
F I G U R E 3 1 : U. S. retail power - historical class a cap rates
b y tier
Denver
Chicago
ALL MARKETS Average
%
Tier II Average 8.5
Nashville
Houston
Phoenix
7.5
Orlando
Tampa
Baltimore
Dallas/Ft. Worth 6.5
Atlanta
Tier III Average
Las Vegas
5.5
5.0% 5.5% 6.0% 6.5% 7.0% 7.5% 8.0%
H1 2013 H1 2014 H1 2015 H1 2016 H1 2017 H1 2018 H1 2019
Tier I Tier II Tier III All Markets
Source: CBRE Research, Q2 2019. Data for stabilized acquisitions. Notes: data is subject to historical revisions. Markets represent Tier I Tier II Tier III

U.s. retail | Overview cont.
FIGUR e 32: U. S. RETAI L high street - class a cap rates h 1 2 0 1 9 - F I G U R E 3 3 : U. S. R etail neighborhoo d/ communit y center Rate
TIER I & II METROS trend s - six month outloo K

S. CA: San Francisco
Boston
Tier I Average 100
NY: New York City
All Markets Average 80
Tier II Average
Seattle 60
Philadelphia
Las Vegas 40
Washington, D.C.
S. FL: Miami 20
Chicago
0
3.5% 4.0% 4.5% 5.0% 5.5% 6.0% -3: Decrease -2: Decrease -1: Decrease No Change 1: Increase 2: Increase 3: Increase
Tier I Tier II All Markets (50+ bps) (25-49 bps) (1-24 bps) (1-24 bps) (25-49 bps) (50+ bps)
F I G U R E 3 4 : U. S. R etail power center Rate trends - si x month

outloo K

120
100
80
60
40
20
0
Source: CBRE Research, Q2 2019. Data for stabilized acquisitions. Notes: data is subject to historical revisions. -3: Decrease -2: Decrease -1: Decrease No Change 1: Increase 2: Increase 3: Increase
Markets represent metropolitan areas. For larger metros, tier designation is based on the U.S. Census Bureau’s combined (50+ bps) (25-49 bps) (1-24 bps) (1-24 bps) (25-49 bps) (50+ bps)
statistical area (CSA) definitions. Note that MSAs retain the same tier designation as the CSA to which they belong. See tier
methodology for further explanation. Source: CBRE Research, Q2 2019.

u.s. retail neighborhood/community center | F I GU R E 3 5 : key rates

expected expected p

INCREASE
cap rates cap rates Return on Cost cap rates Return on Cost
for Stabilized for Stabilized for Value-Add for Stabilized for Value-Add
q

DECREASE
properties (%) CHANGE1 properties (%) CHANGE1 properties (%) CHANGE1 properties (%) CHANGE1 properties (%) CHANGE1
tu

STABLE
Boston 5.50 - 6.50 tu 7.00 - 8.00 tu 8.00 - 9.25 tu 8.50 - 10.00 tu 9.00 - 10.00 tu
—

N/A
Chicago 5.50 - 6.00 tu 7.00 - 7.50 tu 8.00 - 9.00 tu 8.75 - 9.50 tu 9.75 - 11.00 tu
N. CA: Oakland 5.00 - 6.00 q 6.50 - 7.25 tu 7.50 - 8.50 tu 8.00 - 9.00 q 9.50 - 10.50 p 1
Compared with H2 2018. Changes
less than 15 bps considered stable.
N. CA: San Francisco 4.50 - 5.25 tu 6.00 - 7.00 q 7.50 - 8.50 tu 8.00 - 9.00 tu 9.00 - 10.00 tu Source: CBRE Research, Q2 2019.
N. CA: San Jose 4.25 - 5.50 tu 6.00 - 7.25 tu 7.50 - 8.50 tu 8.00 - 9.00 tu 9.00 - 10.00 tu
NY: Fairfield County, CT 5.75 - 6.25 tu 6.75 - 7.25 tu 7.75 - 8.25 tu — — revision. Markets represented by
NY: N. New Jersey 5.75 - 6.25 tu 6.75 - 7.25 tu 7.75 - 8.25 tu — —
T IE R I
tier designation is based on the U.S.

S. CA: Inland Empire 5.50 - 6.50 tu 6.75 - 7.50 tu 7.50 - 8.50 tu 8.00 - 8.75 tu 8.50 - 9.50 tu Census Bureau’s combined statistical
area (CSA) definitions. Note that MSAs
S. CA: Los Angeles 4.50 - 5.25 tu 6.00 - 6.75 tu 7.00 - 7.75 tu 8.00 - 9.00 tu 8.00 - 9.50 tu retain same tier designation as the CSA
to which they belong. Rates are for
S. CA: Orange County 4.50 - 5.25 tu 6.00 - 6.75 tu 7.00 - 7.75 tu 8.00 - 9.00 tu 8.00 - 9.50 tu grocery-anchored neighborhood and
S. FL: Ft. Lauderdale 5.00 - 5.75 tu 6.50 - 7.50 tu 7.50 - 9.00 tu 8.00 - 9.50 tu 8.50 - 9.75 tu community centers.
S. FL: Miami 5.00 - 5.75 tu 6.50 - 7.50 tu 7.50 - 9.00 tu 8.00 - 9.50 tu 8.50 - 9.75 tu Retail Class A, return on cost for value
add was not reported for this survey due
S. FL: West Palm Beach 5.00 - 5.75 tu 6.50 - 7.50 tu 7.50 - 9.00 tu 8.00 - 9.50 tu 8.50 - 9.75 tu to the limited properties represented by
this category.
San Diego 5.25 - 6.00 tu 6.00 - 7.00 tu 6.50 - 7.75 tu 8.50 - 10.00 tu 8.75 - 10.25 tu
Washington, D.C. 5.25 - 6.00 tu 7.00 - 9.00 tu 9.00 - 11.00 tu 9.00 - 11.00 tu 13.00 - 15.00 tu

expected expected
Atlanta 5.25 - 6.25 tu 6.25 - 8.25 tu 7.50 - 8.50 tu 8.25 - 11.00 tu 8.75 - 11.00 tu
Austin 5.00 - 5.75 p 6.25 - 7.25 tu 7.00 - 8.00 p 7.50 - 9.00 q 8.50 - 10.00 tu
Baltimore 6.25 - 7.25 tu 8.00 - 10.00 tu 10.00 - 12.00 tu 9.50 - 11.50 tu 13.00 - 15.00 tu
Dallas/ Ft. Worth 4.75 - 6.25 tu 6.25 - 7.75 q 7.50 - 9.00 q 8.25 - 9.75 q 9.00 - 10.50 q
Denver 5.25 - 6.00 p 6.50 - 7.50 p 7.50 - 8.50 p 8.50 - 9.50 p 9.00 - 10.00 tu
Houston 5.25 - 6.75 tu 7.00 - 8.50 tu 10.00 - 11.50 tu 9.00 - 11.00 p 12.00 - 14.00 tu
Las Vegas 6.25 - 7.00 q 7.00 - 7.50 tu 7.50 - 9.00 tu 7.75 - 9.00 tu 8.50 - 10.00 tu
TI E R II
Nashville 6.00 - 6.50 tu 6.50 - 7.00 tu 8.00 - 9.00 tu 8.00 - 9.00 tu 12.00 - 15.00 tu
Orlando 5.50 - 6.50 tu 7.50 - 8.25 tu 8.25 - 9.00 tu 8.50 - 10.50 tu 9.00 - 11.00 tu
Philadelphia 5.50 - 6.75 tu 7.00 - 8.25 tu 8.75 - 10.00 tu 8.75 - 10.00 tu 9.75 - 11.00 tu
Phoenix 6.00 - 6.50 tu 7.25 - 8.25 q 9.00 - 9.50 tu 8.50 - 9.25 tu 9.00 - 10.00 tu
Portland 5.00 - 5.75 tu 6.75 - 7.75 tu 8.00 - 9.00 tu 8.00 - 9.00 tu 9.00 - 10.00 tu
Sacramento 5.75 - 6.25 tu 6.25 - 7.25 tu 8.00 - 8.75 tu 7.75 - 8.25 tu 8.50 - 9.50 tu
Seattle 4.50 - 6.00 tu 5.50 - 7.25 tu 7.50 - 9.25 tu 7.50 - 8.75 tu 8.00 - 11.00 tu
Tampa 5.50 - 6.50 tu 7.25 - 8.25 tu 8.25 - 9.00 tu 8.50 - 10.50 tu 9.00 - 11.00 tu

u.s. retail neighborhood/community center | F I GU R E 3 5 : key rates cont.

expected expected
Albuquerque 7.50 - 7.75 p 8.25 - 8.75 tu 9.50 - 10.00 tu 9.50 - 10.00 tu 9.50 - 10.00 tu
Charlotte 5.75 - 6.25 p 7.25 - 7.75 p 8.00 - 9.00 tu 8.50 - 9.50 q 9.00 - 10.00 q
Cincinnati 6.50 - 7.00 tu 7.75 - 8.25 p 8.50 - 9.50 tu 8.75 - 9.75 tu 10.00 - 11.25 tu
Cleveland 6.75 - 7.25 tu 8.00 - 8.50 q 9.25 - 10.25 tu 9.75 - 10.75 tu 10.75 - 12.25 tu
Columbus 6.50 - 7.00 tu 7.50 - 8.00 tu 8.50 - 9.50 tu 9.00 - 9.75 tu 10.00 - 11.25 tu
Detroit 7.25 - 8.00 p 8.75 - 10.00 p 9.25 - 10.50 p 10.25 - 11.75 p 11.00 - 12.75 p
Honolulu 4.75 - 6.50 tu 6.00 - 7.00 tu 7.50 - 8.00 p 6.50 - 7.50 tu 6.75 - 8.50 tu
T IE R III
Indianapolis 6.50 - 7.00 tu 7.50 - 8.00 tu 8.50 - 9.50 tu 9.00 - 9.75 tu 10.00 - 11.25 tu
Jacksonville 5.50 - 6.50 tu 7.50 - 8.25 tu 8.25 - 9.00 tu 8.50 - 10.50 tu 9.00 - 11.00 tu
Kansas City 6.50 - 7.00 tu 7.50 - 8.00 tu 8.50 - 9.50 tu 9.00 - 9.75 tu 10.00 - 11.25 tu
Memphis 7.25 - 7.75 tu 8.00 - 8.50 tu 9.00 - 9.50 tu 9.75 - 10.25 tu 10.75 - 11.25 tu
Minneapolis/St. Paul 5.75 - 6.25 tu 7.50 - 8.00 tu 8.50 - 9.50 tu 8.75 - 9.50 tu 9.75 - 11.00 q
Pittsburgh 6.75 - 7.75 p 8.00 - 8.75 p 10.75 - 13.75 p 10.75 - 11.75 p 12.75 - 13.00 p
Salt Lake City 6.00 - 6.50 tu 6.75 - 7.25 p 7.25 - 8.00 tu 7.75 - 8.25 p 8.25 - 8.75 p
San Antonio 5.25 - 6.75 p 7.00 - 8.75 p 7.00 - 8.75 tu 8.75 - 10.25 tu 9.25 - 10.50 tu
St. Louis 6.50 - 7.25 tu 7.50 - 8.25 tu 8.50 - 9.50 tu 9.00 - 10.00 tu 10.00 - 11.25 tu
1
Rates are for grocery-anchored neighborhood and community centers. Retail Class A, returns on cost for value add were not reported for this survey due to the limited properties represented by this category.

u.s. retail neighborhood/community center | F I G U R E 3 6 : f orecast trend s - six month outlook

expected expected
properties properties properties properties properties
Boston
Chicago
N. CA: Oakland
N. CA: San Jose
NY: Fairfield County, CT — —
NY: N. New Jersey — —

T IE R I

S. CA: Los Angeles
S. FL: Miami
San Diego
Washington, D.C.
Increase Decrease stable — N/A
Retail Class A, returns on cost for value add were not reported for this survey due to the limited properties represented by this category.

u.s. retail neighborhood/community center | F I GU R E 3 6 : f orecast trend s - six month outlook cont.

expected expected
Atlanta
Austin
Baltimore
Dallas/Ft. Worth
Denver
Houston
Las Vegas
T IE R II
Nashville
Orlando
Philadelphia
Phoenix
Portland
Sacramento
Seattle
Tampa

u.s. retail neighborhood/community center | F I G U R E 3 6 : f orecast trend s - six month outlook cont.

expected expected
Albuquerque
Charlotte
Cincinnati
Cleveland
Columbus
Detroit
Honolulu
T IE R III
Indianapolis
Jacksonville
Kansas City
Memphis
Pittsburgh
Salt Lake City
San Antonio
St. Louis

u.s. retail power | F IG URE 3 7 : key rates

expected expected p

INCREASE
for Stabilized for Stabilized for Value-Add for Stabilized for Value-Add q

DECREASE
tu

STABLE
Boston 5.50 - 6.50 tu 6.25 - 7.25 q 7.50 - 8.50 tu 7.50 - 8.50 tu 8.50 - 10.00 tu
Chicago 6.75 - 7.50 tu 8.00 - 8.75 tu 9.00 - 10.25 tu 10.00 - 11.00 tu 11.00 - 12.50 tu —

N/A
N. CA: Oakland 6.00 - 7.00 tu 7.50 - 8.50 p 9.00 - 11.00 tu 9.25 - 10.50 tu 10.00 - 12.00 tu 1
Compared with end of H2 2018.
N. CA: San Francisco 6.00 - 7.00 tu 7.25 - 8.25 p 9.00 - 11.00 tu 9.25 - 10.50 tu 10.00 - 12.00 tu Changes less than 15 bps considered
stable. All rates are rounded to the
N. CA: San Jose 6.00 - 7.00 tu 7.25 - 8.25 p 9.00 - 11.00 tu 9.25 - 10.50 tu 10.00 - 12.00 tu nearest 25 bps.
NY: Fairfield County, CT 6.25 - 7.00 tu 7.00 - 8.25 tu 7.50 - 9.50 tu 8.00 - 9.00 tu 9.00 - 11.00 tu Source: CBRE Research, Q2 2019.
NY: N. New Jersey 6.25 - 7.00 tu 7.50 - 8.25 tu 7.50 - 9.50 tu 8.00 - 9.00 tu 9.00 - 11.00 tu Notes: Data is subject to historical
T IE R I
revision. Markets represented by

