🕷️ Crawler Inspector

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Direct Parameter Lookup

Raw Queries and Responses

1. Shard Calculation

Query:

Response:

Calculated Shard: 195 (from laksa052)

2. Crawled Status Check

Query:

curl -X POST \
  'http://laksa195.int.ahrefs:8124/' \
  -H 'Content-Type: text/plain' \
  -H 'X-ClickHouse-Database: crawler3' \
  -H 'Authorization: Basic YXBpOg==' \
  -d 'SELECT getAhrefsURLFromUnparsed(src_unparsed) AS found_url, ifNull(toUnixTimestamp(download_stamp), 0) AS crawl_time, ifNull(toUnixTimestamp(props_url_first_seen), 0) AS first_indexed_time, download_http_code AS http_code, src_unparsed AS src_unparsed, src_root_hash AS src_root_hash, history_drop_reason AS history_drop_reason, meta_title AS meta_title, meta_descriptions AS meta_descriptions, attrs_boilerpipe_text AS attrs_boilerpipe_text, attrs_markdown AS attrs_markdown, attrs_readable_markdown AS attrs_readable_markdown, meta_canonical AS meta_canonical FROM crawler3.page_info_local FINAL PREWHERE (src_root_hash, src_unparsed) IN ((getAhrefsRootHashFromUnparsed(getAhrefsUnparsedNoserviceFromURL(\'https://www.jpmorgan.com/insights/real-estate/commercial-term-lending/cap-rates-explained\')), getAhrefsUnparsedNoserviceFromURL(\'https://www.jpmorgan.com/insights/real-estate/commercial-term-lending/cap-rates-explained\'))) FORMAT JSONEachRow'

Response:

{"found_url":"https:\/\/www.jpmorgan.com\/insights\/real-estate\/commercial-term-lending\/cap-rates-explained","crawl_time":1776574963,"first_indexed_time":1687414834,"http_code":200,"src_unparsed":"com,jpmorgan!www,\/insights\/real-estate\/commercial-term-lending\/cap-rates-explained s443","src_root_hash":"13979532339076139995","history_drop_reason":null,"meta_title":"Cap Rates, Explained | JPMorganChase","meta_descriptions":["Gain a better understanding of cap rates in commercial real estate, including the impact of interest rates and other macroeconomic influences."],"attrs_boilerpipe_text":"Key\ntakeaways\nIt’s critical to analyze like-kind comparables, such as property type, location, income\/expense, quality\/condition and durability, when looking at cap rates. Factors such as actual or projected income and expenses can also make a big difference.\nWhile they aren’t considered a primary driver of cap rates, interest rate changes can influence cap rates as the cost of borrowing will impact return on investments.\nSome specific elements that can influence cap rates are property location, condition, asset class, investment size, tenant quality, anticipated rent growth and external economic factors.\nIn real estate, capitalization rates—commonly called cap rates—are useful risk measurements for\ncommercial properties\n. \nThe capitalization rate of a property is calculated by dividing the annual net operating income, or NOI, by the property's market value. For instance, if a property was valued at $14,000,000 and the NOI was $600,000, the cap rate would be 4.3%.\nCap rate levels can also reflect other larger economic factors, such as competition, monetary policy, and real estate zoning and regulations. \nAmid market uncertainty, we’re here to help\nConnect with a banker\nRising interest rates increase the cost of capital, so fluctuations in the interest rate environment can contribute to rising cap rates.\nThat’s the case in the current economic environment. While\ninterest rate hikes\ndidn’t occur in 2025, rates remain elevated relative to the historically low levels. This increased financing costs, limited transaction volume and made it difficult to assess cap rates. Nationally,\nmultifamily\ncap rates remained unchanged between Q4 of 2024 and Q4 of 2025. During the same time period, office and retail cap rates increased slightly (0.2% and 0.1%, respectively) and\nindustrial\ndropped by 0.1%.\nThe Fed and the market anticipate more rate\ninterest rate cuts\nin 2026, which would likely lower borrowing costs and decrease cap rates. However, the future of the economy and\ninterest rates is uncertain\n.\n4Q 25\nMultifamily\nIndustrial\nOffice\nRetail\nLos Angeles\n5.00%\n5.20%\n7.60%\n5.90%\nSan Francisco\n4.50%\n5.90%\n7.40%\n5.20%\nNew York\n5.40%\n6.00%\n6.90%\n6.10%\nChicago\n6.70%\n8.10%\n10.10%\n8.10%\nSeattle\n5.00%\n5.80%\n7.70%\n6.30%\nPortland\n5.60%\n6.80%\n8.80%\n6.90%\nWashington DC\n5.70%\n6.70%\n9.80%\n6.90%\nNational\n6.10%\n7.20%\n9.10%\n7.30%\n4Q 24\nMultifamily\nIndustrial\nOffice\nRetail\nLos Angeles\n5.00%\n5.10%\n7.60%\n5.70%\nSan Francisco\n4.50%\n5.80%\n6.90%\n5.10%\nNew York\n5.40%\n6.00%\n6.80%\n6.10%\nChicago\n6.80%\n8.10%\n9.80%\n8.00%\nSeattle\n4.90%\n5.70%\n7.40%\n6.20%\nPortland\n5.50%\n6.80%\n8.40%\n6.70%\nWashington DC\n5.70%\n6.80%\n9.30%\n6.80%\nNational\n6.10%\n7.30%\n8.90%\n7.20%\nChange\nMultifamily\nIndustrial\nOffice\nRetail\nLos Angeles\n0.00%\n0.10%\n0.00%\n0.20%\nSan Francisco\n0.00%\n0.10%\n0.50%\n0.10%\nNew York\n0.00%\n0.00%\n0.10%\n0.00%\nChicago\n-0.10%\n0.00%\n0.30%\n0.10%\nSeattle\n0.10%\n0.10%\n0.30%\n0.10%\nPortland\n0.10%\n0.00%\n0.40%\n0.20%\nWashington DC\n0.00%\n-0.10%\n0.50%\n0.10%\nNational\n0.00%\n-0.10%\n0.20%\n0.10%\nCap rates measure investors’ return expectations, but they’re a forward-looking point-in-time measurement. An investor’s realized returns may differ from their expected ones because of many factors, including:\nRent growth:\nRent growth can accelerate during periods of higher inflation, particularly in apartments with short-term leases. The anticipation of higher rents and greater NOI can offset higher interest rates. Likewise, deteriorating economic conditions can add upward pressure on cap rates and slow rent growth.\nGross Domestic Product (GDP) and unemployment:\nBoth GDP and unemployment reflect the health of the economy. When GDP is high and unemployment is low, commercial real estate investments tend to have lower cap rates. When GDP is low and unemployment is high, there’s a greater risk associated with investment properties. But remember: Cap rates are typically forward-looking, and individual deals are affected by a building’s unique prospects and an investor’s viewpoint—as well as the prevailing economic conditions and outlook.\nStage in the economic cycle:\nIn periods of stress, such as the Great Financial Crisis, cap rates have increased while interest rates decreased, a result of investors taking on more risk to own commercial real estate. In expansionary cycles with moderate\ninterest rate increases\n, cap rates may remain unchanged if investors can expect increases in income and still achieve their expected return over their investment horizon.  \nLocation\n:\nProximity to the city’s employment center, highways and public transit also influences cap rates. Properties located in high-demand and stable locations generally have lower cap rates, while transitional or outlying neighborhoods usually have higher cap rates due to higher employment volatility and fluctuating demand. This can lead to higher tenant turnover, leasing costs and other factors that impact\noperating cash flows.\nAsset class:\nCap rates vary across asset classes depending on asset fundamentals, performance outlook and supply and demand, among other factors. In recent years, multifamily and industrial properties have exhibited the lowest cap rates. The weight of several economic measurements may also vary based on asset class. For example, personal income is a major factor for multifamily and\nretail properties\n, and durable and nondurable goods spending is especially important for industrial properties.\nCap rates are just one unit of comparison used for evaluating commercial real estate; both macroeconomic and property specific characteristics should be considered when determining an appropriate cap rate for any specific property. Various factors, such as supply and demand trends, real estate zoning and regulations, credit worthiness of residents, remaining lease terms and specific lease factors can impact the actual cap rate. An investor’s awareness and diligence can be the differentiator between expectations and outcomes.