Prime yields increased for all property types in the commercial real estate sector in Germany between 2021 and 2023. Multifamily housing had the lowest yield as of the third quarter of 2023, at *** percent. Conversely, and the highest for shopping centers, amounting to *** percent.

Industrial multi-lets and industrial distribution properties had the lowest yields in the industrial real estate sector, amounting to **** percent in February 2025. Conversely, yields were the highest for retail warehousing (restricted), at ************* Yield is an indicator for the expected return of a property investment and is calculated as the ratio of rental income and the property value. Several factors can drive yields — increased demand could raise property values, causing lower yields, while a fall in demand could create the opposite effect. Overall, yields expanded across all commercial property types in 2023.

Prime yields in the commercial real estate market in the UK increased the most for office real estate in the second half of 2023. The yield shift amounted to 0.46 percent, which was about five times the increase for retail real estate. The prime yields for different property types vary widely across the different markets in the UK.

In the first quarter of 2023, cities with office stock exceeding ************ square meters, classed in the category A-location according to office real estate market size, had an average prime yield of **** percent. Cities with smaller office markets (C- and D-locations) had average prime yields between *** and *** percent. In the same quarter, Dusseldorf had the lowest prime yield in Germany. The prime gross initial yield is the ratio of the contractual rent to the acquisition price.

The prime yields in the UK expanded across most property types between 2022 and 2025. In April 2025, yields were the lowest in the London West End offices market at *****percent. In contrast, shopping center yields stood at ****percent. Yield is an indicator for the expected return of a property investment and is calculated as the ratio of rental income and the property value. Several factors can drive yields - increased demand could raise property values, causing lower yields, while a fall in demand could create the opposite effect. Which is the largest commercial real estate sector in the UK? Office real estate has traditionally accounted for the lion’s share of the commercial property investment market, but since the start of the COVID-19 pandemic, investors’ interest has shifted towards industrial real estate. With the e-commerce sector growing and supply chain management becoming more important than ever, so has the industrial and logistic sector. This increase in importance is also reflected in the occupiers market, with the annual take-up exceeding the ten-year average for three years in a row. How is the commercial property market expected to develop in the coming years? The industrial and logistic property market is forecast to outperform retail and offices in terms of capital value growth in the period between 2025 and 2028. According to the same forecast, rental growth is expected to turn positive for all property types in 2025, except for shopping centers.

High street properties fetched the highest yield in the retail real estate market in Spain in 2023. The prime yield for high street retail real estate amounted to 6.75 percent in the fourth quarter of the year. Retail parks stood at the other end of the spectrum, with the prime yield at four percent. Yields are a measure of profitability and are calculated as the ratio of rental income to property value. Although higher yields suggest higher profitability, they are also associated with increased levels of risk.

Bucharest, Riga, and Tallin were the cities with the highest prime warehouse yields in Europe in the first quarter of 2025. Conversely, the major markets in Germany had warehouse yields of **** percent, which was the lowest across the European cities in the ranking. Other markets with low yields were London, Paris, and Rotterdam. In real estate, yield is a measure of the rate of return and is calculated as the ratio of the annual income to the total investment cost. Yields in markets with higher property values are typically lower, displaying lower investment risk due to better capital value and rental growth prospects over the period of the investment. That can be seen in markets such as London, Paris, and Berlin, which, despite being among the most sought-after investment destinations, had some of the lowest prime yields. How have yields developed in recent years? As a function of income and costs, many political and market factors can contribute to yield fluctuation. In Germany, prime warehouse yields declined steadily between 2014 and 2021, followed by an increase in 2022 and 2023. The rise in net prime yields reflects a slowdown in commercial property values amid a decline in the investment market. Investment in industrial and logistics real estate Industrial and logistics emerged as one of the most resilient commercial real estate sectors after the COVID-19 pandemic, as businesses sought strategies to strengthen supply chains and boost e-commerce. Nevertheless, challenges in the commercial real estate market related to a tougher lending environment, asset repricing, and a worsening investor sentiment caused commercial real estate investment volumes in Europe to plummet in 2023. This also affected the industrial and logistics real estate investments, with the value of capital allocated to the sector reaching the lowest value since 2016.