S. CA: Inland Empire 6.50 - 7.25 tu 8.00 - 9.00 tu 8.50 - 10.00 tu 9.00 - 11.00 tu 10.00 - 12.00 tu metropolitan areas. For larger metros,
S. CA: Los Angeles 5.75 - 6.75 tu 7.50 - 8.50 tu 8.00 - 9.00 tu 8.75 - 10.00 tu 9.00 - 12.00 tu tier designation is based on the U.S.
S. CA: Orange County 5.75 - 6.75 tu 7.50 - 8.50 tu 8.00 - 9.00 tu 8.75 - 10.00 tu 9.00 - 11.00 tu area (CSA) definitions. Note that
MSAs retain same tier designation as
S. FL: Ft. Lauderdale 6.50 - 7.25 tu 7.50 - 8.50 p 9.00 - 11.50 p 8.50 - 10.50 p 8.75 - 11.25 p the CSA to which they belong.
S. FL: Miami 6.50 - 7.25 tu 7.25 - 8.25 tu 8.75 - 11.25 tu 8.25 - 10.25 tu 8.50 - 11.00 tu Retail Class A, return on cost for
S. FL: West Palm Beach 6.50 - 7.25 tu 7.25 - 8.25 tu 8.75 - 11.25 tu 8.25 - 10.25 tu 8.50 - 11.00 tu value add was not reported for this
survey due to the limited properties
San Diego 5.50 - 5.75 tu 7.00 - 7.75 tu 9.50 - 10.00 tu 8.75 - 10.00 tu 9.00 - 11.00 tu represented by this category.
Washington, D.C. 6.25 - 7.50 tu 7.50 - 9.00 tu 9.50 - 11.00 q 10.00 - 12.00 tu 13.00 - 15.00 tu

expected expected
Atlanta 7.00 - 8.25 tu 8.25 - 9.50 p 8.50 - 9.50 tu 9.50 - 12.25 p 9.50 - 12.00 tu
Austin 6.25 - 7.25 p 7.00 - 8.00 q 7.25 - 8.75 tu 7.50 - 8.50 q 7.75 - 9.75 tu
Baltimore 7.00 - 8.00 tu 8.00 - 10.00 tu 10.00 - 12.00 tu 10.00 - 12.00 tu 13.00 - 15.00 tu
Dallas/ Ft. Worth 7.00 - 8.00 p 7.50 - 9.00 tu 7.50 - 9.25 tu 9.25 - 10.50 p 9.25 - 11.50 tu
Denver 6.75 - 7.50 p 8.00 - 9.00 q 9.00 - 10.00 tu 10.50 - 12.00 p 10.00 - 12.00 p
Houston 7.00 - 7.75 p 8.25 - 8.75 p 11.25 - 11.75 tu 9.00 - 11.00 p 12.00 - 14.00 tu
Las Vegas 7.50 - 8.25 p 8.00 - 9.00 tu 8.25 - 9.25 p 8.75 - 9.75 p 9.00 - 11.00 tu
T IE R I I
Nashville 7.00 - 7.50 tu 8.50 - 9.00 q 12.00 - 15.00 tu 10.00 - 12.00 tu 12.00 - 15.00 tu
Orlando 7.00 - 8.00 tu 7.75 - 9.00 tu 8.25 - 10.00 tu 8.75 - 10.00 tu 9.50 - 11.00 tu
Philadelphia 6.50 - 7.50 tu 8.50 - 9.50 tu 9.50 - 11.00 tu 10.00 - 11.00 tu —
Phoenix 7.25 - 7.75 tu 7.75 - 8.75 tu 8.75 - 9.75 tu 9.00 - 10.00 tu 10.00 - 11.00 tu
Portland 6.25 - 7.00 tu 7.00 - 8.25 tu 7.25 - 9.25 tu 8.25 - 9.25 tu 9.00 - 11.00 tu
Sacramento 5.50 - 6.25 tu 6.25 - 7.00 tu 8.00 - 9.00 tu 7.00 - 8.00 tu 8.50 - 10.00 tu
Seattle 5.50 - 6.00 tu 6.25 - 8.00 tu 7.25 - 9.00 tu 7.50 - 9.50 tu 7.75 - 10.25 tu
Tampa 7.00 - 8.00 tu 7.75 - 9.00 tu 8.25 - 10.00 tu 8.75 - 10.00 tu 9.50 - 11.50 tu

u.s. retail power | F IG URE 3 7 : key rates cont.

expected expected
Albuquerque 8.00 - 8.50 tu 8.50 - 9.25 tu 8.75 - 9.50 tu 9.50 - 10.00 tu 9.50 - 10.50 tu
Charlotte 7.50 - 8.25 tu 8.25 - 9.00 tu 8.50 - 9.50 tu 9.00 - 10.00 tu 9.50 - 11.00 tu
Cincinnati 7.50 - 8.50 tu 8.50 - 9.50 tu 9.75 - 12.00 tu 10.50 - 11.50 q 11.75 - 13.25 tu
Cleveland 8.25 - 9.00 tu 9.25 - 10.00 tu 10.25 - 11.50 tu 11.50 - 13.00 tu 12.50 - 14.50 tu
Columbus 7.75 - 8.00 tu 8.75 - 9.50 tu 9.75 - 12.00 tu 10.75 - 11.75 tu 11.75 - 13.25 tu
Detroit 8.25 - 9.25 p 9.00 - 10.25 p 9.50 - 10.50 p 9.75 - 10.75 p 10.00 - 12.00 p
Honolulu 4.75 - 5.75 tu 4.75 - 7.25 tu 5.00 - 7.00 tu 5.50 - 6.00 q 6.50 - 8.50 tu
T IE R III
Indianapolis 7.75 - 8.50 tu 8.75 - 9.50 tu 9.75 - 12.00 tu 10.75 - 11.75 tu 11.75 - 13.25 tu
Jacksonville 7.00 - 8.00 tu 7.75 - 9.00 tu 8.25 - 10.00 tu 8.75 - 10.00 tu 9.50 - 11.50 tu
Kansas City 7.75 - 8.50 tu 8.75 - 9.50 tu 9.75 - 12.00 tu 10.75 - 11.75 tu 11.75 - 13.25 tu
Memphis 7.00 - 7.50 tu 8.25 - 9.00 tu 8.75 - 10.00 tu 9.25 - 10.25 tu 11.00 - 12.00 p
Minneapolis/St. Paul 6.75 - 7.50 tu 8.25 - 9.00 tu 9.25 - 10.50 tu 10.25 - 11.25 tu 11.25 - 12.75 tu
Pittsburgh 7.50 - 8.50 p 8.00 - 9.50 p 9.25 - 11.00 p 9.00 - 10.00 p 10.50 - 12.50 p
Salt Lake City 6.50 - 7.25 tu 7.50 - 8.25 p 8.50 - 9.00 p 7.50 - 8.50 p 8.50 - 9.50 p
San Antonio 6.00 - 7.50 q 7.75 - 9.25 tu 8.75 - 9.50 tu 8.75 - 10.00 tu 8.50 - 10.25 tu
St. Louis 7.75 - 8.50 tu 8.75 - 9.50 tu 9.75 - 12.00 tu 10.75 - 11.75 tu 11.75 - 13.25 tu
1
Retail Class A, return on cost for value add was not reported for this survey due to the limited properties represented by this category.

u.s. retail power | F IG URE 3 8 : forecast trend s - six month outlook

expected expected
Boston
Chicago
N. CA: Oakland
N. CA: San Jose
NY: N. New Jersey
T IE R I

S. CA: Los Angeles
S. FL: Miami
San Diego
Washington, D.C.
Forecasts represent the opinions of CBRE professionals of where rates are likely to trend in H 2 2019.

u.s. retail power | F I G UR E 3 8 : forecast trend s - six month outlook cont.

expected expected
Atlanta
Austin
Baltimore
Dallas/Ft. Worth
Denver
Houston
Las Vegas
T IE R II
Nashville
Orlando
Philadelphia —
Phoenix
Portland
Sacramento
Seattle
Tampa

u.s. retail power | F IG URE 3 8 : forecast trend s - six month outlook cont.

expected expected
Albuquerque
Charlotte
Cincinnati
Cleveland
Columbus
Detroit
Honolulu
T IE R III
Indianapolis
Jacksonville
Kansas City
Memphis
Pittsburgh
Salt Lake City
San Antonio
St. Louis

u.s. retail high street | F I G UR E 3 9 : key rates
Class A
cap rates
for Stabilized
properties (%) CHANGE1
Boston 4.00 - 5.00 tu
Chicago 5.00 - 6.00 tu
N. CA: San Francisco 3.00 - 5.00 tu

tier i
NY: New York City 4.50 - 5.00 q
S. CA: Los Angeles 3.25 - 5.00 tu
S. FL: Miami 4.50 - 5.50 tu
Washington, D.C. 4.50 - 5.50 tu
Class A
cap rates
for Stabilized
Las Vegas 2
4.75 - 5.25 tu
tier ii
Philadelphia 4.75 - 5.25 tu
Seattle 4.50 - 5.50 tu
1
2
For the purposes of high-street retail, Las Vegas is considered a Tier II market.

u.s. retail high street | F IG URE 4 0 : forecast trend s
Class A
cap rates
for Stabilized
properties
Boston
Chicago
S. CA: Los Angeles
tier i
S. FL: Miami
NY: New York City
Washington, D.C.
Class A
cap rates
for Stabilized
properties
Las Vegas1
tier ii
Philadelphia
Seattle
For the purposes of high-street retail, Las Vegas is considered a Tier II market.
1


u.s. MULTIFAMILY | Overview
INFILL The spread between cap rate averages for stabilized infill Class A and Class B assets
dropped slightly (5 bps) to 43 bps, the tightest A/B spread in the 10-year history of
Infill cap rates remained at historically low levels, indicating firm pricing trends,
the survey.
sustained investor interest in the multifamily sector and investors’ willingness to buy
assets at low cap rates. Similarly, the spread between Tier I and Tier II markets (all classes) compressed 5 bps
to total 25 bps in H1. This spread was also at its tightest since the survey began and
Continued healthy market fundamentals contributed significantly to multifamily’s
reflects sustained investor interest in the high-growth dynamics of most Tier II markets.
appeal and sustained high levels of investment at low cap rates. The drop in long-
term interest rates through most of H1 2019 also contributed to the favorable view As in previous surveys, San Francisco had the nation’s lowest average cap rate for
of the sector and influenced pricing decisions. This led to slightly lower cap rates and stabilized Class A assets—stable at 4.00%. The survey also found sub-5% cap rates for
more optimism for continued solid pricing in H2 2019 for both infill and suburban Class A infill assets in most other California markets (Los Angeles, the Inland Empire,
cap rates and expected returns on cost for value-add acquisitions. Orange County, Oakland, San Diego and San Jose), as well as nearly all Tier I and
Tier II markets with the exception of Fairfield County and Sacramento (5% each).
The average cap rate for all stabilized infill assets at the end of H1 2019 was 5.20%—
the lowest among all commercial real estate sectors and the lowest rate since CBRE
f igure 4 1 : U. s. multifamily inf ill - cap rates f or stabilized
began conducting the survey in 2009. properties
The stabilized infill cap rate fell 5 bps in H1, reflecting high levels of investment Metro tier class h1 2019 (%) h2 2018 (%) change (BPS)
ALL 5.20 5.25 -5
capital coming into the sector and sustained confidence in its performance.
A 4.69 4.70 -2
All
B 5.12 5.18 -6
Cap rates declined slightly more in Tier II and III markets than in Tier I, reflecting
C 5.82 5.91 -9
investors’ search for yield in secondary and tertiary markets. Tier I’s average cap rate
A 4.49 4.45 4
of 4.92% fell by 3 bps in H1. The Tier II and Tier III averages of 5.17% and 6.24%, I B 4.85 4.91 -5
respectively, each fell 7 bps. C 5.45 5.52 -7
A 4.63 4.70 -7
Cap rate decreases by class were modest but confirm investor preferences and II B 5.17 5.23 -6
buying activity for lower-quality assets in secondary and tertiary markets. The C 5.71 5.80 -9
A 5.51 5.57 -6
average Class A cap rate declined marginally by 2 bps to 4.69%, Class B ticked
III B 5.97 6.02 -6
down 6 bps to 5.12% and Class C fell by 9 bps to 5.82%. The largest cap rate
C 7.25 7.36 -11
decreases occurred for Class C assets in Tier II and Tier III markets by 9 bps and
11 bps, respectively. Notes: Some numbers may not total due to rounding. Data is subject to historical revisions.