\nCap rates are among several factors to consider when\ngrowing your multifamily portfolio\n.\nJPMorgan Chase Bank, N.A. Member FDIC. Visit\njpmorgan.com\/cb-disclaimer\nfor disclosures and disclaimers related to this content.","attrs_markdown":"[Skip to main content](https:\/\/www.jpmorgan.com\/insights\/real-estate\/commercial-term-lending\/cap-rates-explained#main)\n\n[![J.P. 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Estate](https:\/\/www.jpmorgan.com\/insights\/real-estate)\n- [Commercial Term Lending](https:\/\/www.jpmorgan.com\/insights\/real-estate\/commercial-term-lending)\n- The role of cap rates in real estate\n\n[Real Estate](https:\/\/www.jpmorgan.com\/insights\/real-estate)\n\n# The role of cap rates in real estate\nFebruary 02, 2026\n\nThis common metric can help investors assess the potential value of a property.\n\nOverview\n\n![skyrise buildings](https:\/\/www.jpmorgan.com\/content\/dam\/jpm\/commercial-banking\/insights\/commercial-real-estate\/banner-insight-ctl-multifamily-investing-cap-rates-1440x810.jpg)\n\n## Key takeaways\n- It’s critical to analyze like-kind comparables, such as property type, location, income\/expense, quality\/condition and durability, when looking at cap rates. Factors such as actual or projected income and expenses can also make a big difference.\n- While they aren’t considered a primary driver of cap rates, interest rate changes can influence cap rates as the cost of borrowing will impact return on investments.\n- Some specific elements that can influence cap rates are property location, condition, asset class, investment size, tenant quality, anticipated rent growth and external economic factors.\n\n## Browse by topic\n- [Real Estate](https:\/\/www.jpmorgan.com\/insights\/real-estate)\n- [Commercial Term Lending](https:\/\/www.jpmorgan.com\/insights\/real-estate\/commercial-term-lending)\n- [Commercial Real Estate](https:\/\/www.jpmorgan.com\/insights\/real-estate\/commercial-real-estate)\n- [Multifamily](https:\/\/www.jpmorgan.com\/insights\/real-estate\/multifamily)\n- [Investing](https:\/\/www.jpmorgan.com\/insights\/real-estate\/investing)\n\nIn real estate, capitalization rates—commonly called cap rates—are useful risk measurements for [commercial properties](https:\/\/www.jpmorgan.com\/commercial-real-estate \"Go to Commercial Real Estate\").\n\n## The cap rate formula\nCalculated by dividing a property’s net operating income by its asset value, the cap rate is an assessment of the yield of a property over one year. For example, a property worth \\$14 million generating \\$600,000 of NOI would have a cap rate of 4.3%. That means that you can expect a roughly 4.3% annual operating cash flow given the price paid for the property.\n\nYou should also note: It’s critical to make an apples-to-apples comparison with cap rates. For example, it matters if you are comparing cap rates based on actual versus projected income.\n\n**What’s a good cap rate?** It varies from investor to investor and property to property. In general, the higher the cap rate, the greater the risk and return.\n\n![Net Operating Income Equation](https:\/\/www.jpmorgan.com\/content\/dam\/jpmorgan\/images\/cb\/insights\/real-estate\/cb-cre-ctl-cap-rates-noi-equation-1440x810-horizontal.jpg)\n\nView text Version\n\nThe capitalization rate of a property is calculated by dividing the annual net operating income, or NOI, by the property's market value. For instance, if a property was valued at \\$14,000,000 and the NOI was \\$600,000, the cap rate would be 4.3%.\n\n![Net Operating Income Equation](https:\/\/www.jpmorgan.com\/content\/dam\/jpmorgan\/images\/cb\/insights\/real-estate\/cb-cre-ctl-cap-rates-noi-equation-1440x810-horizontal.jpg)\n\nView Infographic\n\nView text Version\n\nCap rate levels can also reflect other larger economic factors, such as competition, monetary policy, and real estate zoning and regulations.\n\nAmid market uncertainty, we’re here to help\n\n[Connect with a banker](https:\/\/www.jpmorgan.com\/insights\/real-estate\/commercial-term-lending\/cap-rates-explained#contact-ctl)\n\n## The impact of interest rates on cap rates\nRising interest rates increase the cost of capital, so fluctuations in the interest rate environment can contribute to rising cap rates.\n\nThat’s the case in the current economic environment. While [interest rate hikes](https:\/\/www.jpmorgan.com\/insights\/real-estate\/commercial-real-estate\/rising-interest-rates-effect-on-commercial-real-estate \"What Fed policy means for multifamily property investors\") didn’t occur in 2025, rates remain elevated relative to the historically low levels. This increased financing costs, limited transaction volume and made it difficult to assess cap rates. Nationally, [multifamily](https:\/\/www.jpmorgan.com\/commercial-real-estate\/multifamily-property-loans \"Financing for Multifamily Buildings\") cap rates remained unchanged between Q4 of 2024 and Q4 of 2025. During the same time period, office and retail cap rates increased slightly (0.2% and 0.1%, respectively) and [industrial](https:\/\/www.jpmorgan.com\/commercial-real-estate\/industrial-property-loans-and-mortgages \"Financing for industrial properties\") dropped by 0.1%.\n\nThe Fed and the market anticipate more rate [interest rate cuts](https:\/\/www.jpmorgan.com\/insights\/real-estate\/commercial-term-lending\/interest-rate-cuts-impact-on-multifamily-real-estate \"How interest rate cuts could impact commercial real estate\") in 2026, which would likely lower borrowing costs and decrease cap rates. However, the future of the economy and [interest rates is uncertain](https:\/\/www.jpmorgan.com\/insights\/real-estate\/commercial-term-lending\/hedging-interest-rates-in-commercial-real-estate \"Navigating interest rate uncertainty\").\n\n## Sample cap rates\n| 4Q 25 | Multifamily | Industrial | Office | Retail |\n|---|---|---|---|---|\n| Los Angeles | 5\\.00% | 5\\.20% | 7\\.60% | 5\\.90% |\n| San Francisco | 4\\.50% | 5\\.90% | 7\\.40% | 5\\.20% |\n| New York | 5\\.40% | 6\\.00% | 6\\.90% | 6\\.10% |\n| Chicago | 6\\.70% | 8\\.10% | 10\\.10% | 8\\.10% |\n| Seattle | 5\\.00% | 5\\.80% | 7\\.70% | 6\\.30% |\n| Portland | 5\\.60% | 6\\.80% | 8\\.80% | 6\\.90% |\n| Washington DC | 5\\.70% | 6\\.70% | 9\\.80% | 6\\.90% |\n| National | 6\\.10% | 7\\.20% | 9\\.10% | 7\\.30% |\n\n| 4Q 24 | Multifamily | Industrial | Office | Retail |\n|---|---|---|---|---|\n| Los Angeles | 5\\.00% | 5\\.10% | 7\\.60% | 5\\.70% |\n| San Francisco | 4\\.50% | 5\\.80% | 6\\.90% | 5\\.10% |\n| New York | 5\\.40% | 6\\.00% | 6\\.80% | 6\\.10% |\n| Chicago | 6\\.80% | 8\\.10% | 9\\.80% | 8\\.00% |\n| Seattle | 4\\.90% | 5\\.70% | 7\\.40% | 6\\.20% |\n| Portland | 5\\.50% | 6\\.80% | 8\\.40% | 6\\.70% |\n| Washington DC | 5\\.70% | 6\\.80% | 9\\.30% | 6\\.80% |\n| National | 6\\.10% | 7\\.30% | 8\\.90% | 7\\.20% |\n\n| Change | Multifamily | Industrial | Office | Retail |\n|---|---|---|---|---|\n| Los Angeles | 0\\.00% | 0\\.10% | 0\\.00% | 0\\.20% |\n| San Francisco | 0\\.00% | 0\\.10% | 0\\.50% | 0\\.10% |\n| New York | 0\\.00% | 0\\.00% | 0\\.10% | 0\\.00% |\n| Chicago | \\-0.10% | 0\\.00% | 0\\.30% | 0\\.10% |\n| Seattle | 0\\.10% | 0\\.10% | 0\\.30% | 0\\.10% |\n| Portland | 0\\.10% | 0\\.00% | 0\\.40% | 0\\.20% |\n| Washington DC | 0\\.00% | \\-0.10% | 0\\.50% | 0\\.10% |\n| National | 0\\.00% | \\-0.10% | 0\\.20% | 0\\.10% |\n\n## How other macroeconomic factors affect cap rates\nCap rates measure investors’ return expectations, but they’re a forward-looking point-in-time measurement. An investor’s realized returns may differ from their expected ones because of many factors, including:\n\n- **Rent growth:** Rent growth can accelerate during periods of higher inflation, particularly in apartments with short-term leases. The anticipation of higher rents and greater NOI can offset higher interest rates. Likewise, deteriorating economic conditions can add upward pressure on cap rates and slow rent growth.