CoStar’s latest forecasts on capitalization rates suggest that apartment owners may soon be able to raise rents more easily as vacancy rates fall.Cap rates, or the yields on net operating income, are stabilizing in a sign that apartment investors are becoming more confident in the supply outlook and anticipating stronger rent growth ahead.A change of direction in multifamily cap rates is often the first sign of an inflection point in the commercial real estate cycle. These cap rates stopped increasing one year ago, and compression is now evident in certain instances. In contrast, instead of stabilizing, industrial, retail, and office cap rates are expected to expand slightly before they begin to stabilize in the next few quarters, once rent growth accelerates and vacancy peaks and begins to decline, mirroring opposite inflection points.
Source: News | Often first to react to market corrections, multifamily capitalization rates are stabilizing