U.s. MULTIFAMILY | Overview cont.
figure 42: U.s. multi family in fill - class a cap rates, h 1 2 0 1 9 - F I G U R e 4 3 : U.s. multi family inf ill - historical cap rates by class
T IER i & II METROS
%
7.0
Seattle 6.5
N. CA: San Jose
Houston 6.0
Austin
5.5
San Diego
S. CA: Orange County 5.0
NY: N. New Jersey
S. CA: Los Angeles 4.5
Boston
4.0
S. FL: Miami
tier i average H1 2013 H1 2014 H1 2015 H1 2016 H1 2017 H1 2018 H1 2019
Washington, D.C.
N. CA: Oakland Class A Class B Class C
Raleigh-Durham
Portland
Phoenix
Denver
Atlanta
S. FL: West Palm Beach FIGURe 44: U.s. multifamily infill - historical class a cap rates by tier
S. FL: Ft. Lauderdale %
tier ii average
6.5
ALL markets average
Nashville 6.0
Charlotte
Tampa 5.5
Philadelphia
Orlando 5.0
Dallas/Ft. Worth 4.5
Baltimore
NY: New York City 4.0
Chicago
H1 2013 H1 2014 H1 2015 H1 2016 H1 2017 H1 2018 H1 2019
Sacramento
NY: Fairfield County, CT Tier I Tier II Tier III
Tier III averagE
Source: CBRE Research, Q2 2019. Data for stabilized acquisitions. Notes: data is subject to historical revisions. Markets
3.5% 4.0% 4.5% 5.0% 5.5% represent metropolitan areas. For larger metros, tier designation is based on the U.S. Census Bureau’s combined statistical area
(CSA) definitions. Note that MSAs retain the same tier designation as the CSA to which they belong. See tier methodology for
Tier I Tier II Tier III All Markets further explanation.

u.s. MULTIFAMILY | Overview cont.
Of the 50 multifamily markets surveyed, about one-third had average cap rates f igure 4 5 : U.s. multi family Suburban - cap rates f or stabilized
properties
for Class B infill assets under 5%. San Jose and San Francisco had the lowest rates
(4.25%), followed by Ft. Lauderdale, Miami, Orange County, Austin and Honolulu. Metro tier class h1 2019 (%) h2 2018 (%) change (BPS)
All 5.49 5.55 -6
Sixteen markets had decreases in infill Class B cap rates. Markets that tightened by 25 All
a 4.99 5.01 -2
B 5.37 5.43 -6
bps or more were Austin, Columbus, Detroit, Ft. Lauderdale, Houston, Indianapolis,
C 6.12 6.22 -10
Inland Empire, Miami, Orlando, Phoenix, Seattle and West Palm Beach.
A 4.81 4.75 6
I B 5.15 5.17 -2
The expected average return on cost for multifamily infill value-add acquisitions remained
C 5.91 5.89 2
low at 5.95%, down by 5 bps in H1. The rate has ranged between 5.86% and 6.07% A 4.98 5.04 -6
since H1 2012, reflecting the sustained high level of interest in value-add investment. II B 5.33 5.44 -11
C 6.00 6.15 -15
The differences in expected return on cost rate movement by class were relatively A 5.44 5.54 -10
small with declines of 3 to 6 bps. The spreads between Class A and Class B expected III B 5.99 6.04 -5
C 6.85 7.10 -25
returns on cost compressed slightly for the first time since 2015.
Spreads between average Tier I and Tier II expected returns on costs tightened in H1 Notes: Some numbers may not total due to rounding. Data is subject to historical revisions.
as Tier I markets edged up 1 bp and Tier II markets declined 11 bps. Spreads have
to 5.44%, the cap rate spread between Tier I and Tier II markets fell to only 15 bps—
been gradually declining since 2011; in H1, the spread narrowed to only 34 bps, the
another survey historical low. Tier III cap rates declined by 13 bps to 6.10% in H1.
lowest level in survey history.
H1 cap rate changes by class were more modest. The average Class A cap rate declined by
Approximately 85% of survey respondents expect infill multifamily cap rates and
2 bps to 4.99%, Class B ticked down 6 bps to 5.37% and Class C fell by 10 bps to 6.12%.
expected returns on cost will remain stable in H2 2019. Another 13% expect further
tightening for both stabilized asset cap rates and value-add expected returns on costs. Combining tiers and classes, the largest cap rate decrease occurred for Class C assets in
Tier III markets (by 25 bps to 6.85%), followed by Class C assets in Tier II markets (down
SUBURBAN
15 bps to 6.00%).
Suburban multifamily cap rates fell slightly in H1. The average cap rate for stabilized
Investors are not pricing Tier II suburban assets much differently than Tier I. The spread
suburban assets fell by 6 bps to 5.49%—the lowest level in survey history.
between Tier I and Tier II markets compressed to a very tight 15 bps in H1, the lowest
Investor buying activity indicates a preference for secondary and tertiary markets. Given level in survey history. This minimum pricing differential is largely attributable to the high-
the slight rise in Tier I cap rates to (2 bps) 5.29% and the 11-bps drop in Tier II cap rates growth dynamics of most Tier II markets and strong suburban market fundamentals.

The cap rate spread between Class A and Class B markets is also relatively tight at 38 f igure 4 6 : U. s. multifamily suburban - class a cap rates, h1 2019
- TIER I & II METROS
bps, down by 4 bps in H1.
Of the 50 multifamily markets surveyed, 11 had average cap rates for Class B suburban N. CA: San Jose
S. CA: San Francisco
assets under 5%. These included the three South Florida markets (Miami, Ft. Lauderdale S. CA: Orange County
and West Palm Beach), four California markets (Orange County, San Diego, San Austin
San Diego
Francisco and San Jose) and Austin, Orlando, Phoenix and Seattle.
Portland
Seattle
Eighteen markets had declines in cap rates for Class B suburban assets. The Inland S. FL: Miami
S. CA: Los Angeles
Empire, Orlando and Phoenix tightened the most.
Expected returns on cost for suburban value-add acquisitions have stayed within a tight Phoenix
range of 6.23% to 6.42% over the past five years. In H1 2019, the expected return on Houston
N. CA: Oakland
cost for multifamily suburban value-add acquisitions edged down 6 bps to the low end
tier i average
of that range. Orlando
Boston
On average, expected returns on cost increased by 3 bps to 5.97% in Tier I markets but
TIER II average
fell by 12 bps in both Tier II and Tier III markets to 6.23% and 6.94%, respectively. The ALL TIERs
spread between Tier I and Tier II expected returns on cost for suburban assets tightened Nashville
Tampa
to the lowest level on record (26 bps). These pricing trends provide further evidence of Sacramento
investors’ growing preferences for secondary and tertiary markets and for older product. Denver
Dallas/Ft. Worth
Raleigh-Durham
Cap rates for stabilized suburban acquisitions are expected to remain stable in H2 2019
Atlanta
by 83% of survey respondents. Another 14% expect further tightening of less than 25 bps. Charlotte
Philadelphia
For suburban value-add acquisitions, 83% of respondents expect stable pricing and Minneapolis/St. Paul
Washington, D.C.
returns on cost for all classes and tiers in H2, while 15% expect modest tightening. NY: N. New Jersey
Chicago
tier iii average
Baltimore
Source: CBRE Research, Q2 2019. Data for stabilized acquisitions. Notes: data is subject to historical revisions. Markets
represent metropolitan areas. For larger metros, tier designation is based on the U.S. Census Bureau’s combined statistical area 3.5% 4.0% 4.5% 5.0% 5.5% 6.0%
(CSA) definitions. Note that MSAs retain the same tier designation as the CSA to which they belong. See tier methodology for
further explanation. Tier I Tier II Tier III All Markets


FIGURe 47: U. s. multifamily suburban - historical cap rates F I G U R E 4 9 : U. S. multi family inf ill Rate trends - si x month
by class outloo K
% # Responses Stabilized Value-Add

7.5 140
7.0 120
6.5 100
6.0 80
5.5 60
5.0
40
4.5
20
H1 2013 H1 2014 H1 2015 H1 2016 H1 2017 H1 2018 H1 2019
0
Class A Class B Class C -3: Decrease -2: Decrease -1: Decrease No Change 1: Increase 2: Increase 3: Increase
(50+ bps) (25-49 bps) (1-24 bps) (1-24 bps) (25-49 bps) (50+ bps)
F I GU R E 5 0 : U. S. multifamily suburban Rate trends - si x month

FIGUR e 48: U. s. multifamily suburban - historical class a cap outloo K
rates by tier
% 140
6.5
120
6.0 100
80
5.5
60
5.0 40
20
4.5
0
H1 2013 H1 2014 H1 2015 H1 2016 H1 2017 H1 2018 H1 2019
Tier I Tier II Tier III (50+ bps) (25-49 bps) (1-24 bps) (1-24 bps) (25-49 bps) (50+ bps)
Source: CBRE Research, Q2 2019. Data for stabilized acquisitions. Note: data is subject to historical revisions Source: CBRE Research, Q2 2019.

u.s. multifamily infill | F I G UR E 5 1 : key rates

Boston 3.75 - 4.75 tu 5.00 - 5.75 tu 4.50 - 5.00 tu 5.75 - 6.25 tu — 6.25 - 6.75 tu
Chicago 4.75 - 5.00 tu 5.25 - 5.50 tu 5.25 - 5.25 tu 5.50 - 6.00 tu 5.75 - 6.25 tu 6.50 - 7.25 tu
NY: Fairfield County, CT 4.75 - 5.25 tu 5.75 - 6.25 tu 5.75 - 6.25 tu 6.25 - 6.75 tu — —
NY: N. New Jersey 4.00 - 4.50 tu 5.00 - 5.50 tu 4.50 - 5.00 tu 5.50 - 6.00 tu 5.50 - 6.00 tu —
NY: New York City 4.50 - 5.00 tu 5.00 - 5.50 tu 4.75 - 5.25 tu 5.50 - 5.75 tu 5.00 - 5.50 tu 6.00 - 6.50 p
T IE R I
S. CA: Inland Empire 4.50 - 4.75 tu 5.00 - 5.25 tu 5.00 - 5.50 q 5.25 - 6.00 tu 5.25 - 6.00 q 5.75 - 6.50 tu
S. CA: Los Angeles 4.00 - 4.50 tu 4.25 - 5.00 tu 4.25 - 5.00 tu 4.75 - 5.75 tu 5.00 - 6.00 q 5.50 - 6.50 q
S. CA: Orange County 4.00 - 4.50 tu 5.25 - 6.75 tu 4.25 - 4.75 tu 6.00 - 7.25 tu 4.75 - 5.25 tu 6.75 - 7.75 tu
S. FL: Ft. Lauderdale 4.50 - 4.75 tu 5.50 - 5.75 tu 4.25 - 4.75 q 5.50 - 5.75 q 5.25 - 5.75 q 6.50 - 6.75 q
S. FL: Miami 4.25 - 4.50 tu 5.25 - 5.50 tu 4.25 - 4.75 q 5.50 - 5.75 q 5.25 - 5.75 q 6.50 - 6.75 q
S. FL: West Palm Beach 4.50 - 4.75 tu 5.75 - 6.00 tu 4.50 - 5.00 q 5.75 - 6.00 q 5.25 - 5.75 q 6.50 - 7.00 q
San Diego 4.00 - 4.50 tu 4.25 - 4.75 tu 4.50 - 5.25 tu 5.00 - 5.50 tu 4.75 - 5.25 tu 5.50 - 6.00 tu
Seattle 4.00 - 4.25 q 4.75 - 5.25 p 4.50 - 4.75 q 4.75 - 5.25 q 5.25 - 5.75 q 5.25 - 6.00 q
Washington, D.C. 4.25 - 4.75 tu 5.25 - 5.75 tu 5.00 - 5.50 tu 5.50 - 6.00 tu 6.00 - 6.75 tu 7.25 - 8.00 tu
p

INCREASE q

DECREASE tu

STABLE —

N /A
1

u.s. multifamily infill | F I G UR E 5 1 : key rates cont .

Atlanta 4.25 - 5.00 tu 5.50 - 6.25 tu 5.00 - 5.75 tu 6.25 - 6.75 tu 5.75 - 6.50 tu 6.50 - 7.25 tu p

INCREASE
Austin 4.00 - 4.50 q 4.00 - 4.50 tu 4.25 - 4.75 q 4.25 - 4.75 q 4.50 - 5.25 q 4.50 - 5.25 q q

DECREASE
Baltimore 4.50 - 5.00 tu 5.25 - 5.75 tu 5.00 - 5.75 tu 6.00 - 6.75 tu 6.00 - 6.75 tu 7.00 - 8.00 tu
tu

STABLE
Charlotte 4.50 - 5.00 tu 4.75 - 5.25 tu 5.00 - 5.50 tu 4.75 - 5.25 tu 5.75 - 6.25 tu 5.50 - 6.00 q
—

N/A
Dallas/ Ft. Worth 4.50 - 5.00 tu 5.00 - 5.50 tu 5.00 - 6.00 tu 6.00 - 7.00 tu 5.75 - 6.25 tu 6.75 - 7.25 tu
Denver 4.25 - 5.00 tu 5.75 - 6.25 q 5.00 - 5.50 tu 6.00 - 7.00 q 5.25 - 5.75 tu 6.75 - 7.25 q 1
Compared with
H2 2018. Changes
Houston 4.00 - 4.50 q 4.75 - 5.25 q 4.75 - 5.25 q 5.25 - 5.75 q 5.50 - 6.00 q 6.25 - 6.75 q less than 15 bps
T IE R II
Minneapolis/St. Paul 4.50 - 5.00 tu 5.00 - 5.50 tu 5.00 - 5.25 tu 5.50 - 6.00 tu 5.00 - 5.50 tu 5.75 - 6.25 tu considered stable.
Source: CBRE
Nashville 4.50 - 5.00 tu 4.25 - 5.75 tu 5.00 - 5.50 tu 5.25 - 5.75 tu 5.50 - 6.00 q 6.00 - 6.50 tu Research, Q2 2019.
Notes: Data is subject
Orlando 4.50 - 5.00 tu — 4.50 - 5.00 q 5.25 - 5.75 q 5.25 - 5.75 q 6.00 - 6.50 q to historical revision.
Philadelphia 4.50 - 5.00 q 5.75 - 6.75 q 5.50 - 6.00 tu 6.75 - 7.75 tu 6.00 - 6.75 tu 7.00 - 7.75 q Markets represented
by metropolitan areas.
Phoenix 4.25 - 5.00 tu 5.50 - 6.00 tu 4.25 - 5.00 q 5.50 - 6.25 tu 4.75 - 5.25 q 5.75 - 6.50 q For larger metros, tier
designation is based
Portland 4.50 - 4.75 tu 4.75 - 5.00 tu 4.75 - 5.00 tu 5.00 - 5.25 tu 5.00 - 5.25 p 5.25 - 5.50 p
on the U.S. Census
Raleigh-Durham 4.25 - 5.00 tu 5.25 - 5.75 tu 5.00 - 5.75 tu 6.00 - 6.50 tu 5.50 - 6.00 tu 6.00 - 6.50 tu Bureau’s combined
statistical area (CSA)
Sacramento 4.75 - 5.25 p 5.25 - 6.00 tu 5.00 - 5.50 p 5.50 - 6.50 tu 5.25 - 5.75 tu 5.50 - 6.50 tu definitions. Note that
Tampa 4.50 - 5.00 tu 5.00 - 5.50 tu 4.75 - 5.25 tu 5.50 - 6.00 tu 5.50 - 6.00 tu 6.25 - 7.25 tu MSAs retain same tier
designation as the
CSA to which they
Class A Class B Class C belong.