\n- **Gross Domestic Product (GDP) and unemployment:** Both GDP and unemployment reflect the health of the economy. When GDP is high and unemployment is low, commercial real estate investments tend to have lower cap rates. When GDP is low and unemployment is high, there’s a greater risk associated with investment properties. But remember: Cap rates are typically forward-looking, and individual deals are affected by a building’s unique prospects and an investor’s viewpoint—as well as the prevailing economic conditions and outlook.\n- **Stage in the economic cycle:** In periods of stress, such as the Great Financial Crisis, cap rates have increased while interest rates decreased, a result of investors taking on more risk to own commercial real estate. In expansionary cycles with moderate [interest rate increases](https:\/\/www.jpmorgan.com\/insights\/real-estate\/commercial-real-estate\/rising-interest-rates-effect-on-commercial-real-estate \"go to What Fed policy means for multifamily property investors\"), cap rates may remain unchanged if investors can expect increases in income and still achieve their expected return over their investment horizon.\n- **[Location](https:\/\/www.jpmorgan.com\/insights\/real-estate\/investing\/how-to-create-a-multifamily-location-strategy \"Go to How to Create a Multifamily Location Strategy\"):** Proximity to the city’s employment center, highways and public transit also influences cap rates. Properties located in high-demand and stable locations generally have lower cap rates, while transitional or outlying neighborhoods usually have higher cap rates due to higher employment volatility and fluctuating demand. This can lead to higher tenant turnover, leasing costs and other factors that impact [operating cash flows.](https:\/\/www.jpmorgan.com\/insights\/real-estate\/commercial-term-lending\/calculating-net-operating-income-and-cash-flow \"Go to Calculating Net Operating Income and Cash flow\")\n- **Asset class:** Cap rates vary across asset classes depending on asset fundamentals, performance outlook and supply and demand, among other factors. In recent years, multifamily and industrial properties have exhibited the lowest cap rates. The weight of several economic measurements may also vary based on asset class. For example, personal income is a major factor for multifamily and [retail properties](https:\/\/www.jpmorgan.com\/commercial-real-estate\/financing-for-retail-properties \"go to Financing for retail properties\"), and durable and nondurable goods spending is especially important for industrial properties.\n## The bottom line\nCap rates are just one unit of comparison used for evaluating commercial real estate; both macroeconomic and property specific characteristics should be considered when determining an appropriate cap rate for any specific property. Various factors, such as supply and demand trends, real estate zoning and regulations, credit worthiness of residents, remaining lease terms and specific lease factors can impact the actual cap rate. An investor’s awareness and diligence can be the differentiator between expectations and outcomes.\n\nCap rates are among several factors to consider when [growing your multifamily portfolio](https:\/\/www.jpmorgan.com\/insights\/real-estate\/commercial-term-lending\/building-your-commercial-real-estate-portfolio \"3 tips for growing your rental property portfolio\").\n\n*JPMorgan Chase Bank, N.A. Member FDIC. Visit* [*jpmorgan.com\/cb-disclaimer*](https:\/\/www.jpmorgan.com\/commercial-banking\/legal-disclaimer \"CB Disclaimer\") *for disclosures and disclaimers related to this content.*\n## Get in touch\n\n## Related insights\n![Bridge looking skyward](https:\/\/www.jpmorgan.com\/content\/dam\/jpmorgan\/images\/cb\/insights\/real-estate\/cb-cre-banner-agency-lending-1440x810px-horizontal.jpg)\n\nReal Estate\n\n[Using bridge loans with agency financing in multifamily](https:\/\/www.jpmorgan.com\/insights\/real-estate\/agency-lending\/commercial-bridge-loans-and-agency-lending)\n\nMar 20, 2026\n\nBridge loans offer multifamily investors flexible short-term capital. Find out how they can also provide a smooth transition to agency financing.\n\n[Read more](https:\/\/www.jpmorgan.com\/insights\/real-estate\/agency-lending\/commercial-bridge-loans-and-agency-lending)\n\n![Overhead view of a lone white semi‑truck parked on a large, empty, cracked concrete lot with long shadows.](https:\/\/www.jpmorgan.com\/content\/dam\/jpmorgan\/images\/cb\/insights\/real-estate\/cb-cre-banner-bnkg-long-term-impact-of-tariffs-1440x810px-horizontal.jpg)\n\nReal Estate\n\n[How tariffs impact commercial real estate](https:\/\/www.jpmorgan.com\/insights\/real-estate\/commercial-real-estate\/tariffs-and-trade-policys-impact-on-commercial-real-estate)\n\nMar 16, 2026\n\nTariffs and trade policy uncertainty can impact commercial real estate by increasing construction costs and delaying critical decisions. Find out more about their effects.\n\n[Read more](https:\/\/www.jpmorgan.com\/insights\/real-estate\/commercial-real-estate\/tariffs-and-trade-policys-impact-on-commercial-real-estate)\n\n![Elegant businesswoman working on her laptop pc in her company](https:\/\/www.jpmorgan.com\/content\/dam\/jpmorgan\/images\/jpma\/what-to-know-about-tax-aware-borrowing\/what-to-know-about-tax-aware-borrowing-1440.jpg)\n\nReal Estate\n\n[What to know about tax-aware borrowing](https:\/\/www.jpmorgan.com\/insights\/real-estate\/housing-market\/what-to-know-about-tax-aware-borrowing)\n\nMar 11, 2026\n\nIndividuals can choose to take out loans in a way that may minimize their tax liability – this is called tax-aware borrowing. Learn more about it.\n\n[Read more](https:\/\/www.jpmorgan.com\/insights\/real-estate\/housing-market\/what-to-know-about-tax-aware-borrowing)\n\n![Window reflection of office](https:\/\/www.jpmorgan.com\/content\/dam\/jpmorgan\/images\/cb\/commercial-real-estate\/cb-cre-banner-in-the-news-1440x810px-horizontal.jpg)\n\nReal Estate\n\n[In the News](https:\/\/www.jpmorgan.com\/commercial-real-estate\/in-the-news)\n\nMar 04, 2026\n\nLearn from JPMorgan Chase commercial real estate leaders and stay up to date on the latest industry news and media coverage.\n\n[Read more](https:\/\/www.jpmorgan.com\/commercial-real-estate\/in-the-news)\n\n![Stacked cardboard boxes and a ladder in a bright, empty office space, suggesting a move or renovation.](https:\/\/www.jpmorgan.com\/content\/dam\/jpmorgan\/images\/cb\/insights\/real-estate\/cb-cre-cdb-understanding-office-to-resi-conversion-1440x810px-horizontal.jpg)\n\nReal Estate\n\n[What to know about office-to-residential conversion](https:\/\/www.jpmorgan.com\/insights\/real-estate\/community-development-banking\/office-to-residential-conversion-what-to-know)\n\nFeb 27, 2026\n\nAdaptive reuse can turn aging offices into much-needed housing. Learn what makes properties strong candidates for conversion and explore financing tools to support redevelopment.\n\n[Read more](https:\/\/www.jpmorgan.com\/insights\/real-estate\/community-development-banking\/office-to-residential-conversion-what-to-know)\n\n![Abstract network of glowing blue and orange lines and nodes on a dark background.](https:\/\/www.jpmorgan.com\/content\/dam\/jpmorgan\/images\/cb\/insights\/real-estate\/cb-cre-cybersecurity-for-cre-header-1440x810px-horizontal.jpg)\n\nReal Estate\n\n[Protecting commercial properties from cybersecurity threats](https:\/\/www.jpmorgan.com\/insights\/real-estate\/payments\/cybersecurity-for-commercial-real-estate-key-strategies)\n\nFeb 06, 2026\n\nLearn how to protect your payments and data from common cybersecurity threats affecting commercial real estate owners and operators.\n\n[Read more](https:\/\/www.jpmorgan.com\/insights\/real-estate\/payments\/cybersecurity-for-commercial-real-estate-key-strategies)\n\n![Intersection of roads](https:\/\/www.jpmorgan.com\/content\/dam\/jpmorgan\/images\/cb\/insights\/real-estate\/cb-ctl-interest-rates-uncertainty-1440x810px-horizontal.jpg)\n\nReal Estate\n\n[Navigating interest rate uncertainty](https:\/\/www.jpmorgan.com\/insights\/real-estate\/commercial-term-lending\/hedging-interest-rates-in-commercial-real-estate)\n\nFeb 03, 2026\n\nAt its January meeting, the Fed held interest rates steady. Learn more about the factors behind the decision\n\n[Read more](https:\/\/www.jpmorgan.com\/insights\/real-estate\/commercial-term-lending\/hedging-interest-rates-in-commercial-real-estate)\n\n![3 people looking at blueprints](https:\/\/www.jpmorgan.com\/content\/dam\/jpmorgan\/images\/cb\/insights\/real-estate\/cb-cre-cbd-banner-meeting-1440x810px-horizontal.jpg)\n\n3:00 - Real Estate\n\n[How tax credit equity helped Dupaco return to its roots](https:\/\/www.jpmorgan.com\/insights\/real-estate\/community-development-banking\/how-htc-and-nmtc-helped-restore-downtown-dubuque-iowa)\n\nJan 30, 2026\n\nSee how both Historic and New Markets Tax Credit from J.P. Morgan helped transform a vacant manufacturing facility and spur community development in Dubuque, Iowa.\n\n[Watch video](https:\/\/www.jpmorgan.com\/insights\/real-estate\/community-development-banking\/how-htc-and-nmtc-helped-restore-downtown-dubuque-iowa)\n\nYou're now leaving J.P. Morgan\n\nJ.P. 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P. Morgan logo](https:\/\/www.jpmorgan.com\/content\/dam\/jpmorgan\/images\/logos\/jpm-logo-brown-062322.svg)\n\n- [Privacy](https:\/\/www.jpmorgan.com\/privacy)\n- [Terms of Use](https:\/\/www.jpmorgan.com\/terms-of-use)\n- [Accessibility](https:\/\/www.chase.com\/digital\/resources\/accessibility)\n- [Cookies Policy](https:\/\/www.jpmorgan.com\/cookies)\n- [Regulatory Disclosures](https:\/\/www.jpmorgan.com\/disclosures)\n\n©  JPMorgan Chase & Co. All rights reserved.","attrs_readable_markdown":"![skyrise buildings](https:\/\/www.jpmorgan.com\/content\/dam\/jpm\/commercial-banking\/insights\/commercial-real-estate\/banner-insight-ctl-multifamily-investing-cap-rates-1440x810.jpg)\n\n## Key takeaways\n- It’s critical to analyze like-kind comparables, such as property type, location, income\/expense, quality\/condition and durability, when looking at cap rates. Factors such as actual or projected income and expenses can also make a big difference.\n- While they aren’t considered a primary driver of cap rates, interest rate changes can influence cap rates as the cost of borrowing will impact return on investments.\n- Some specific elements that can influence cap rates are property location, condition, asset class, investment size, tenant quality, anticipated rent growth and external economic factors.\n\nIn real estate, capitalization rates—commonly called cap rates—are useful risk measurements for [commercial properties](https:\/\/www.jpmorgan.com\/commercial-real-estate \"Go to Commercial Real Estate\").\n\n![Net Operating Income Equation](https:\/\/www.jpmorgan.com\/content\/dam\/jpmorgan\/images\/cb\/insights\/real-estate\/cb-cre-ctl-cap-rates-noi-equation-1440x810-horizontal.jpg)\n\nThe capitalization rate of a property is calculated by dividing the annual net operating income, or NOI, by the property's market value. For instance, if a property was valued at \\$14,000,000 and the NOI was \\$600,000, the cap rate would be 4.3%.\n\n![Net Operating Income Equation](https:\/\/www.jpmorgan.com\/content\/dam\/jpmorgan\/images\/cb\/insights\/real-estate\/cb-cre-ctl-cap-rates-noi-equation-1440x810-horizontal.jpg)\n\nCap rate levels can also reflect other larger economic factors, such as competition, monetary policy, and real estate zoning and regulations.\n\nAmid market uncertainty, we’re here to help\n\n[Connect with a banker](https:\/\/www.jpmorgan.com\/insights\/real-estate\/commercial-term-lending\/cap-rates-explained#contact-ctl)\n\n##\nRising interest rates increase the cost of capital, so fluctuations in the interest rate environment can contribute to rising cap rates.\n\nThat’s the case in the current economic environment. While [interest rate hikes](https:\/\/www.jpmorgan.com\/insights\/real-estate\/commercial-real-estate\/rising-interest-rates-effect-on-commercial-real-estate \"What Fed policy means for multifamily property investors\") didn’t occur in 2025, rates remain elevated relative to the historically low levels. This increased financing costs, limited transaction volume and made it difficult to assess cap rates. Nationally, [multifamily](https:\/\/www.jpmorgan.com\/commercial-real-estate\/multifamily-property-loans \"Financing for Multifamily Buildings\") cap rates remained unchanged between Q4 of 2024 and Q4 of 2025. During the same time period, office and retail cap rates increased slightly (0.2% and 0.1%, respectively) and [industrial](https:\/\/www.jpmorgan.com\/commercial-real-estate\/industrial-property-loans-and-mortgages \"Financing for industrial properties\") dropped by 0.1%.\n\nThe Fed and the market anticipate more rate [interest rate cuts](https:\/\/www.jpmorgan.com\/insights\/real-estate\/commercial-term-lending\/interest-rate-cuts-impact-on-multifamily-real-estate \"How interest rate cuts could impact commercial real estate\") in 2026, which would likely lower borrowing costs and decrease cap rates. However, the future of the economy and [interest rates is uncertain](https:\/\/www.jpmorgan.com\/insights\/real-estate\/commercial-term-lending\/hedging-interest-rates-in-commercial-real-estate \"Navigating interest rate uncertainty\").\n\n##\n| 4Q 25 | Multifamily | Industrial | Office | Retail |\n|---|---|---|---|---|\n| Los Angeles | 5\\.00% | 5\\.20% | 7\\.60% | 5\\.90% |\n| San Francisco | 4\\.50% | 5\\.90% | 7\\.40% | 5\\.20% |\n| New York | 5\\.40% | 6\\.00% | 6\\.90% | 6\\.10% |\n| Chicago | 6\\.70% | 8\\.10% | 10\\.10% | 8\\.10% |\n| Seattle | 5\\.00% | 5\\.80% | 7\\.70% | 6\\.30% |\n| Portland | 5\\.60% | 6\\.80% | 8\\.80% | 6\\.90% |\n| Washington DC | 5\\.70% | 6\\.70% | 9\\.80% | 6\\.90% |\n| National | 6\\.10% | 7\\.20% | 9\\.10% | 7\\.30% |\n\n| 4Q 24 | Multifamily | Industrial | Office | Retail |\n|---|---|---|---|---|\n| Los Angeles | 5\\.00% | 5\\.10% | 7\\.60% | 5\\.70% |\n| San Francisco | 4\\.50% | 5\\.80% | 6\\.90% | 5\\.10% |\n| New York | 5\\.40% | 6\\.00% | 6\\.80% | 6\\.10% |\n| Chicago | 6\\.80% | 8\\.10% | 9\\.80% | 8\\.00% |\n| Seattle | 4\\.90% | 5\\.70% | 7\\.40% | 6\\.20% |\n| Portland | 5\\.50% | 6\\.80% | 8\\.40% | 6\\.70% |\n| Washington DC | 5\\.70% | 6\\.80% | 9\\.30% | 6\\.80% |\n| National | 6\\.10% | 7\\.30% | 8\\.90% | 7\\.20% |\n\n| Change | Multifamily | Industrial | Office | Retail |\n|---|---|---|---|---|\n| Los Angeles | 0\\.00% | 0\\.10% | 0\\.00% | 0\\.20% |\n| San Francisco | 0\\.00% | 0\\.10% | 0\\.50% | 0\\.10% |\n| New York | 0\\.00% | 0\\.00% | 0\\.10% | 0\\.00% |\n| Chicago | \\-0.10% | 0\\.00% | 0\\.30% | 0\\.10% |\n| Seattle | 0\\.10% | 0\\.10% | 0\\.30% | 0\\.10% |\n| Portland | 0\\.10% | 0\\.00% | 0\\.40% | 0\\.20% |\n| Washington DC | 0\\.00% | \\-0.10% | 0\\.50% | 0\\.10% |\n| National | 0\\.00% | \\-0.10% | 0\\.20% | 0\\.10% |\n\n##\nCap rates measure investors’ return expectations, but they’re a forward-looking point-in-time measurement. An investor’s realized returns may differ from their expected ones because of many factors, including:\n\n- **Rent growth:** Rent growth can accelerate during periods of higher inflation, particularly in apartments with short-term leases. The anticipation of higher rents and greater NOI can offset higher interest rates. Likewise, deteriorating economic conditions can add upward pressure on cap rates and slow rent growth.\n- **Gross Domestic Product (GDP) and unemployment:** Both GDP and unemployment reflect the health of the economy. When GDP is high and unemployment is low, commercial real estate investments tend to have lower cap rates. When GDP is low and unemployment is high, there’s a greater risk associated with investment properties. But remember: Cap rates are typically forward-looking, and individual deals are affected by a building’s unique prospects and an investor’s viewpoint—as well as the prevailing economic conditions and outlook.