Cincinnati 5.00 - 5.75 tu 5.75 - 7.50 tu 5.25 - 6.00 tu 6.50 - 7.75 tu 6.00 - 7.50 q 7.00 - 8.50 tu
Cleveland 5.50 - 6.25 tu 7.00 - 8.00 tu 6.00 - 7.00 tu 8.50 - 8.75 tu 8.00 - 9.00 tu 9.00 - 11.00 tu
Columbus 5.25 - 5.75 tu 5.75 - 6.25 tu 5.50 - 5.75 q 6.25 - 7.50 q 6.75 - 8.75 q 7.75 - 8.25 q
Detroit 6.00 - 7.00 q 6.75 - 7.50 q 6.50 - 7.50 q 7.50 - 8.25 q 9.00 - 10.50 tu 9.50 - 11.00 tu
Honolulu 4.75 - 5.75 tu — 3.00 - 6.00 tu — 4.50 - 6.00 tu —
Indianapolis 5.25 - 5.50 tu 6.50 - 6.75 tu 5.50 - 5.75 q 6.50 - 6.75 tu 6.00 - 6.50 q 7.25 - 10.00 tu
TIE R III
Jacksonville 4.75 - 5.25 tu 5.50 - 6.25 tu 5.25 - 6.25 tu 6.00 - 7.00 tu 6.00 - 6.50 tu 7.00 - 7.50 tu
Milwaukee 5.00 - 5.75 tu 5.50 - 6.25 tu 5.75 - 6.50 tu 6.25 - 7.00 tu 7.00 - 8.00 tu 7.50 - 8.50 tu
Oklahoma City 5.25 - 5.50 q 6.75 - 7.00 q 6.00 - 6.75 tu 7.50 - 8.25 q 6.75 - 7.50 q 8.75 - 9.50 tu
Pittsburgh 5.50 - 6.50 tu 6.50 - 7.00 tu 6.50 - 7.00 tu 7.00 - 7.50 tu 7.50 - 8.00 tu 8.50 - 9.00 tu
Salt Lake City 4.50 - 5.00 tu 5.25 - 5.50 tu 5.00 - 5.50 tu 6.00 - 6.25 p 5.75 - 6.25 tu 6.50 - 7.00 tu
San Antonio 4.50 - 5.25 tu 4.50 - 5.25 tu 4.75 - 5.50 tu 4.50 - 5.25 q 5.00 - 5.50 q 5.00 - 5.50 q
St. Louis 5.50 - 5.75 tu — 6.00 - 6.75 tu — 7.50 - 8.50 tu —

U.s. multifamily infill | F I G UR E 5 2 : forecast trend s - six month outlook

Boston
Chicago
N. CA: Oakland
N. CA: San Jose
NY: N. New Jersey —
NY: New York City

T IE R I

S. CA: Los Angeles
S. FL: Miami
San Diego
Seattle
Washington, D.C.

U.s. multifamily infill | F IG URE 5 2 : forecast trend s - six month outlook C O N T.

Atlanta
Austin
Baltimore
Charlotte
Dallas/Ft. Worth
Denver
Houston
T IE R II
Nashville
Orlando —
Philadelphia
Phoenix
Portland
Raleigh-Durham
Sacramento
San Antonio
Tampa

u.s. multifamily infill | F IG URE 5 2 : forecast trend s - six month outlook cont .

Albuquerque
Cincinnati
Cleveland
Columbus
Detroit
Honolulu — — —
Indianapolis
Jacksonville
T IE R III
Kansas City
Memphis
Milwaukee
Nashville
Oklahoma City
Pittsburgh
Salt Lake City
San Antonio
St. Louis — — —

u.s. multifamily SUBURBAN | figure 53 : key rates

Boston 4.50 - 5.25 tu 5.75 - 6.25 tu 4.75 - 5.75 q 6.25 - 6.75 q 6.00 - 6.75 tu 7.00 - 7.50 tu p

INCREASE
Chicago 5.25 - 5.50 tu 6.00 - 6.25 tu 5.75 - 5.75 tu 6.75 - 7.00 tu 6.25 - 6.75 tu 7.50 - 7.75 tu q

DECREASE
tu

STABLE
—

N/A
NY: Fairfield County, CT 5.50 - 6.00 tu 6.00 - 6.50 tu 6.00 - 6.50 tu 6.50 - 7.00 tu — —
1
Compared with
H2 2018. Changes
NY: N. New Jersey 5.00 - 5.50 tu 5.75 - 6.25 tu 5.25 - 5.75 tu 6.25 - 6.75 tu 5.75 - 6.50 tu — — less than 15 bps
T IE R I
considered stable.
S. CA: Inland Empire 4.50 - 4.75 tu 5.00 - 5.25 tu 5.00 - 5.50 q 5.25 - 6.00 tu 5.25 - 6.00 q 5.75 - 6.50 tu
Source: CBRE
S. CA: Los Angeles 4.25 - 5.00 p 4.75 - 5.50 p 4.75 - 5.75 p 5.25 - 6.25 p 5.50 - 7.00 p 6.00 - 7.50 p Research, Q2 2019.
S. CA: Orange County 4.00 - 4.75 tu 5.25 - 6.75 tu 4.25 - 5.00 tu 6.00 - 7.50 tu 4.75 - 5.25 tu 6.75 - 8.00 tu to historical revision.
S. FL: Ft. Lauderdale 4.50 - 4.75 tu 5.50 - 5.75 tu 4.25 - 4.75 q 5.50 - 5.75 q 5.00 - 5.50 q 6.25 - 6.50 q Markets represented
S. FL: Miami 4.50 - 4.75 tu 5.50 - 5.75 tu 4.25 - 4.75 q 5.50 - 5.75 q 5.00 - 5.50 q 6.25 - 6.50 q For larger metros, tier
designation is based
S. FL: West Palm Beach 4.75 - 5.00 tu 5.75 - 6.00 tu 4.50 - 5.25 q 5.25 - 6.25 q 5.25 - 5.75 q 6.50 - 6.75 q
on the U.S. Census
San Diego 4.25 - 4.75 tu 4.50 - 4.75 tu 4.50 - 5.00 tu 5.00 - 5.50 tu 5.25 - 5.75 tu 5.75 - 6.25 tu Bureau’s combined
statistical area (CSA)
Seattle 4.50 - 4.75 q 4.50 - 5.00 q 4.75 - 5.00 q 4.75 - 5.25 q 5.25 - 5.75 q 5.25 - 6.00 q definitions. Note that
Washington, D.C. 5.00 - 5.50 tu 5.25 - 6.00 tu 5.25 - 5.75 tu 5.75 - 6.25 tu 6.00 - 6.75 tu 6.75 - 7.50 tu MSAs retain same tier
designation as the
CSA to which they
Class A Class B Class C belong.
Atlanta 4.75 - 5.50 tu 5.75 - 6.50 q 5.25 - 5.75 tu 6.00 - 6.75 tu 6.00 - 6.75 tu 6.50 - 7.25 tu
Austin 4.25 - 4.75 q 4.00 - 4.75 q 4.50 - 5.00 q 4.25 - 5.00 q 4.75 - 5.25 q 4.50 - 5.25 q
Baltimore 5.25 - 5.75 tu 5.50 - 6.00 tu 5.25 - 5.75 tu 6.00 - 6.75 tu 6.00 - 6.75 tu 7.00 - 8.00 tu
Charlotte 5.00 - 5.50 tu 4.75 - 5.25 q 5.25 - 5.75 tu 5.00 - 5.50 q 6.00 - 6.50 tu 6.00 - 6.50 tu
Dallas/Ft. Worth 4.75 - 5.25 tu 5.50 - 6.00 tu 5.50 - 6.00 tu 6.25 - 6.75 tu 6.25 - 6.75 tu 7.00 - 7.50 tu
Denver 4.75 - 5.25 tu 6.00 - 6.75 tu 4.75 - 5.50 tu 6.00 - 7.00 q 5.25 - 5.75 tu 6.75 - 7.50 tu
Houston 4.50 - 5.00 q 5.00 - 5.50 q 5.00 - 5.50 q 5.50 - 6.00 q 6.25 - 6.75 q 8.00 - 8.50 q
TI E R II
Minneapolis/St. Paul 5.00 - 5.50 tu 5.50 - 6.00 tu 5.25 - 5.75 q 6.00 - 6.25 tu 5.25 - 6.00 q 6.00 - 6.50 tu
Nashville 4.75 - 5.25 q 5.50 - 6.00 tu 5.25 - 5.75 tu 5.75 - 6.25 tu 6.00 - 6.50 tu 6.50 - 7.25 tu
Orlando 4.50 - 5.25 tu — 4.50 - 5.25 q 5.25 - 7.00 tu 5.50 - 6.00 q 7.00 - 7.50 q
Philadelphia 5.00 - 5.50 tu 6.00 - 6.50 tu 5.50 - 6.00 tu 6.50 - 7.00 q 6.00 - 6.75 tu 7.00 - 7.75 q
Phoenix 4.50 - 5.00 tu 5.50 - 6.00 q 4.25 - 5.00 q 5.50 - 6.25 q 4.75 - 5.25 q 5.75 - 6.50 q
Portland 4.50 - 4.75 tu 4.75 - 5.00 tu 5.00 - 5.25 tu 5.25 - 5.50 q 5.00 - 5.25 q 6.25 - 6.75 tu
Raleigh-Durham 4.75 - 5.50 tu 5.50 - 6.00 tu 5.00 - 5.75 tu 5.50 - 6.00 tu 5.50 - 6.25 tu 6.00 - 6.50 tu
Sacramento 4.75 - 5.25 tu 5.25 - 6.00 tu 5.00 - 5.50 p 5.50 - 6.50 p 5.25 - 5.75 tu 5.50 - 6.50 tu
Tampa 4.75 - 5.25 tu 5.25 - 5.75 tu 5.00 - 5.50 tu 5.75 - 6.25 tu 6.00 - 6.50 tu 6.75 - 7.50 tu

u.s. multifamily SUBURBAN | F I G UR E 5 3 : key rates cont.

Cincinnati 5.00 - 5.75 tu 6.50 - 7.50 tu 5.00 - 5.75 tu 7.00 - 8.00 tu 6.00 - 7.00 tu 7.50 - 8.50 tu
Cleveland 5.50 - 6.00 tu 7.00 - 8.00 tu 6.50 - 7.50 tu 7.50 - 8.50 tu 7.50 - 8.50 q 9.00 - 11.00 tu
Columbus 5.50 - 6.00 q 5.50 - 6.00 q 6.00 - 6.50 tu 6.50 - 6.75 tu 6.75 - 7.50 tu 8.25 - 8.50 tu
Detroit 5.75 - 6.75 tu 6.50 - 7.50 tu 6.25 - 7.25 tu 7.00 - 7.50 tu 7.50 - 8.50 tu 8.50 - 10.00 tu
Honolulu 4.25 - 5.50 tu — 4.75 - 6.50 tu — 5.25 - 6.75 tu —
Indianapolis 5.00 - 5.50 q 6.50 - 6.75 tu 5.25 - 5.50 q 6.50 - 6.75 tu 6.25 - 7.50 q 8.00 - 10.00 tu
T IE R III
Jacksonville 4.75 - 5.50 tu 5.25 - 5.75 tu 5.00 - 6.00 tu 6.50 - 7.00 tu 5.00 - 7.00 q 7.00 - 8.00 tu
Las Vegas 4.50 - 4.75 q 4.75 - 5.00 q 4.75 - 5.25 q 5.00 - 5.50 q 4.75 - 5.25 q 5.00 - 5.50 q
Milwaukee 5.25 - 6.25 tu 6.00 - 6.75 tu 6.25 - 7.00 tu 6.75 - 7.50 tu 7.50 - 8.50 tu 8.00 - 9.00 tu
Oklahoma City 5.50 - 6.00 tu 7.00 - 7.50 q 6.00 - 6.75 tu 7.50 - 8.25 q 6.75 - 7.50 q 8.75 - 9.50 tu
Pittsburgh 5.25 - 6.00 q 6.00 - 6.75 q 6.50 - 7.00 tu 7.00 - 7.50 tu 7.50 - 8.00 tu 8.50 - 9.00 tu
Salt Lake City 4.75 - 5.00 tu 5.00 - 5.25 tu 5.00 - 5.50 tu 5.50 - 6.00 tu 5.75 - 6.00 tu 6.00 - 6.50 tu
San Antonio 4.50 - 5.25 tu 4.50 - 5.25 tu 4.75 - 5.50 tu 4.50 - 5.25 q 5.00 - 5.75 q 5.00 - 5.75 q
St. Louis 5.50 - 5.75 tu — 6.00 - 6.75 tu — 7.25 - 8.25 tu —
1

u.s. multifamily SUBURBAN | F I G UR E 54 : f orecast trend s - six month outlook

Boston
Chicago
N. CA: Oakland
N. CA: San Jose
NY: N. New Jersey —
NY: New York City

T IE R I

S. CA: Los Angeles
S. FL: Miami
San Diego
Seattle
Washington, D.C.

u.s. multifamily SUBURBAN | F I G UR E 54 : f orecast trend s - six month outlook cont.

Atlanta
Austin
Baltimore
Charlotte
Dallas/Ft. Worth
Denver
Houston
T IE R II
Nashville
Orlando —
Philadelphia
Phoenix
Portland
Raleigh-Durham
Sacramento
San Antonio
Tampa

u.s. multifamily SUBURBAN | F I G UR E 5 4 : f orecast trend s - six month outlook cont.