\n- **Stage in the economic cycle:** In periods of stress, such as the Great Financial Crisis, cap rates have increased while interest rates decreased, a result of investors taking on more risk to own commercial real estate. In expansionary cycles with moderate [interest rate increases](https:\/\/www.jpmorgan.com\/insights\/real-estate\/commercial-real-estate\/rising-interest-rates-effect-on-commercial-real-estate \"go to What Fed policy means for multifamily property investors\"), cap rates may remain unchanged if investors can expect increases in income and still achieve their expected return over their investment horizon.\n- **[Location](https:\/\/www.jpmorgan.com\/insights\/real-estate\/investing\/how-to-create-a-multifamily-location-strategy \"Go to How to Create a Multifamily Location Strategy\"):** Proximity to the city’s employment center, highways and public transit also influences cap rates. Properties located in high-demand and stable locations generally have lower cap rates, while transitional or outlying neighborhoods usually have higher cap rates due to higher employment volatility and fluctuating demand. This can lead to higher tenant turnover, leasing costs and other factors that impact [operating cash flows.](https:\/\/www.jpmorgan.com\/insights\/real-estate\/commercial-term-lending\/calculating-net-operating-income-and-cash-flow \"Go to Calculating Net Operating Income and Cash flow\")\n- **Asset class:** Cap rates vary across asset classes depending on asset fundamentals, performance outlook and supply and demand, among other factors. In recent years, multifamily and industrial properties have exhibited the lowest cap rates. The weight of several economic measurements may also vary based on asset class. For example, personal income is a major factor for multifamily and [retail properties](https:\/\/www.jpmorgan.com\/commercial-real-estate\/financing-for-retail-properties \"go to Financing for retail properties\"), and durable and nondurable goods spending is especially important for industrial properties.\n##\nCap rates are just one unit of comparison used for evaluating commercial real estate; both macroeconomic and property specific characteristics should be considered when determining an appropriate cap rate for any specific property. Various factors, such as supply and demand trends, real estate zoning and regulations, credit worthiness of residents, remaining lease terms and specific lease factors can impact the actual cap rate. An investor’s awareness and diligence can be the differentiator between expectations and outcomes.\n\nCap rates are among several factors to consider when [growing your multifamily portfolio](https:\/\/www.jpmorgan.com\/insights\/real-estate\/commercial-term-lending\/building-your-commercial-real-estate-portfolio \"3 tips for growing your rental property portfolio\").\n\n*JPMorgan Chase Bank, N.A. Member FDIC. Visit* [*jpmorgan.com\/cb-disclaimer*](https:\/\/www.jpmorgan.com\/commercial-banking\/legal-disclaimer \"CB Disclaimer\") *for disclosures and disclaimers related to this content.*","meta_canonical":null}

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URL	https://www.jpmorgan.com/insights/real-estate/commercial-term-lending/cap-rates-explained
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Meta Title	Cap Rates, Explained \| JPMorganChase
Meta Description	Gain a better understanding of cap rates in commercial real estate, including the impact of interest rates and other macroeconomic influences.
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Boilerpipe Text	Key takeaways It’s critical to analyze like-kind comparables, such as property type, location, income/expense, quality/condition and durability, when looking at cap rates. Factors such as actual or projected income and expenses can also make a big difference. While they aren’t considered a primary driver of cap rates, interest rate changes can influence cap rates as the cost of borrowing will impact return on investments. Some specific elements that can influence cap rates are property location, condition, asset class, investment size, tenant quality, anticipated rent growth and external economic factors. In real estate, capitalization rates—commonly called cap rates—are useful risk measurements for commercial properties . The capitalization rate of a property is calculated by dividing the annual net operating income, or NOI, by the property's market value. For instance, if a property was valued at $14,000,000 and the NOI was $600,000, the cap rate would be 4.3%. Cap rate levels can also reflect other larger economic factors, such as competition, monetary policy, and real estate zoning and regulations. Amid market uncertainty, we’re here to help Connect with a banker Rising interest rates increase the cost of capital, so fluctuations in the interest rate environment can contribute to rising cap rates. That’s the case in the current economic environment. While interest rate hikes didn’t occur in 2025, rates remain elevated relative to the historically low levels. This increased financing costs, limited transaction volume and made it difficult to assess cap rates. Nationally, multifamily cap rates remained unchanged between Q4 of 2024 and Q4 of 2025. During the same time period, office and retail cap rates increased slightly (0.2% and 0.1%, respectively) and industrial dropped by 0.1%. The Fed and the market anticipate more rate interest rate cuts in 2026, which would likely lower borrowing costs and decrease cap rates. However, the future of the economy and interest rates is uncertain . 4Q 25 Multifamily Industrial Office Retail Los Angeles 5.00% 5.20% 7.60% 5.90% San Francisco 4.50% 5.90% 7.40% 5.20% New York 5.40% 6.00% 6.90% 6.10% Chicago 6.70% 8.10% 10.10% 8.10% Seattle 5.00% 5.80% 7.70% 6.30% Portland 5.60% 6.80% 8.80% 6.90% Washington DC 5.70% 6.70% 9.80% 6.90% National 6.10% 7.20% 9.10% 7.30% 4Q 24 Multifamily Industrial Office Retail Los Angeles 5.00% 5.10% 7.60% 5.70% San Francisco 4.50% 5.80% 6.90% 5.10% New York 5.40% 6.00% 6.80% 6.10% Chicago 6.80% 8.10% 9.80% 8.00% Seattle 4.90% 5.70% 7.40% 6.20% Portland 5.50% 6.80% 8.40% 6.70% Washington DC 5.70% 6.80% 9.30% 6.80% National 6.10% 7.30% 8.90% 7.20% Change Multifamily Industrial Office Retail Los Angeles 0.00% 0.10% 0.00% 0.20% San Francisco 0.00% 0.10% 0.50% 0.10% New York 0.00% 0.00% 0.10% 0.00% Chicago -0.10% 0.00% 0.30% 0.10% Seattle 0.10% 0.10% 0.30% 0.10% Portland 0.10% 0.00% 0.40% 0.20% Washington DC 0.00% -0.10% 0.50% 0.10% National 0.00% -0.10% 0.20% 0.10% Cap rates measure investors’ return expectations, but they’re a forward-looking point-in-time measurement. An investor’s realized returns may differ from their expected ones because of many factors, including: Rent growth: Rent growth can accelerate during periods of higher inflation, particularly in apartments with short-term leases. The anticipation of higher rents and greater NOI can offset higher interest rates. Likewise, deteriorating economic conditions can add upward pressure on cap rates and slow rent growth. Gross Domestic Product (GDP) and unemployment: Both GDP and unemployment reflect the health of the economy. When GDP is high and unemployment is low, commercial real estate investments tend to have lower cap rates. When GDP is low and unemployment is high, there’s a greater risk associated with investment properties. But remember: Cap rates are typically forward-looking, and individual deals are affected by a building’s unique prospects and an investor’s viewpoint—as well as the prevailing economic conditions and outlook. Stage in the economic cycle: In periods of stress, such as the Great Financial Crisis, cap rates have increased while interest