Albuquerque
Cincinnati
Cleveland
Columbus
Detroit
Honolulu — — —
Indianapolis
Jacksonville
T IE R III
Kansas City
Las Vegas
Memphis
Milwaukee
Nashville
Oklahoma City
Pittsburgh
Salt Lake City
San Antonio
St. Louis — — —

u.s. hotel | Overview
cbd f igure 5 5 : U. S. H otel CB D - cap rates f or stabilized properties

Unlike in recent surveys, U.S. hotel cap rates did not move in lockstep in H1 2019.
all 8.01 7.98 3
Cap rate movement reflected the disparate supply-and-demand dynamics across the
LUXURY 7.05 7.04 1
country. STR data for H1 2019 indicates greater supply growth than demand growth All Full-service 7.75 7.69 6
(2.5% versus 1.3%) in the top-25 markets and greater demand growth than supply Select-service 8.04 8.03 1
growth (2.6% versus 1.8%) in other hotel markets. The most dramatic cap rate increases ECONOMY 9.20 9.17 4
occurred among full-service and economy classes in Tier I cities. Every market class in LUXURY 6.44 6.39 5
Tier III cities recorded declines in hotel cap rates, the most noteworthy of which was a Full-service 7.30 7.20 10
I
Select-service 7.70 7.69 1
9-bp drop in the economy class.
ECONOMY 8.90 8.78 12
LUXURY 7.29 7.34 -5
Cap rate increases in H1 2019 were modest albeit consistent across CBD market
Full-service 7.89 7.84 5
classes (luxury, full-service, select-service, and economy). The overall CBD cap rate II
increased by only 3 bps to 8.01%, marking the first time since H1 2013 that the CBD
ECONOMY 9.33 9.31 2
hotel cap rate exceeded 8%. LUXURY 7.75 7.78 -2
Full-service 8.34 8.39 -4
Evidence suggests that the pace of CBD hotel room additions is quickening. STR data III
Select-service 8.33 8.36 -3
revealed a widening spread between supply and demand growth throughout H1 ECONOMY 9.51 9.60 -9
2019, which is influencing investor bidding.
Changes in CBD hotel cap rates across Tier I, Tier II and Tier III markets and
corresponding classes differed in H1. The largest increases occurred for the full-service
and economy classes in Tier I markets. Cap rates in Tier I CBDs for full-service hotels some California, Florida and non-coastal-market CBDs, full-service cap rates are at
increased by 10 bps to 7.30% and by 12 bps for economy hotels. In contrast, CBD mid-8% levels.
cap rates in Tier III markets declined 5 bps to 8.49%, while those in Tier II markets
remained relatively unchanged at 8.18%. STR reported a positive spread between suburban
demand and supply growth in small markets. Anecdotal evidence collected by CBRE
The average suburban hotel cap rate increased by 5 bps to 8.55% in H1. Suburban
also suggests that investor interest in small markets is growing.
hotel cap rates for full-service properties in Tier I metros increased by 20 bps to
Full-service hotels dominate the CBD segment. Except for Denver and Orlando, the 8.02%. Cap rates for suburban economy hotels rose 14 bps to 9.56%. In Tier III
lowest full-service CBD cap rates remain in coastal markets. Cap rates in the Boston, suburban markets, hotel cap rates declined by 6 bps to 8.91%. The largest decline
Washington, D.C. and Seattle CBDs haven increased but remain below 7.00%. In was 10 bps for economy hotels to 10.00%

u.s. hotel | Overview cont.
figure 56: U. S. hotel cb d - full service cap rates, h 1 2 0 1 9 - F I G U R e 5 7 : U. S. hotel cbd - historical cap rates by hotel ty pe
tier i & ii metros
%
Boston 10
Washington, D.C.
Seattle
9
NY: New York City
San Diego
Denver 8
S. FL: Miami
7
S. CA: Los Angeles
Tier I Average
Orlando 6
N. CA: San Francisco H1 2015 H1 2016 H1 2017 H1 2018 h1 2019
NY: N. New Jersey
Tampa Luxury Full-Service Select-Service Economy
All markets average
Phoenix
Portland
Austin
F I G U R E 5 8 : U. S. hotel cb d - historical class a f ull- service
Philadelphia
cap rates b y tier
Atlanta
Chicago
Tier II Average %
Nashville
8.5
Baltimore
Houston
S. FL: Ft. Lauderdale 8.0
Las Vegas
Dallas/Ft. Worth
Tier iII Average 7.5
N. CA: San Jose
7.0
N. CA: Oakland
5.0% 5.5% 6.0% 6.5% 7.0% 7.5% 8.0% 8.5% 6.5
Tier I Tier II Tier III All Markets H1 2015 H1 2016 H1 2017 H1 2018 h1 2019
Source: CBRE Research, Q2 2019. Data for stabilized acquisitions. Notes: data is subject to historical revisions. Markets represent Tier I Tier II Tier III

U.s. hotel | Overview cont.
figure 59: U. S. Hotel S uburban - cap rates f or stabili z e d f igure 6 0 : U. S. hotel suburban - f ull- service cap rates, h1 2019
properties tier I & I I metros

all 8.55 8.50 5 San Diego
LUXURY 7.61 7.59 2
S. CA: Los Angeles
All Full-service 8.26 8.18 8
Washington, D.C.
Select-service 8.53 8.50 3 N. CA: San Jose
ECONOMY 9.74 9.69 5 N. CA: Oakland
LUXURY 7.38 7.32 6 Phoenix

Boston
Full-service 8.02 7.82 20
I Orlando
Tampa
ECONOMY 9.56 9.43 14 Tier I Average
LUXURY 7.60 7.62 -3 Seattle
Full-service 8.25 8.22 3 Philadelphia

II NY: N. New Jersey
NY: New York City
ECONOMY 9.77 9.74 3
S. FL: Miami
LUXURY 8.18 8.21 -3 Las Vegas
Full-service 8.72 8.80 -8 Dallas/Ft. Worth
III
Select-service 8.62 8.63 -1 Tier II Average
ECONOMY 10.00 10.10 -10 All Markets average

Austin
Source: CBRE Research, Q2 2019. Denver
Atlanta
Portland
Baltimore
Houston
Tier iII Average
Nashville
Chicago
6.0% 6.5% 7.0% 7.5% 8.0% 8.5% 9.0%

Tier I Tier II Tier III All Markets
Source: CBRE Research, Q2 2019. Data for stabilized acquisitions. Notes: data is subject to historical revisions. Markets represent metropolitan
areas. For larger metros, tier designation is based on the U.S. Census Bureau’s combined statistical area (CSA) definitions. Note that MSAs retain
the same tier designation as the CSA to which they belong. See tier methodology for further explanation.

u.s. hotel | Overview cont.
F I G U R E 6 1 : U. S . hotel suburban - historical cap rates b y F I G U R E 6 3 : U. S. hotel Rate trends - si x month outloo K
hotel t y pe
# Responses CBD Suburban

%
140
10
120
9
100
8 80
60
7
40
H1 2015 H1 2016 H1 2017 H1 2018 h1 2019
Luxury Full-Service Select-Service Economy 20
0
FIGUR E 62: U. S. hotel suburban - historical f ull- service cap (50+ bps) (25-49 bps) (1-24 bps) (1-24 bps) (25-49 bps) (50+ bps)
rates by tier
%
9.0
8.5
8.0
7.5
7.0
H1 2015 H1 2016 H1 2017 H1 2018 h1 2019
Tier I Tier II Tier III


u.s. hotel LuxUry/Full service | F IG U R E 6 4 : key rates
LUXURY Full-Service
sUBURBAN sUBURBAN
cbd cap rates cap rates CBD cap rates cap rates
for Stabilized for Stabilized for Stabilized for Stabilized
properties (%) CHANGE1 properties (%) CHANGE1 properties (%) CHANGE1 properties (%) CHANGE1
Boston 4.00 - 6.50 tu 6.50 - 7.50 p 5.50 - 7.00 p 7.50 - 8.00 p p

INCREASE
Chicago 6.75 - 7.50 tu 7.50 - 8.75 tu 7.00 - 8.75 q 8.00 - 10.00 p q

DECREASE
N. CA: Oakland 7.50 - 8.50 tu 7.50 - 8.50 tu 8.00 - 9.00 tu 7.00 - 8.00 tu tu

STABLE
N. CA: San Francisco 6.00 - 7.00 tu 7.00 - 8.00 tu 7.00 - 8.00 tu 8.00 - 9.00 tu —

N/A
N. CA: San Jose 7.50 - 8.50 tu 7.50 - 8.50 tu 8.00 - 9.00 tu 7.00 - 8.00 tu 1
Compared with end of H2 2018
NY: N. New Jersey 6.25 - 6.75 tu 7.00 - 7.75 tu 6.75 - 8.25 tu 7.50 - 9.00 tu Changes less than 15 bps
considered stable. All rates are
NY: New York City 4.50 - 5.50 tu 6.50 - 8.00 tu 6.50 - 7.50 tu 7.50 - 9.00 tu rounded to the nearest 25 bps.
T IE R I
S. CA: Inland Empire 7.25 - 9.00 p 7.25 - 9.00 tu 7.50 - 9.25 p 7.50 - 9.25 tu Source: CBRE Research, Q2 2019.
S. CA: Los Angeles 5.50 - 8.00 p 6.00 - 8.00 p 6.50 - 8.00 p 6.75 - 8.00 p revision. Markets represented by
S. CA: Orange County 5.50 - 8.00 p 6.00 - 8.00 p 6.50 - 8.00 p 6.75 - 8.00 p metropolitan areas. For larger
metros, tier designation is based on
S. FL: Ft. Lauderdale 7.00 - 8.00 tu 7.50 - 8.50 tu 7.50 - 8.50 tu 8.25 - 9.25 tu the U.S. Census Bureau’s combined
statistical area (CSA) definitions.
S. FL: Miami 6.25 - 7.00 tu 7.00 - 7.75 tu 6.75 - 7.75 tu 7.75 - 8.75 tu Note that MSAs retain same tier
S. FL: West Palm Beach 8.00 - 8.50 tu 8.25 - 9.00 tu 8.00 - 8.75 tu 8.50 - 9.50 tu designation as the CSA to which
they belong.
San Diego 5.50 - 8.00 p 6.00 - 8.00 tu 6.50 - 8.00 p 6.75 - 8.00 p
Seattle 6.00 - 6.50 tu 6.75 - 7.75 tu 6.25 - 7.00 tu 7.75 - 8.50 tu
Washington, D.C. 4.50 - 6.00 tu 6.00 - 7.50 tu 6.00 - 7.00 p 6.50 - 8.50 tu
LUXURY Full-Service
sUBURBAN sUBURBAN
Atlanta 6.50 - 8.00 tu 7.00 - 8.25 tu 7.25 - 8.50 tu 7.75 - 9.00 tu
Austin 6.50 - 8.00 tu 7.00 - 8.25 tu 7.25 - 8.50 tu 7.75 - 9.00 tu
Baltimore 6.50 - 7.50 tu 8.00 - 9.00 tu 7.50 - 8.50 tu 8.00 - 9.00 tu
Dallas/Ft. Worth 7.50 - 8.50 tu 7.50 - 8.50 tu 7.75 - 8.75 p 7.75 - 8.75 p
Denver 6.00 - 6.50 q 7.00 - 7.50 tu 7.00 - 7.50 tu 8.00 - 8.75 tu
Houston 7.50 - 8.50 q 7.50 - 8.50 q 7.50 - 8.50 q 8.00 - 9.00 q

TI E R II
Las Vegas 7.00 - 8.00 tu 7.25 - 8.25 tu 7.75 - 8.75 tu 7.75 - 8.75 tu
Minneapolis/St. Paul 7.25 - 8.25 p 7.50 - 8.25 tu 7.25 - 8.50 tu 8.25 - 9.75 p
Nashville 7.50 - 8.00 tu 7.75 - 8.00 tu 7.75 - 8.25 p 8.25 - 9.50 tu
Orlando 6.00 - 7.50 tu 6.50 - 7.75 tu 6.75 - 8.00 tu 7.00 - 8.50 tu
Philadelphia 6.00 - 6.50 tu 6.50 - 7.00 tu 7.50 - 8.25 tu 7.75 - 8.50 tu
Phoenix 6.75 - 6.75 tu 6.75 - 6.75 tu 7.75 - 7.75 tu 7.75 - 7.75 tu
Portland 7.25 - 8.25 tu 8.25 - 8.50 tu 7.50 - 8.25 tu 8.25 - 8.50 tu
Tampa 6.25 - 7.50 tu 6.50 - 7.75 tu 7.00 - 8.25 tu 7.25 - 8.50 tu

u.s. hotel LuxUry/Full service | F I GU R E 6 4 : key rate cont.
luxury full-service
sUBURBAN sUBURBAN
Albuquerque 7.25 - 8.25 tu 7.75 - 8.50 tu 7.75 - 9.00 tu 8.25 - 9.25 tu
Charlotte 6.00 - 8.00 tu 6.50 - 8.00 tu 7.00 - 8.00 tu 7.50 - 9.00 tu
Cincinnati 8.00 - 8.50 tu 8.25 - 8.75 tu 8.50 - 9.00 tu 8.50 - 9.00 tu
Cleveland 8.00 - 8.50 tu 8.25 - 8.75 tu 8.50 - 9.00 tu 8.50 - 9.00 tu
Columbus 8.00 - 8.50 tu 8.25 - 8.75 tu 8.50 - 9.00 tu 8.50 - 9.00 tu
Detroit 8.00 - 8.50 tu 8.00 - 8.75 tu 8.25 - 9.00 tu 9.25 - 10.25 tu
Honolulu 5.00 - 7.00 tu — — 6.75 - 9.00 tu
T IE R III
Indianapolis 7.00 - 8.50 tu 8.00 - 9.00 tu 7.50 - 9.00 tu 8.00 - 9.50 q

Jacksonville 6.25 - 7.50 tu 7.00 - 8.00 tu 7.00 - 8.00 tu 7.50 - 8.50 tu
Kansas City 7.50 - 8.50 tu 8.00 - 8.75 tu 8.00 - 9.25 tu 8.25 - 9.50 tu
New Orleans 7.25 - 7.75 — 7.50 - 8.50 — 7.50 - 8.50 — 8.00 - 9.00 —
Oklahoma City 8.00 - 9.00 tu 8.00 - 9.00 tu 8.25 - 9.50 tu 8.50 - 9.75 tu
Pittsburgh 7.50 - 8.50 tu 8.25 - 8.75 tu 8.50 - 9.00 tu 8.50 - 9.00 tu
Sacramento 7.50 - 9.00 tu — 8.00 - 9.00 tu 9.00 - 10.00 tu
Salt Lake City 6.25 - 7.25 tu 6.75 - 7.75 tu 8.00 - 8.75 tu 8.25 - 9.00 tu
San Antonio — — 7.00 - 8.00 tu 7.50 - 8.50 tu
St. Louis 7.50 - 9.50 tu 7.50 - 9.50 tu 7.50 - 10.50 q 8.00 - 10.50 tu
1
Compared with end of H2 2018. Changes less than 15 bps considered stable. All rates are rounded to the nearest 25 bps.