rates decreased, a result of investors taking on more risk to own commercial real estate. In expansionary cycles with moderate interest rate increases , cap rates may remain unchanged if investors can expect increases in income and still achieve their expected return over their investment horizon. Location : Proximity to the city’s employment center, highways and public transit also influences cap rates. Properties located in high-demand and stable locations generally have lower cap rates, while transitional or outlying neighborhoods usually have higher cap rates due to higher employment volatility and fluctuating demand. This can lead to higher tenant turnover, leasing costs and other factors that impact operating cash flows. Asset class: Cap rates vary across asset classes depending on asset fundamentals, performance outlook and supply and demand, among other factors. In recent years, multifamily and industrial properties have exhibited the lowest cap rates. The weight of several economic measurements may also vary based on asset class. For example, personal income is a major factor for multifamily and retail properties , and durable and nondurable goods spending is especially important for industrial properties. Cap rates are just one unit of comparison used for evaluating commercial real estate; both macroeconomic and property specific characteristics should be considered when determining an appropriate cap rate for any specific property. Various factors, such as supply and demand trends, real estate zoning and regulations, credit worthiness of residents, remaining lease terms and specific lease factors can impact the actual cap rate. An investor’s awareness and diligence can be the differentiator between expectations and outcomes. Cap rates are among several factors to consider when growing your multifamily portfolio . JPMorgan Chase Bank, N.A. Member FDIC. Visit jpmorgan.com/cb-disclaimer for disclosures and disclaimers related to this content.
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Overview ![skyrise buildings](https://www.jpmorgan.com/content/dam/jpm/commercial-banking/insights/commercial-real-estate/banner-insight-ctl-multifamily-investing-cap-rates-1440x810.jpg) ## Key takeaways - It’s critical to analyze like-kind comparables, such as property type, location, income/expense, quality/condition and durability, when looking at cap rates. Factors such as actual or projected income and expenses can also make a big difference. - While they aren’t considered a primary driver of cap rates, interest rate changes can influence cap rates as the cost of borrowing will impact return on investments. - Some specific elements that can influence cap rates are property location, condition, asset class, investment size, tenant quality, anticipated rent growth and external economic factors. ## Browse by topic - [Real Estate](https://www.jpmorgan.com/insights/real-estate) - [Commercial Term Lending](https://www.jpmorgan.com/insights/real-estate/commercial-term-lending) - [Commercial Real Estate](https://www.jpmorgan.com/insights/real-estate/commercial-real-estate) - [Multifamily](https://www.jpmorgan.com/insights/real-estate/multifamily) - [Investing](https://www.jpmorgan.com/insights/real-estate/investing) In real estate, capitalization rates—commonly called cap rates—are useful risk measurements for [commercial properties](https://www.jpmorgan.com/commercial-real-estate "Go to Commercial Real Estate"). ## The cap rate formula Calculated by dividing a property’s net operating income by its asset value, the cap rate is an assessment of the yield of a property over one year. For example, a property worth \$14 million generating \$600,000 of NOI would have a cap rate of 4.3%. That means that you can expect a roughly 4.3% annual operating cash flow given the price paid for the property. You should also note: It’s critical to make an apples-to-apples comparison with cap rates. For example, it matters if you are comparing cap rates based on actual versus projected income. What’s a good cap rate? It varies from investor to investor and property to property. In general, the higher the cap rate, the greater the risk and return. ![Net Operating Income Equation](https://www.jpmorgan.com/content/dam/jpmorgan/images/cb/insights/real-estate/cb-cre-ctl-cap-rates-noi-equation-1440x810-horizontal.jpg) View text Version The capitalization rate of a property is calculated by dividing the annual net operating income, or NOI, by the property's market value. For instance, if a property was valued at \$14,000,000 and the NOI was \$600,000, the cap rate would be 4.3%. ![Net Operating Income Equation](https://www.jpmorgan.com/content/dam/jpmorgan/images/cb/insights/real-estate/cb-cre-ctl-cap-rates-noi-equation-1440x810-horizontal.jpg) View Infographic View text Version Cap rate levels can also reflect other larger economic factors, such as competition, monetary policy, and real estate zoning and regulations. Amid market uncertainty, we’re here to help [Connect with a banker](https://www.jpmorgan.com/insights/real-estate/commercial-term-lending/cap-rates-explained#contact-ctl) ## The impact of interest rates on cap rates Rising interest rates increase the cost of capital, so fluctuations in the interest rate environment can contribute to rising cap rates. That’s the case in the current economic environment. While [interest rate hikes](https://www.jpmorgan.com/insights/real-estate/commercial-real-estate/rising-interest-rates-effect-on-commercial-real-estate "What Fed policy means for multifamily property investors") didn’t occur in 2025, rates remain elevated relative to the historically low levels. This increased financing costs, limited transaction volume and made it difficult to assess cap rates. Nationally, [multifamily](https://www.jpmorgan.com/commercial-real-estate/multifamily-property-loans "Financing for Multifamily Buildings") cap rates remained unchanged between Q4 of 2024 and Q4 of 2025. During the same time period, office and retail cap rates increased slightly (0.2% and 0.1%, respectively) and [industrial](https://www.jpmorgan.com/commercial-real-estate/industrial-property-loans-and-mortgages "Financing for industrial properties") dropped by 0.1%. The Fed and the market anticipate more rate [interest rate cuts](https://www.jpmorgan.com/insights/real-estate/commercial-term-lending/interest-rate-cuts-impact-on-multifamily-real-estate "How interest rate cuts could impact commercial real estate") in 2026, which would likely lower borrowing costs and decrease cap rates. However, the future of the economy and [interest rates is uncertain](https://www.jpmorgan.com/insights/real-estate/commercial-term-lending/hedging-interest-rates-in-commercial-real-estate "Navigating interest rate uncertainty"). ## Sample cap rates \| 4Q 25 \| Multifamily \| Industrial \| Office \| Retail \| \|---\|---\|---\|---\|---\| \| Los Angeles \| 5\.00% \| 5\.20% \| 7\.60% \| 5\.90% \| \| San Francisco \| 4\.50% \| 5\.90% \| 7\.40% \| 5\.20% \| \| New York \| 5\.40% \| 6\.00% \| 6\.90% \| 6\.10% \| \| Chicago \| 6\.70% \| 8\.10% \| 10\.10% \| 8\.10% \| \| Seattle \| 5\.00% \| 5\.80% \| 7\.70% \| 6\.30% \| \| Portland \| 5\.60% \| 6\.80% \| 8\.80% \| 6\.90% \| \| Washington DC \| 5\.70% \| 6\.70% \| 9\.80% \| 6\.90% \| \| National \| 6\.10% \| 7\.20% \| 9\.10% \| 7\.30% \| \| 4Q 24 \| Multifamily \| Industrial \| Office \| Retail \| \|---\|---\|---\|---\|---\| \| Los Angeles \| 5\.00% \| 5\.10% \| 7\.60% \| 5\.70% \| \| San Francisco \| 4\.50% \| 5\.80% \| 6\.90% \| 5\.10% \| \| New York \| 5\.40% \| 6\.00% \| 6\.80% \| 6\.10% \| \| Chicago \| 6\.80% \| 8\.10% \| 9\.80% \| 8\.00% \| \| Seattle \| 4\.90% \| 5\.70% \| 7\.40% \| 6\.20% \| \| Portland \| 5\.50% \| 6\.80% \| 8\.40% \| 6\.70% \| \| Washington DC \| 5\.70% \| 6\.80% \| 9\.30% \| 6\.80% \| \| National \| 6\.10% \| 7\.30% \| 8\.90% \| 7\.20% \| \| Change \| Multifamily \| Industrial \| Office \| Retail \| \|---\|---\|---\|---\|---\| \| Los Angeles \| 0\.00% \| 0\.10% \| 0\.00% \| 0\.20% \| \| San Francisco \| 0\.00% \| 0\.10% \| 0\.50% \| 0\.10% \| \| New York \| 0\.00% \| 0\.00% \| 0\.10% \| 0\.00% \| \| Chicago \| \-0.10% \| 0\.00% \| 0\.30% \| 0\.10% \| \| Seattle \| 0\.10% \| 0\.10% \| 0\.30% \| 0\.10% \| \| Portland \| 0\.10% \| 0\.00% \| 0\.40% \| 0\.20% \| \| Washington DC \| 0\.00% \| \-0.10% \| 0\.50% \| 0\.10% \| \| National \| 0\.00% \| \-0.10% \| 0\.20% \| 0\.10% \| ## How other macroeconomic factors affect cap rates Cap rates measure investors’ return expectations, but they’re a forward-looking point-in-time measurement. An investor’s realized returns may differ from their expected ones because of many factors, including: - Rent growth: Rent growth can accelerate during periods of higher inflation, particularly in apartments with short-term leases. The anticipation of higher rents and greater NOI can offset higher interest rates. Likewise, deteriorating economic conditions can add upward pressure on cap rates and slow rent growth. - Gross Domestic Product (GDP) and unemployment: Both GDP and unemployment reflect the health of the economy. When GDP is high and unemployment is low, commercial real estate investments tend to have lower cap rates. When GDP is low and unemployment is high, there’s a greater risk associated with investment properties. But remember: Cap rates are typically forward-looking, and individual deals are affected by a building’s unique prospects and an investor’s viewpoint—as well as the prevailing economic conditions and outlook. - Stage in the economic cycle: In periods of stress, such as the Great Financial Crisis, cap rates have increased while interest rates decreased, a result of investors taking on more risk to own commercial real estate. In expansionary cycles with moderate [interest rate increases](https://www.jpmorgan.com/insights/real-estate/commercial-real-estate/rising-interest-rates-effect-on-commercial-real-estate "go to What Fed policy means for multifamily property investors"), cap rates may remain unchanged if investors can expect increases in income and still achieve their expected return over their investment horizon. - [Location](https://www.jpmorgan.com/insights/real-estate/investing/how-to-create-a-multifamily-location-strategy "Go to How to Create a Multifamily Location Strategy"): Proximity to the city’s employment center, highways and public transit also influences cap rates. Properties located in high-demand and stable locations generally have lower cap rates, while transitional or outlying neighborhoods usually have higher cap rates due to higher employment volatility and fluctuating demand. This can lead to higher tenant turnover, leasing costs and other factors that impact [operating cash flows.](https://www.jpmorgan.com/insights/real-estate/commercial-term-lending/calculating-net-operating-income-and-cash-flow "Go to Calculating Net Operating Income and Cash flow") - Asset class: Cap rates vary across asset classes depending on asset fundamentals, performance outlook and supply and demand, among other factors. In recent years, multifamily and industrial properties have exhibited the lowest cap rates. The weight of several economic measurements may also vary based on asset class. For example, personal income is a major factor for multifamily and [retail properties](https://www.jpmorgan.com/commercial-real-estate/financing-for-retail-properties "go to Financing for retail properties"), and durable and nondurable goods spending is especially important for industrial properties. ## The bottom line Cap rates are just one unit of comparison used for evaluating commercial real estate; both macroeconomic and property specific characteristics should be considered when determining an appropriate cap rate for any specific property. Various factors, such as supply and demand trends, real estate zoning and regulations, credit worthiness of residents, remaining lease terms and specific lease factors can impact the actual cap rate. An investor’s awareness and diligence can be the differentiator between expectations and outcomes. Cap rates are among several factors to consider when [growing your multifamily portfolio](https://www.jpmorgan.com/insights/real-estate/commercial-term-lending/building-your-commercial-real-estate-portfolio "3 tips for growing your rental property portfolio"). JPMorgan Chase Bank, N.A. Member FDIC. Visit [jpmorgan.com/cb-disclaimer](https://www.jpmorgan.com/commercial-banking/legal-disclaimer "CB Disclaimer") for disclosures and disclaimers related to this content. ## Get in touch ## Related insights ![Bridge looking skyward](https://www.jpmorgan.com/content/dam/jpmorgan/images/cb/insights/real-estate/cb-cre-banner-agency-lending-1440x810px-horizontal.jpg) Real Estate [Using bridge loans with agency financing in multifamily](https://www.jpmorgan.com/insights/real-estate/agency-lending/commercial-bridge-loans-and-agency-lending) Mar 20, 2026 Bridge loans offer multifamily investors flexible short-term capital. Find out how they can also provide a smooth transition to agency financing. 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[Read more](https://www.jpmorgan.com/insights/real-estate/payments/cybersecurity-for-commercial-real-estate-key-strategies) ![Intersection of roads](https://www.jpmorgan.com/content/dam/jpmorgan/images/cb/insights/real-estate/cb-ctl-interest-rates-uncertainty-1440x810px-horizontal.jpg) Real Estate [Navigating interest rate uncertainty](https://www.jpmorgan.com/insights/real-estate/commercial-term-lending/hedging-interest-rates-in-commercial-real-estate) Feb 03, 2026 At its January meeting, the Fed held interest rates steady. Learn more about the factors behind the decision [Read more](https://www.jpmorgan.com/insights/real-estate/commercial-term-lending/hedging-interest-rates-in-commercial-real-estate) ![3 people looking at blueprints](https://www.jpmorgan.com/content/dam/jpmorgan/images/cb/insights/real-estate/cb-cre-cbd-banner-meeting-1440x810px-horizontal.jpg) 3:00 - Real Estate [How tax credit equity helped Dupaco return to its roots](https://www.jpmorgan.com/insights/real-estate/community-development-banking/how-htc-and-nmtc-helped-restore-downtown-dubuque-iowa) Jan 30, 2026 See how both Historic and New Markets Tax Credit from J.P. Morgan helped transform a vacant manufacturing facility and spur community development in Dubuque, Iowa. [Watch video](https://www.jpmorgan.com/insights/real-estate/community-development-banking/how-htc-and-nmtc-helped-restore-downtown-dubuque-iowa) You're now leaving J.P. Morgan J.P. 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Readable Markdown	![skyrise buildings](https://www.jpmorgan.com/content/dam/jpm/commercial-banking/insights/commercial-real-estate/banner-insight-ctl-multifamily-investing-cap-rates-1440x810.jpg) ## Key takeaways - It’s critical to analyze like-kind comparables, such as property type, location, income/expense, quality/condition and durability, when looking at cap rates. Factors such as actual or projected income and expenses can also make a big difference. - While they aren’t considered a primary driver of cap rates, interest rate changes can influence cap rates as the cost of borrowing will impact return on investments. - Some specific elements that can influence cap rates are property location, condition, asset class, investment size, tenant quality, anticipated rent growth and external economic factors. In real estate, capitalization rates—commonly called cap rates—are useful risk measurements for [commercial properties](https://www.jpmorgan.com/commercial-real-estate "Go to Commercial Real Estate"). ![Net Operating Income Equation](https://www.jpmorgan.com/content/dam/jpmorgan/images/cb/insights/real-estate/cb-cre-ctl-cap-rates-noi-equation-1440x810-horizontal.jpg) The capitalization rate of a property is calculated by dividing the annual net operating income, or NOI, by the