u.s. hotel select/economy | F I G UR E 6 4 : key rates cont.
select-service Economy
sUBURBAN sUBURBAN
Boston 6.50 - 7.50 p 7.50 - 8.50 p — 8.00 - 9.00 q p

INCREASE
Chicago 7.25 - 8.25 q 8.50 - 9.50 p 9.50 - 10.75 p 10.00 - 12.00 p q

DECREASE
N. CA: Oakland 8.50 - 10.50 tu 8.00 - 9.00 tu 9.50 - 11.50 tu 9.50 - 11.50 tu tu

STABLE
N. CA: San Francisco 8.00 - 9.00 tu 9.50 - 10.50 tu 8.50 - 10.50 tu 9.50 - 11.50 tu
—

N/A
N. CA: San Jose 8.50 - 10.50 tu 8.00 - 9.00 tu 9.50 - 11.50 tu 9.50 - 11.50 tu
1
Compared wtih end of H2 2018.
NY: N. New Jersey 7.75 - 8.75 tu 7.75 - 9.00 tu 8.00 - 9.00 tu 9.00 - 10.50 tu Changes less than 15 bps consid-
ered stable. All rates are rounded
NY: New York City 6.75 - 8.00 tu 7.75 - 9.50 tu 8.00 - 9.00 tu 9.00 - 11.00 tu
to the nearest 25 bps.
T IE R I
S. CA: Inland Empire 7.25 - 9.25 tu 7.25 - 9.25 tu 8.00 - 10.00 tu 8.00 - 10.25 tu
S. CA: Los Angeles 6.75 - 8.00 tu 6.75 - 8.25 tu 7.75 - 9.00 p 7.75 - 9.00 tu Notes: Data is subject to historical
revision. Markets represented by
S. CA: Orange County 6.75 - 8.00 tu 6.75 - 8.25 p 7.75 - 9.00 p 7.75 - 9.00 tu
metropolitan areas. For larger
S. FL: Ft. Lauderdale 8.00 - 9.00 tu 8.50 - 9.50 tu 9.00 - 10.00 tu 9.50 - 10.50 tu metros, tier designation is based on
the U.S. Census Bureau’s combined
S. FL: Miami 8.00 - 8.50 tu 8.75 - 9.25 tu 9.00 - 10.00 tu 9.50 - 10.25 tu statistical area (CSA) definitions.
S. FL: West Palm Beach 8.50 - 9.50 tu 9.00 - 10.00 tu 9.00 - 10.00 tu 9.50 - 10.50 tu Note that MSAs retain same tier
designation as the CSA to which
San Diego 6.75 - 8.00 tu 6.75 - 8.25 tu 7.75 - 9.00 tu 8.25 - 9.25 tu they belong.
Seattle 6.75 - 7.25 tu 7.75 - 8.50 tu 8.50 - 9.25 p 9.50 - 10.50 p
Washington, D.C. 6.50 - 7.50 p 7.50 - 9.00 tu 7.00 - 8.00 tu 8.50 - 9.50 tu
Select-Service ECONOMY
sUBURBAN sUBURBAN
Atlanta 7.75 - 9.00 tu 8.25 - 9.50 tu 8.50 - 9.75 tu 9.50 - 11.00 tu
Austin 7.75 - 9.00 tu 8.25 - 9.50 tu 8.50 - 9.75 tu 9.50 - 11.00 tu
Baltimore 7.50 - 8.50 tu 8.25 - 9.25 tu 8.00 - 9.50 tu 8.50 - 10.00 tu
Dallas/Ft. Worth 7.50 - 8.25 p 7.75 - 9.00 tu 8.00 - 10.00 tu 8.50 - 11.00 tu
Denver 7.50 - 8.25 tu 8.00 - 8.75 tu 8.25 - 9.00 tu 8.50 - 9.50 tu
Houston 7.50 - 8.50 q 8.00 - 9.00 q 8.50 - 10.75 q 9.00 - 10.75 q
TI E R II
Las Vegas 8.00 - 9.50 tu 8.00 - 9.50 tu 9.00 - 10.25 tu 9.00 - 10.25 tu
Minneapolis/St. Paul 7.75 - 8.75 q 8.50 - 10.00 tu 8.25 - 10.25 p 9.25 - 10.75 p
Nashville 7.75 - 8.50 p 8.75 - 9.50 tu 9.75 - 10.50 p 10.00 - 10.75 p
Orlando 8.00 - 8.75 tu 8.25 - 9.00 tu 9.25 - 10.00 tu 9.25 - 10.00 tu
Philadelphia 7.50 - 8.50 tu 7.75 - 8.50 tu 8.75 - 9.25 tu 10.00 - 10.50 tu
Phoenix 7.50 - 7.50 tu 7.75 - 7.75 tu 9.00 - 9.00 tu 9.25 - 9.25 tu
Portland 7.75 - 8.75 tu 8.25 - 9.25 tu 9.00 - 9.75 tu 9.50 - 10.50 p
Tampa 8.00 - 9.00 tu 8.25 - 9.00 tu 9.25 - 10.00 tu 9.25 - 10.00 tu

u.s. hotel select/economy | F I G UR E 6 4 : key rates cont.
select-service economy
sUBURBAN sUBURBAN
Albuquerque 8.25 - 9.00 tu 8.25 - 9.25 tu 9.25 - 10.50 tu 9.25 - 10.50 tu
Charlotte 7.00 - 8.50 tu 8.00 - 9.00 tu 8.25 - 10.00 tu 9.00 - 11.00 tu
Cincinnati 8.50 - 9.00 tu 8.50 - 9.00 tu 9.00 - 10.00 tu 10.00 - 11.00 tu
Cleveland 8.50 - 9.00 tu 8.50 - 9.00 tu 9.00 - 10.00 tu 10.00 - 11.00 tu
Columbus 8.50 - 9.00 tu 8.50 - 9.00 tu 9.00 - 10.00 tu 10.00 - 11.00 tu
Detroit 8.25 - 9.00 tu 8.50 - 9.50 tu 10.00 - 11.00 tu 10.75 - 11.75 tu
Honolulu — 7.25 - 10.25 tu — 8.25 - 11.25 tu
T IE R III
Indianapolis 7.50 - 8.50 tu 8.25 - 9.25 tu 9.50 - 11.00 p 9.50 - 11.00 q

Jacksonville 8.00 - 8.75 tu 8.25 - 9.00 tu 9.50 - 10.00 tu 9.50 - 10.00 tu
Kansas City 7.75 - 8.75 tu 8.00 - 9.00 tu 9.00 - 11.00 tu 9.25 - 11.50 tu
New Orleans 7.50 - 8.50 8.00 - 9.00 8.00 - 9.00 8.50 - 9.50
Oklahoma City 8.00 - 9.25 tu 8.25 - 9.50 tu 9.50 - 11.50 tu 9.75 - 11.50 tu
Pittsburgh 8.50 - 9.00 tu 8.50 - 9.00 tu 9.00 - 10.00 tu 10.00 - 11.00 tu
Sacramento 7.50 - 8.50 tu 7.50 - 8.50 tu 8.50 - 10.00 tu 8.50 - 10.00 tu
Salt Lake City 7.25 - 8.25 tu 7.25 - 8.25 tu 8.00 - 9.00 tu 8.00 - 9.00 tu
San Antonio 7.00 - 8.00 tu 7.50 - 9.00 tu 7.50 - 10.00 tu 8.00 - 11.00 tu
St. Louis 8.00 - 10.50 tu 8.00 - 10.25 tu 8.50 - 10.50 q 8.75 - 10.50 tu
1
Compared with end of H2 2018. Changes less than 15 bps considered stable. All rates are rounded to the nearest 25 bps.

u.s. hotel | FIGURE 6 5 : forecast tren d s - six month outlook
LUXURY Full-Service Select-Service ECONOMY

suburban suburban suburban suburban
cbd cap rates cap rates cbd cap rates cap rates cbd cap rates cap rates cbd cap rates cap rates
for stabilized for stabilized for stabilized for stabilized for stabilized for stabilized for stabilized for stabilized
properties properties properties properties properties properties properties properties
Boston — Increase
Chicago
Decrease
N. CA: Oakland
N. CA: San Francisco stable
N. CA: San Jose
NY: N. New Jesrey — N/A
NY: N. New York City Forecasts represent

T IE R I
S. CA: Inland Empire the opinions of CBRE

professionals of where
S. CA: Los Angeles rates are likely to trend
S. CA: Orange County in H 2 2019.
Source: CBRE Research,
S. FL: Ft. Lauderdale Q2 2019.
S. FL: Miami to historical revision.
S. FL: West Palm Beach Markets represented
San Diego For larger metros, tier
Seattle designation is based on
the U.S. Census Bureau’s
Washington, D.C. combined statistical
area (CSA) definitions.
Note that MSAs retain
same tier designation as
LUXURY Full-Service Select-Service ECONOMY the CSA to which they
belong.
Atlanta
Austin
Baltimore
Dallas/Ft. Worth
Denver
Houston
TI E R II
Las Vegas
Nashville
Orlando
Philadelphia
Phoenix
Portland
Tampa

u.s. hotel | FIGURE 6 5 : forecast tren d s - six month outlook cont.
LUXURY Full-Service Select-Service ECONOMY

Albuquerque
Charlotte
Cincinnati
Cleveland
Columbus
Detroit
Honolulu — — — —
T IE R III
Indianapolis
Jacksonville
Kansas City
New Orleans
Oklahoma City
Pittsburgh
Sacramento —
Salt Lake City
San Antonio — —
St. Louis

canada | OVERVIEW
Key Observations FIGURE 66: canada national-level cap rates by property type ,
segment and class
• Cap rates remained relatively stable for Canada’s major property sectors in
STABILIZED PROPERTY ACQUISITIONS
H1 2019. Marginal increases were restricted almost exclusively to lower-quality
SPREAD OVER -
product within the retail and suburban office sectors, as well as in Tier II and III 10-YEAR bond
markets. Investors’ focus is currently on value-add opportunities and sentiment Cap Rate yield (bps)
PROPERTY H1 2019 H2 2018 CHANGE H1 2019 H2 2018
turned very aggressive in H1. TYPE SEgment CLASS (%) (%) (bps) (%) EOP (%) EOP
1.47 1.96
• Slowing global growth, a softening in monetary policy and the Bank of AA 4.85 4.81 4 338 285
Canada’s shift to a more dovish stance resulted in a significant drop in cbd A 5.63 5.63 0 416 367
office B 6.55 6.50 5 508 454
Canadian bond yields in H1. The benchmark Canadian 10-year bond yield A 6.39 6.33 6 492 437
suburban
fell to 1.47% from 1.96%. While several years of cap rate compression B 7.22 7.16 6 575 520
A 5.11 5.17 -6 364 321
progressively tightened spreads to bonds, the recent reversal of benchmark industrial all
B 6.14 6.16 -2 467 420
yields should support increased liquidity and more accommodative financing
neighborhood/
opportunities in the near term. community all 6.28 6.25 3 481 429
center
retail
power CenteR ALL 6.23 6.19 4 476 423
infill A 3.86 3.91 -5 239 195

multi-
family
suburban B 4.91 4.92 -1 344 296
cbd FULL SERVICE 7.08 7.08 0 561 512
hotel
suburban SELECT SERVICE 8.20 8.20 0 673 624
Source: CBRE Research, Q2 2019, Bank of Canada. EOP = end of period.

Notes: H2 Government of Canada 10-year Bond Yield as of June 28, 2019. Some numbers may not total due to
rounding.

canada Office | Overview
cbD and suburban FIGURE 67: canadian office cbd and suburban - historical cap
rates by class
Canadian office cap rates remained stable in H1 2019, with none of those for any
%
property type changing by more than 6 bps. Rate increases were almost exclusively for
Class B properties and assets in suburban or secondary markets. Pricing for Class AA 8
and A assets in CBDs have remained essentially unchanged since 2017 and investor 7
interest in this market segment has remained high.
6
Three markets had moderate office cap rate increases in H1. Toronto and Ottawa 5
each had 25-bp increases for suburban Class A and B rates, while Montreal had a
4
25-bp increase to 4.75% in CBD Class AA rates and a 38-bp increase to 6.00% in
H1 2013 H1 2014 H1 2015 H1 2016 H1 2017 H1 2018 H1 2019
Class B rates. The only market with a decrease in office cap rates in H1 was Kitchener-
Waterloo, where the rate for suburban Class B assets fell by 38 bps to 6.88%. CBD AA CBD A CBD B Suburban A Suburban B
Source: CBRE Research, Q2 2019. Data for stabilized acquisitions. Note: data is subject to historical revision.

canada OFFICE CBD | F IG URE 6 8 : key rates
CLASS AA CLASS A CLASS B
cap rates cap rates cap rates

for Stabilized for Stabilized for Stabilized
properties (%) CHANGE1 properties (%) CHANGE1 properties (%) CHANGE1
Toronto 4.00 - 4.50 4.25 - 4.75 4.75 - 5.25
tier i
tu tu tu
Vancouver 3.75 - 4.00 tu 3.75 - 4.25 tu 4.00 - 4.50 tu

properties (%) CHANGE1 properties (%) CHANGE1 properties (%) CHANGE1
Calgary 5.25 - 5.75 tu 6.25 - 7.00 tu 7.75 - 8.50 tu
tier ii
Edmonton 5.50 - 6.00 tu 6.75 - 7.50 tu 8.00 - 10.00 tu
Montreal 4.50 - 5.00 p 5.00 - 5.50 tu 5.75 - 6.25 p

properties (%) CHANGE 1
Halifax — 6.25 - 6.75 tu 7.00 - 7.50 tu
Kitchener - Waterloo — 6.00 - 7.00 tu 6.50 - 7.25 tu
London - Windsor — 6.50 - 8.50 tu 8.00 - 9.00 tu