property's market value. For instance, if a property was valued at \$14,000,000 and the NOI was \$600,000, the cap rate would be 4.3%. ![Net Operating Income Equation](https://www.jpmorgan.com/content/dam/jpmorgan/images/cb/insights/real-estate/cb-cre-ctl-cap-rates-noi-equation-1440x810-horizontal.jpg) Cap rate levels can also reflect other larger economic factors, such as competition, monetary policy, and real estate zoning and regulations. Amid market uncertainty, we’re here to help [Connect with a banker](https://www.jpmorgan.com/insights/real-estate/commercial-term-lending/cap-rates-explained#contact-ctl) ## Rising interest rates increase the cost of capital, so fluctuations in the interest rate environment can contribute to rising cap rates. That’s the case in the current economic environment. While [interest rate hikes](https://www.jpmorgan.com/insights/real-estate/commercial-real-estate/rising-interest-rates-effect-on-commercial-real-estate "What Fed policy means for multifamily property investors") didn’t occur in 2025, rates remain elevated relative to the historically low levels. This increased financing costs, limited transaction volume and made it difficult to assess cap rates. Nationally, [multifamily](https://www.jpmorgan.com/commercial-real-estate/multifamily-property-loans "Financing for Multifamily Buildings") cap rates remained unchanged between Q4 of 2024 and Q4 of 2025. During the same time period, office and retail cap rates increased slightly (0.2% and 0.1%, respectively) and [industrial](https://www.jpmorgan.com/commercial-real-estate/industrial-property-loans-and-mortgages "Financing for industrial properties") dropped by 0.1%. The Fed and the market anticipate more rate [interest rate cuts](https://www.jpmorgan.com/insights/real-estate/commercial-term-lending/interest-rate-cuts-impact-on-multifamily-real-estate "How interest rate cuts could impact commercial real estate") in 2026, which would likely lower borrowing costs and decrease cap rates. However, the future of the economy and [interest rates is uncertain](https://www.jpmorgan.com/insights/real-estate/commercial-term-lending/hedging-interest-rates-in-commercial-real-estate "Navigating interest rate uncertainty"). ## \| 4Q 25 \| Multifamily \| Industrial \| Office \| Retail \| \|---\|---\|---\|---\|---\| \| Los Angeles \| 5\.00% \| 5\.20% \| 7\.60% \| 5\.90% \| \| San Francisco \| 4\.50% \| 5\.90% \| 7\.40% \| 5\.20% \| \| New York \| 5\.40% \| 6\.00% \| 6\.90% \| 6\.10% \| \| Chicago \| 6\.70% \| 8\.10% \| 10\.10% \| 8\.10% \| \| Seattle \| 5\.00% \| 5\.80% \| 7\.70% \| 6\.30% \| \| Portland \| 5\.60% \| 6\.80% \| 8\.80% \| 6\.90% \| \| Washington DC \| 5\.70% \| 6\.70% \| 9\.80% \| 6\.90% \| \| National \| 6\.10% \| 7\.20% \| 9\.10% \| 7\.30% \| \| 4Q 24 \| Multifamily \| Industrial \| Office \| Retail \| \|---\|---\|---\|---\|---\| \| Los Angeles \| 5\.00% \| 5\.10% \| 7\.60% \| 5\.70% \| \| San Francisco \| 4\.50% \| 5\.80% \| 6\.90% \| 5\.10% \| \| New York \| 5\.40% \| 6\.00% \| 6\.80% \| 6\.10% \| \| Chicago \| 6\.80% \| 8\.10% \| 9\.80% \| 8\.00% \| \| Seattle \| 4\.90% \| 5\.70% \| 7\.40% \| 6\.20% \| \| Portland \| 5\.50% \| 6\.80% \| 8\.40% \| 6\.70% \| \| Washington DC \| 5\.70% \| 6\.80% \| 9\.30% \| 6\.80% \| \| National \| 6\.10% \| 7\.30% \| 8\.90% \| 7\.20% \| \| Change \| Multifamily \| Industrial \| Office \| Retail \| \|---\|---\|---\|---\|---\| \| Los Angeles \| 0\.00% \| 0\.10% \| 0\.00% \| 0\.20% \| \| San Francisco \| 0\.00% \| 0\.10% \| 0\.50% \| 0\.10% \| \| New York \| 0\.00% \| 0\.00% \| 0\.10% \| 0\.00% \| \| Chicago \| \-0.10% \| 0\.00% \| 0\.30% \| 0\.10% \| \| Seattle \| 0\.10% \| 0\.10% \| 0\.30% \| 0\.10% \| \| Portland \| 0\.10% \| 0\.00% \| 0\.40% \| 0\.20% \| \| Washington DC \| 0\.00% \| \-0.10% \| 0\.50% \| 0\.10% \| \| National \| 0\.00% \| \-0.10% \| 0\.20% \| 0\.10% \| ## Cap rates measure investors’ return expectations, but they’re a forward-looking point-in-time measurement. An investor’s realized returns may differ from their expected ones because of many factors, including: - Rent growth: Rent growth can accelerate during periods of higher inflation, particularly in apartments with short-term leases. The anticipation of higher rents and greater NOI can offset higher interest rates. Likewise, deteriorating economic conditions can add upward pressure on cap rates and slow rent growth. - Gross Domestic Product (GDP) and unemployment: Both GDP and unemployment reflect the health of the economy. When GDP is high and unemployment is low, commercial real estate investments tend to have lower cap rates. When GDP is low and unemployment is high, there’s a greater risk associated with investment properties. But remember: Cap rates are typically forward-looking, and individual deals are affected by a building’s unique prospects and an investor’s viewpoint—as well as the prevailing economic conditions and outlook. - Stage in the economic cycle: In periods of stress, such as the Great Financial Crisis, cap rates have increased while interest rates decreased, a result of investors taking on more risk to own commercial real estate. In expansionary cycles with moderate [interest rate increases](https://www.jpmorgan.com/insights/real-estate/commercial-real-estate/rising-interest-rates-effect-on-commercial-real-estate "go to What Fed policy means for multifamily property investors"), cap rates may remain unchanged if investors can expect increases in income and still achieve their expected return over their investment horizon. - [Location](https://www.jpmorgan.com/insights/real-estate/investing/how-to-create-a-multifamily-location-strategy "Go to How to Create a Multifamily Location Strategy"): Proximity to the city’s employment center, highways and public transit also influences cap rates. Properties located in high-demand and stable locations generally have lower cap rates, while transitional or outlying neighborhoods usually have higher cap rates due to higher employment volatility and fluctuating demand. This can lead to higher tenant turnover, leasing costs and other factors that impact [operating cash flows.](https://www.jpmorgan.com/insights/real-estate/commercial-term-lending/calculating-net-operating-income-and-cash-flow "Go to Calculating Net Operating Income and Cash flow") - Asset class: Cap rates vary across asset classes depending on asset fundamentals, performance outlook and supply and demand, among other factors. In recent years, multifamily and industrial properties have exhibited the lowest cap rates. The weight of several economic measurements may also vary based on asset class. For example, personal income is a major factor for multifamily and [retail properties](https://www.jpmorgan.com/commercial-real-estate/financing-for-retail-properties "go to Financing for retail properties"), and durable and nondurable goods spending is especially important for industrial properties. ## Cap rates are just one unit of comparison used for evaluating commercial real estate; both macroeconomic and property specific characteristics should be considered when determining an appropriate cap rate for any specific property. Various factors, such as supply and demand trends, real estate zoning and regulations, credit worthiness of residents, remaining lease terms and specific lease factors can impact the actual cap rate. An investor’s awareness and diligence can be the differentiator between expectations and outcomes. Cap rates are among several factors to consider when [growing your multifamily portfolio](https://www.jpmorgan.com/insights/real-estate/commercial-term-lending/building-your-commercial-real-estate-portfolio "3 tips for growing your rental property portfolio"). JPMorgan Chase Bank, N.A. Member FDIC. Visit [jpmorgan.com/cb-disclaimer](https://www.jpmorgan.com/commercial-banking/legal-disclaimer "CB Disclaimer") for disclosures and disclaimers related to this content.
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