T IE R I II
Ottawa 4.75 - 5.25 tu 5.00 - 5.50 tu 5.75 - 6.25 tu
Quebec City — 6.00 - 6.75 tu 6.25 - 7.50 tu
Saskatoon — 6.50 - 7.25 tu 7.25 - 8.25 tu
Victoria — 4.75 - 5.25 tu 5.25 - 5.75 tu
Winnipeg — 5.50 - 6.00 tu 6.50 - 7.00 tu
1
Compared with Q4 2018. Changes less than 15 bps considered stable. All rates are rounded to the nearest 25 bps.

canada OFFICE SUBURBAN | fi G UR E 6 9: key rates
CLASS A CLASS B
cap rates cap rates

for Stabilized for Stabilized
tier i
Toronto 5.75 - 6.50 p 6.75 - 7.50 p
Vancouver 4.75 - 5.50 tu 5.25 - 6.00 tu
CLASS A CLASS B
cap rates cap rates

Calgary 6.25 - 6.75 tu 7.50 - 8.25 tu
tier ii
Edmonton 6.75 - 7.50 tu 7.50 - 8.00 tu
Montreal 5.75 - 6.25 tu 6.75 - 7.50 tu
CLASS A CLASS B
cap rates cap rates

properties (%) CHANGE1 properties (%) CHANGE1
Halifax 6.50 - 7.50 tu 7.50 - 8.00 tu
Kitchener - Waterloo 6.00 - 7.00 tu 6.50 - 7.25 q
London - Windsor 7.50 - 8.00 tu 8.00 - 8.50 tu

T I ER I I I
Ottawa 6.25 - 6.75 p 7.00 - 7.50 p
Quebec City 6.25 - 7.00 tu 6.50 - 7.25 tu
Saskatoon 6.50 - 7.25 tu 7.25 - 8.00 tu
Victoria 5.00 - 5.50 tu 5.25 - 5.75 tu
Winnipeg 6.50 - 7.00 tu 7.00 - 7.50 tu
1

canada industrial | Overview
Canadian industrial cap rates continued to fall in H1 2019, with the national FIGURE 70: canadian INDUSTRIAL - historical cap rates by class
average Class A & B cap rates each dropping moderately to 5.11% and 6.14%. This
marked the 11th and 8th consecutive halves, respectively, in which the Class A and %
B cap rates have fallen. This trend has been fueled by continued strong industrial 8
property fundamentals from ecommerce growth and rising demand for logistics,
warehousing and distribution space in Canada. Elevated liquidity, paired with the
7
recent dip in benchmark bond yields, has placed significant downward pressure on
cap rates.
6
With yields near or below 4.0% in both Vancouver and Toronto, investors are
showing an increased interest in Tier II and III markets. Victoria, Kitchener-Waterloo,
Montreal, Quebec City and Halifax all recorded decreases in industrial cap rates 5
in H1. The only increase was in Edmonton, where Class B yields rose by 25 bps H1 2013 H1 2014 H1 2015 H1 2016 H1 2017 H1 2018 H1 2019
to 7.00%. Class A Class B

canada industrial | F I G UR E 7 1 : key rates
CLASS A CLASS B
cap rates cap rates

tier i
Toronto 4.00 - 4.50 tu 5.00 - 6.00 tu
Vancouver 3.50 - 4.00 tu 4.25 - 4.75 tu
CLASS A CLASS B
cap rates cap rates

Calgary 5.00 - 5.50 tu 5.75 - 6.25 tu
tier ii
Edmonton 5.25 - 5.75 tu 6.75 - 7.25 p
Montreal 4.50 - 5.25 q 5.50 - 6.50 tu
CLASS A CLASS B
cap rates cap rates

Halifax 6.00 - 6.50 q 7.00 - 7.50 q
Kitchener - Waterloo 5.50 - 6.00 tu 5.50 - 7.00 q

tier iii
Ottawa 4.50 - 5.00 tu 5.50 - 6.50 tu
Quebec City 6.00 -7.00 tu 7.00 - 8.50 q
Saskatoon 6.25 - 7.00 tu 6.75 - 7.25 tu
Victoria 4.75 - 5.25 q 4.75 - 5.25 q
Winnipeg 6.00 - 6.50 tu 6.50 - 7.25 tu
1

canada retail | Overview
neighborhood/community and power center FIGURE 72: canadian Retail neighborhood/community and power
center - historical cap rates b y class
As in 2018, retail cap rates differed significantly by property type and market in
H1. While only minimal movements in cap rates occurred for power centers and %
neighborhood/community centers, investor sentiment regarding these property 8
categories remained muted. Pricing remained resilient for other retail property types,
including regional malls and anchored strip centers, particularly for assets with 7
repurposing and redevelopment potential. Despite turmoil in the retail sector at large,
significant liquidity remains for high-quality retail assets in primary CBD markets.
6
By market classification, the largest increases in retail cap rates were in Tier II
and III markets, where a significant amount of retail property has sold—largely
to REITs. While no market had any material compression in retail yields in H1, 5
investor interest for assets in Vancouver and Toronto remained high and pricing H1 2013 H1 2014 H1 2015 H1 2016 H1 2017 H1 2018 H1 2019
should remain elevated in these markets for the foreseeable future with strong and Power Neighborhood/Community
elevated demand from private investors.
Source: CBRE Research, Q2 2019. Data for acquisition of stablized grocery-anchored neighborhood/community and power
centers.

canada neighborhood/community center | canada retail power center |

FIGUR E 73: key rates F I G U R E 7 4 : key rates
CLASS A CLASS A
cap rates cap rates

Tier i
tier i
Toronto 5.00 - 6.25 tu Toronto 6.00 - 7.00 tu
Vancouver 5.00 - 5.50 tu Vancouver 5.00 - 5.00 tu
CLASS A CLASS A
cap rates cap rates

Calgary 5.50 - 6.00 p Calgary 5.75 - 6.25 p
tier ii
tier ii
Edmonton 6.25 - 6.75 tu Edmonton 6.25 - 6.75 tu
Montreal 6.50 - 7.00 tu Montreal 6.25 - 6.75 tu
CLASS A CLASS A
cap rates cap rates

Halifax 7.00 - 8.00 tu Halifax 6.25 - 7.25 tu
Kitchener - Waterloo 5.50 - 6.50 tu Kitchener - Waterloo 5.75 - 6.50 tu
London - Windsor 6.25 - 7.75 tu London - Windsor 6.25 - 7.00 tu

tier I I I
tier I I I
Ottawa 5.75 - 6.50 tu Ottawa 6.00 - 6.75 tu
Quebec City 7.25 - 8.50 tu Quebec City 6.50 - 7.50 tu
Saskatoon 6.25 - 6.75 p Saskatoon 5.75 - 6.25 p

Victoria 5.00 - 5.50 tu Victoria 5.00 - 6.00 p
Winnipeg 6.50 - 7.00 tu Winnipeg 6.00 - 6.50 tu
p INCREASE q Decrease tu STABLE — N/A p INCREASE q Decrease tu STABLE — N/A
1
Compared with Q4 2018. Changes less than 15 bps considered stable. All rates are rounded to the nearest 25 bps. 1
Source: CBRE Research, Q2 2019. Data for acquisition of stablized grocery-anchored neighborhood/community centers. Source: CBRE Research, Q2 2019. Data for acquisition of stablized retail power centers.

canada multifamily | Overview
infill and suburban FIGURE 75: canadian Multifamily infill and suburbaN - historical
rates b y class
Cap rates for Canadian multifamily assets reached new record lows in H1 2019.
The national average multifamily cap rate for infill Class A properties fell marginally %
to 3.86%, while the average rate for suburban Class B properties was virtually 7
unchanged at 4.91%. With spreads to benchmark bond yields already razor thin, the 6
recent dip in the Canadian 10-year bond yield should increase liquidity for the asset
class. Canada’s G7-leading immigration totals and near 100% multifamily occupancy 5
levels with a limited construction pipeline will support further rent increases. Investors 4
are increasingly willing to sacrifice up-front yield to acquire high-quality assets.
3
Vancouver (2.75%) and Toronto (3.38%) have the lowest cap rates for infill Class A H1 2013 H1 2014 H1 2 0 1 5 H1 2 0 1 6 H1 2 0 1 7 H1 2 0 1 8 H1 2 0 1 9
multifamily properties. With cap rates in these markets so low, liquidity for assets in Infill A Suburban B
Tier II and III markets has risen substantially. In H1, Kitchener-Waterloo cap rates
declined 25 bps across suburban multifamily assets while in Halifax cap rates
decreased 25 bps to 4.75% for infill Class A assets. Several other Tier II and III
markets also reported decreases.

canada multifamily infill | F I G UR E 7 6 : key rates canada multifamily SUBURBAN | FI GURE 77: ke y rates
INFILL class A (HIGH-RISE A) SUBURBAN class B (LOW-RISE B)
cap rates cap rates

tier i
tier i
Toronto 3.00 - 3.75 tu Toronto 3.50 - 4.00 tu

Vancouver 2.50 - 3.00 tu Vancouver 3.25 - 4.25 tu
cap rates cap rates

Calgary 4.00 - 4.50 tu Calgary 4.75 - 5.25 tu
tier ii
tier ii
Edmonton 4.00 - 4.50 tu Edmonton 5.50 - 6.00 tu
Montreal 3.75 - 4.25 tu Montreal 5.00 - 5.50 tu
cap rates cap rates

Halifax 4.50 - 5.00 q Halifax 5.25 - 5.75 tu
Kitchener - Waterloo 4.25 - 4.50 tu Kitchener - Waterloo 4.50 - 5.25 q

London - Windsor 4.75 - 5.50 tu London - Windsor 6.00 - 7.25 tu
tier I I I
T I ER I I I
Ottawa 3.50 - 3.75 tu Ottawa 4.25 - 4.75 tu
Quebec City 4.25 - 5.25 q Quebec City 5.25 - 6.25 tu
Saskatoon — Saskatoon 6.00 - 6.50 tu
Victoria — Victoria 4.00 - 4.50 tu
Winnipeg — Winnipeg 5.50 - 6.00 tu
p INCREASE q Decrease tu STABLE — N/A p INCREASE q Decrease tu STABLE — N/A
1
1
Source: CBRE Research, Q2 2019. Source: CBRE Research, Q2 2019.

canada hotel | Overview
cbd and suburban FIGURE 78: canadian hotel cbd and suburban - historical rates
by class
After seven consecutive halves of decline, Canadian hotel cap rates held steady in
%
H1 2019. The national average cap rates for both CBD full-service and suburban
select-service ended the half at 7.08% and 8.20%, respectively. Moderating economic 10
conditions and slowing profitability have affected investors’ expectations and brought
a slight slowdown to the asset class. While investors remain opportunistic, many have 9
adopted a more cautious approach until the concerns surrounding the economy and
sector performance dissipate. 8
Access to capital for hotel projects remains high and many investors have turned to
construction in a search for yield. New hotel construction in Ontario, British Columbia 7
and Quebec has increased dramatically and should continue as the supply of existing H1 2013 H1 2014 H1 2 0 1 5 H1 2 0 1 6 H1 2 0 1 7 H1 2 0 1 8 H1 2 0 1 9
assets for purchase remains limited. CBD Full-Service Suburban Select Service

canada hotel | F IG URE 7 9 : key rates
CBD Full-Service suburban SELECT (limited) service
cap rates cap rates

tier i
Toronto 4.50 - 6.00 tu 7.00 - 8.50 tu
Vancouver 4.50 - 6.00 tu 6.50 - 7.50 tu
cap rates cap rates

Calgary 6.75 - 8.50 tu 7.75 - 9.00 tu

tier ii
Edmonton 7.00 - 8.50 tu 8.25 - 9.25 tu
Montreal 7.00 - 8.00 p 7.75 - 8.75 tu
cap rates cap rates

Halifax 7.25 - 8.75 tu 8.00 - 9.00 tu
Kitchener - Waterloo 7.50 - 8.50 tu 8.00 - 9.00 tu

T ier I II
Ottawa 7.00 - 8.00 tu 7.75 - 8.75 tu
Quebec City 7.25 - 8.50 tu 8.00 - 9.00 tu
Saskatoon 7.25 - 8.75 tu 8.50 - 9.75 tu
Victoria 5.50 - 7.00 tu 7.50 - 8.50 tu
Winnipeg 7.00 - 8.50 tu 8.00 - 9.50 tu
1

appendix | definitions
Capitalization Rates (Cap Rates) for Stabilized Properties CAP RATE CALCULATION EXAMPLE - OFFICE, INDUSTRIAL, RETAIL AND HOTEL
(Based on 100,000 sq. ft. asset)
Cap rate ranges are best estimates provided by CBRE professionals based on recent
trades in their respective markets, as well as communications with investors. The ranges $/Sq. ft./Year total
represent the cap rates at which a given asset is likely to trade in the current market.
Purchase Price $200 $20,000,000
Cap rates within each subtype will vary, occasionally falling outside the stated ranges,
based on asset location, quality and property-specific opportunities for NOI enhancement. net operating income (NOI)
Income
Stabilized properties (vs. value-add) are assets leased at market rents with typical
Potential Rental Income
market lease terms, and have vacancy levels close to market averages. (Year 1 of holding period)
21.00 2,100,000
The cap rate is the ratio of the net operating income (NOI) to the acquisition price Vacancy 8.00% (1.68) (168,000)
of the asset (NOI divided by acquisition price) as shown in the following examples. Credit Loss 1.00% (0.21) (21,000)
The NOI calculation is based on net income less operating expenses. For all property
net rental income 19.11 1,911,000
types, except multifamily, the first year projected net rental income is used for the
income calculation. For multifamily assets, the trailing 90-day income (annualized) other income
is used in the cap rate calculation. Parking 0.67 67,000
Other Income 0.08 8,000
Expense Reimbursements 2.44 244,000
effective gross income 22.30 2,230,000
operating expenses 9.62 962,000

(Estimated year 1 of holding period)
NET OPERATING INCOME (NOI) $12.68 $1,268,000
CAP RATE 6.3%

(NOI divided by purchase price)
Source: CBRE Research.
Click here for more detailed calculations for each property type.

appendix | definitions cont.
CAP RATE CALCULATION example - multifamily Expected Return on Cost for Value-Add Properties
(Based on 125-unit community)
Expected returns on cost are best estimates provided by CBRE professionals based on
$/UNIT/Year total recent trades in their respective markets, as well as communications with investors.
The ranges represent the expected returns for value-add assets after the property
Purchase Price $80,000 $10,000,000
improvements have been made and the property has been leased to market levels
net operating income (NOI)
(occupancy and rent). Returns on cost within each subtype can vary widely depending,
effective gross Income
7,015 876,875
in particular, on the extent of the capital improvements and upgrades made on the
(Trailing 90-day income annualized)
asset. The expected return on cost is the ratio of the net operating income (NOI)
operating expenses 2,577 322,125 at stabilization to the total investment in the property (to stabilization) as shown in the
(Estimated year 1 of holding period)
following examples.
NET OPERATING INCOME (NOI) $4,438 $554,750
Value-add assets are properties that have below-market rents and/or higher-than-
CAP RATE 5.5%
(NOI divided by purchase price) average vacancy levels. They are properties that are acquired with the intention of
making physical improvements or bringing more effective property management to
significantly improve property performance and create value.

ex pected return on cost for value -a d d ac q uisitions e xpecte d return on cost f or value -add ac q uisitions
calculation example - o ffice , retail , ind ustrial and hotel calculation e xample - multifamily
( Base d o n 100, 000 s q . f t. a s set) ( B a s e d o n 1 2 5 -u n i t com m uni t y )
$/Sq. ft./Year total $/UNIT/Year total
purchase price $100 $10,000,000 purchase price $28,000 $3,500,000
net operating income (noi) at stabilization net operating income (noi) at stabilization
income income
Potential Rental Income 20.00 2,000,000 Potential Rental Income 7,015 876,875
Vacancy 8.00% (1.60) (160,000) Concessions 8.00% (561) (70,150)
Credit Loss 1.00% (0.20) (20,000) adjusted rental income 6,454 806,725
net rental income 18.20 1,820,000 Vacancy 10.00% (645) (80,673)
other income Credit Loss 1.00% (65) (8,067)
Parking Income 0.67 67,000 effective gross income at stabilization 5,744 717,985
Other Income 0.08 8,000 operating expenses 3,500 437,500

(Including reserves)
Expense Reimbursements 2.44 244,000
net operating income (noi) at stabilization 2,244 280,485
effective gross income at stabilization 21.39 2,139,000
investment in property
operating expenses 9.62 962,000
purchase price 28,000 3,500,000
net operating income (noi) at stabilization 11.77 1,177,000
capital expenditures through stabilization 5,200 650,000
investment in property
total investment through stabilization $33,200 $4,150,000
purchase price 100.00 10,000,000
expected return on cost 6.8%
capital expenditures 31.00 3,100,000
(NOI at stabilization divided by total investment through stabilization)
(Including TIs and commissions)
total investment through stabilization $131.00 $13,100,000
expected return on cost 9.0%

(NOI at stabilization divided by total investment through stabilization)

survey nomenclature Angeles-Long Beach-Anaheim, Riverside-San Bernardino and Oxnard-Thousand Oaks.

Four of the largest CSAs in the cap rate survey—New York, Los Angeles, San Francisco
Property type or sector refers to office, industrial, retail, multifamily and hotel. Segment and Miami—include cap rate data for key MSAs within the CSA, providing greater
refers to CBD and suburban for office; neighborhood/community center and power depth in investment pricing for these very large metropolitan regions. Note that MSAs
center for retail; infill and suburban for multifamily. Class refers to AA, A, B and C for retain the same tier designation as the CSA to which they belong.
office, industrial, retail and multifamily sectors; luxury, full-service, select-service and
economy for the hotel sector.
Method for assigning metros to tiers CBD

Central business district or downtown.
Metropolitan areas in the CBRE North America Cap Rate Survey are divided into three
peer groups, primary (Tier I), secondary (Tier II) and tertiary (Tier III). Class AA
The best-quality assets in the most desirable locations, fully leased or near fully leased,
The groups were determined for each property type by ranking all markets according to at or above market rents, to tenants of acceptable credit to investors of high-quality
three metrics: most recent rents, five-year cap rate averages and nine-year investment real estate, on lease terms also acceptable to the same. Typically the top 5-10 Class A
volumes (to capture the length of the current economic cycle). Weights were then assigned properties in a given market.
to each fundamental to calculate a weighted average score for each market. The weights
depended on how strongly each fundamental was correlated with pricing for each property Class A
type—the stronger the correlation, the larger the weight. The weights, as well as the metros Properties competing for higher-quality tenants/residents, with above-average rental
that comprise each tier, vary across the five property types monitored in the survey. rates for the area, along with high-quality finishes, state-of-the-art systems, exceptional
accessibility and a definite market presence.
The division into tiers was determined by the most significant natural breaks in the
list of final scores. In a small minority of cases, markets were assigned to a different Class B
tier than that suggested by the final score because idiosyncrasies placed the metro Buildings competing for a wide range of tenants/residents, with rents in the average
among others that might not normally be considered its peers. An excellent example range for the area. Building finishes are fair to good for the area and the systems are
is Honolulu—while often priced as a Tier I market, it has the fundamentals of a Tier III adequate, but the building does not compete with Class A in terms of price.
market. Since our objective is to rank markets based on what we believe are the key
Class C
drivers of pricing, as opposed to pricing itself, Honolulu lands in Tier III.
Buildings competing for tenants/residents requiring functional space at rents below the
average for the area.
The geographical boundaries for U.S. metros are primarily based on the U.S. Census
Bureau’s definition of the combined statistical area (CSA) for large markets and the Suburban
metropolitan statistical area (MSA) for other markets. A CSA combines the core MSA The portion of a metropolitan area that is outside the city center with a less concentrated
with adjacent MSAs that have a high degree of economic and social integration with population and typically lower density land use than is typically found in the metro’s
the core MSA. For example, the Los Angeles CSA is composed of three MSAs: Los urban areas.

Value Add Hotel class Definitions

Properties which have below market rents and/or higher-than-average vacancy levels.
Value-add assets are assets acquired with the intention of significantly improving Economy
market performance and creating value through capital improvements and Hotel properties priced at 40% or less than average room rates, according to
better management. Smith Travel Research (STR). Economy (also budget) properties, both chain-affiliated
and independent, are generally compatible with the STR chain scale ‘Economy.’
Retail Segment Definitions
Full-Service
High Street Hotel properties typically having more than 150 rooms, room service, an on-site
The primary walkable retail shopping thoroughfare in the premier location of an restaurant and concierge service. Full-service properties, both chain-affiliated and
urban submarket, serving as a focal point for high-end shops and luxury retailers. independent, are generally compatible with the STR chain scales ‘Upper Upscale’
and ‘Upscale.’
Neighborhood/Community Center (Grocery Anchored)
Open-air retail center that is anchored by a grocery store and, in the case of community Luxury
centers, a second major retail anchor. Size range from 75,000 to 350,000 sq. ft. Hotel chains that are priced in the top 15% in terms of average annual room rates,
according to STR. Luxury properties, both chain-affiliated and independent, are
Power Center
generally compatible with the STR chain scale ‘Luxury.’
Open-air retail center typically occupied by large-format, big-box and value-oriented
retailers, with very limited small-shop tenant space. Size range from 100,00 sq. ft. to Select-Service
more than 600,000 sq. ft. Hotel properties typically having less than 150 rooms, no room service, no on-site
restaurant and no concierge service. Select-service properties, both chain-affiliated and
Multifamily Segment Definitions independent, are generally compatible with the STR chain scales ‘Upper Midscale’ and
‘Midscale.’ Generally equivalent to limited-service properties in Canada.
Infill
Multifamily properties that are typically located in the denser parts of metropolitan
areas. They represent higher-density product—mid-rise and high-rise—and are most
commonly found in mature neighborhoods close to the city center. Infill multifamily
product can also be found in higher density suburban neighborhoods.
Suburban
In addition to being located in the suburbs, properties that are typically garden-style
construction and lower density than infill.

For more information about
CBRE Capital Markets: CBRE Research: CBRE Canada: Valuation and Advisory Services:
Chris Ludeman richard barkham, Ph.d. peter senst Thomas edwards

Global President Global Chief Economist, President, Canada Global Head and Executive Managing Director
CBRE Capital Markets Americas Head of Research CBRE Capital Markets CBRE Valuation and Advisory Services
+1 212 984 8330 CBRE Research +1 416 815 2355 +1 312 233 8669
chris.ludeman@cbre.com +1 617 912 5215 peter.senst@cbre.com thomas.edwards@cbre.com
@ChrisLudeman richard.barkham@cbre.com
@RichardJBarkham
paul morassutti For more information about the
Brian Stoffers Executive Managing Director, Canada production of the Cap Rate Survey:
Global President, Debt & Structured Finance spencer G. levy CBRE Valuation and Advisory Services
CBRE Capital Markets Chairman and Senior Economic +1 416 495 6235
+1 713 787 1999 Advisor, Americas paul.morassutti@cbre.com
brian.stoffers@cbre.com CBRE Research shanna drwiega
@BFStof +1 617 912 5236 Project Manager
spencer.levy@cbre.com CBRE Research
marc meehan +1 813 273 8433
@SpencerGLevy Director, Canada shanna.drwiega@cbre.com
Kevin aussef CBRE Research @ShannaDrwiega
Chief Operating Officer, Americas +1 647 943 4205
CBRE Capital Markets Andrea Cross marc.meehan@cbre.com
+1 949 809 3798 Director, Capital Markets
kevin.aussef@cbre.com CBRE Research
+1 415 772 0237 Thomas Biglands
andrea.cross@cbre.com Senior Research Analyst, Canada
brian mcauliffe @AndreaBCross CBRE Research
President, Americas +1 416 847 3241
CBRE Capital Markets thomas.biglands@cbre.com
+1 312 935 1891 George Entis
brian.mcauliffe@cbre.com Senior Research Analyst
CBRE Research
+1 818 907 4751
george.entis@cbre.com
@GeorgeEntis
Connect with a local Capital
Markets expert in your market.
Learn more by visiting: Carl svensson
Research Analyst
CBRE Capital Markets CBRE Research
+1 818 502 6728
CBRE Research carl.svensson@cbre.com
CBRE Valuation & Advisory Services
Search available property listings on CBREdealflow.com
Download the H2 2018 North America Cap Rate Survey
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© Copyright 2019 Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility
to confirm independently its accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of CBRE.

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A CBRE RESEARCH PUBLICATION

CBRE NORTH AMERICA

overview MAPs office industrial retail multifamily hotel CANADA appendix

7 • Strong market fundamentals—low vacancy, robust e-commerce-driven tenant

CBRE Research © 2019 CBRE, Inc. | 1

overview MAPs office industrial retail multifamily hotel CANADA appendix

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overview MAPs office industrial retail multifamily hotel CANADA appendix

STABILIZED PROPERTY ACQUISITIONS VALUE-ADD PROPERTY ACQUISITIONS

high street A 4.76 4.83 -7 276 214 - - - - -

(FIGURE 1: continues on next page)

CBRE Research © 2019 CBRE, Inc. | 3

overview MAPs office industrial retail multifamily hotel CANADA appendix

STABILIZED PROPERTY ACQUISITIONS VALUE-ADD PROPERTY ACQUISITIONS

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overview MAPs office industrial retail multifamily hotel CANADA appendix

u.s. Office | Overview

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overview MAPs office industrial retail multifamily hotel CANADA appendix

U.s. Office | Overview CONT.

N. CA: San Francisco 7

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overview MAPs office industrial retail multifamily hotel CANADA appendix

U.s. Office | Overview CONT.

all 7.91 7.92 -1 Houston

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overview MAPs office industrial retail multifamily hotel CANADA appendix

U.s. Office | Overview CONT.

Class A Class B Class C 0

F I G U R E 1 1 : U. S. o f f ice suburban Rate trends - si x month outloo K

H1 2013 H1 2014 H1 2015 H1 2016 H1 2017 H1 2018 H1 2019 0

CBRE Research © 2019 CBRE, Inc. | 8

overview MAPs office industrial retail multifamily hotel CANADA appendix

U.s. OFFICE CBD | F I G UR E 1 2 : Ke y rates

Class AA Class A Class B Class C

Class AA Class A Class B Class C

p INCREASE q Decrease tu STABLE — N/A

CBRE Research © 2019 CBRE, Inc. | 9

overview MAPs office industrial retail multifamily hotel CANADA appendix

U.s. OFFICE CBD | F IG URE 1 2 : Ke y rates cont.

Class AA Class A Class B Class C

p INCREASE q Decrease tu STABLE — N/A

CBRE Research © 2019 CBRE, Inc. | 10

overview MAPs office industrial retail multifamily hotel CANADA appendix

U.s. OFFICE CBD | FIGURE 1 3 : forecast trend s - six month outlook

Class AA Class A Class B Class C

N. CA: Oakland — N/A

N. CA: San Francisco 2

Class AA Class A Class B Class C

CBRE Research © 2019 CBRE, Inc. | 11

overview MAPs office industrial retail multifamily hotel CANADA appendix

Class AA Class A Class B Class C

Increase Decrease STABLE — N/A

CBRE Research © 2019 CBRE, Inc. | 12

overview MAPs office industrial retail multifamily hotel CANADA appendix

U.s. OFFICE SUBURBAN | F IG URE 1 4 : Ke y rates

Class AA Class A Class B Class C

p INCREASE q Decrease tu STABLE — N/A

CBRE Research © 2019 CBRE, Inc. | 13

overview MAPs office industrial retail multifamily hotel CANADA appendix

U.s. OFFICE SUBURBAN | F IG URE 1 4 : Ke y rates cont.

Class AA Class A Class B Class C

p INCREASE q Decrease tu STABLE — N/A