Retail properties had the highest capitalization rates in the United States in 2023, followed by offices. The cap rate for office real estate was **** percent in the fourth quarter of the year and was forecast to rise further to **** percent in 2024. Cap rates measure the expected rate of return on investment, and show the net operating income of a property as a percentage share of the current asset value. While a higher cap rate indicates a higher rate of return, it also suggests a higher risk. Why have cap rates increased? The increase in cap rates is a consequence of a repricing in the commercial real estate sector. According to the National NCREIF Property Return Index, prices for commercial real estate declined across all property types in 2023. Rental growth was slow during the same period, resulting in a negative annual return. The increase in cap rates reflects the increased risk in the investment environment. Pricing uncertainty in the commercial real estate sector Between 2014 and 2021, commercial property prices in the U.S. enjoyed steady growth. Access to credit with low interest rates facilitated economic growth and real estate investment. As inflation surged in the following two years, lending policy tightened. That had a significant effect on the sector. First, it worsened sentiment among occupiers. Second, it led to a decline in demand for commercial spaces and commercial real estate investment volumes. Uncertainty about the future development of interest rates and occupier demand further contributed to the repricing of real estate assets.

The retail and warehousing real estate sectors saw the highest yield among the different commercial property types in Ireland in 2023. Conversely, rental homes had the lowest yield, reflecting the lower risk associated with investing in that property type. The net equivalent of the retail and industrial sectors in the second quarter of the year was 5.25 percent. Private rental homes had 0.75 percent lower yields, at 4.5 percent.

In 2023, Dusseldorf had the highest high street real estate yield among the seven largest cities in Germany. Net prime yields generally ranged between 3.45 percent and 3.95 percent, with Dusseldorf achieving the highest yield at 3.95 percent. Meanwhile, Munich had the lowest yield, amounting to 3.45 percent. Prime yields show the ratio between the income received by an investor and the capital value of a property. Lower yields typically indicate more competitive markets. In 2023, Munich was the most expensive city for high street rent.

The investment yields of warehouse and industrial space in the UK softened slightly in 2025, after having increased notably in 2023. As of May 2025, yields were the highest for good secondary estates, at ***** percent. Conversely, prime distribution and warehousing properties with a lease term of 20 years and a higher open market value had the lowest yield, at **** percent.

The net initial yield for office real estate in the main German office markets ranged between **** percent and *** percent in the first quarter of 2023. Among the ranked cities, Dusseldorf had the lowest yield of **** percent, while Dortmund had the highest - *** percent. The net initial yield is calculated as the ratio of the initial contract rent minus non-apportionable costs, to the net purchase price of the property, including acquisition costs.

Prime yields in the office real estate market in Central London increased in 2023. In the fourth quarter of the year, the prime yield was the lowest in the Mayfair/St. James, at **** percent. At the other end of the scale were Stratford and Canary Wharf, where the prime office yield was *** percent. Yields are calculated as the ratio of the annual rental value to the cost of a property and measure the income expected from an investment. While lower yields indicate lower return on investment, they are usually a sign of highly competitive markets with strong investment appetite. In recent years, prime office yields in London have maintained levels below four percent.

The prime yields for high street retail real estate in European cities were the lowest in Zurich (Bahnhofstrasse) at *** percent as of the second quarter of 2025. Yield is a measure of profitability and shows the annual rental income as a share of the property price. As can be expected, cities with stronger economies tend to have lower initial yields, reflecting a lower risk and better prospects for rental growth. Sentiment among high street retail investors and developers has trended upward since 2021, after plummeting in response to the COVID-19 pandemic. Despite industry experts' optimism, retail real estate investment volumes stood at a record low in 2023. Furthermore, retail real estate companies traded at one of the highest discount to net asset value (NAV) in the European commercial real estate sector, suggesting concerns about the pricing of the underlying assets.

Prime yields for office real estate in Norway increased in 2022 and 2023, as a result of the tighter monetary policy. The highest prime yields for office real estate in Norway during ************** was in Stavanger and Trondheim, where it was **** percent. The lowest prime yields for office property during this period was in Oslo, reaching **** percent.

The net office prime yield in Central London, England, remained at the same level as 2023. In the fourth quarter of 2024, the prime office yield amounted to **** percent, up from **** percent in 2017 when yields were at their lowest. The net prime yield refers to the ratio of net income to purchase price of a property of highest specification, the best location, and standard size commensurate with local demand. Across the major European markets, the lowest yields were found in Geneva, Zurich, and Stockholm.

The initial prime yields of office properties in the Île-de-France (Paris) region of France increased for the second consecutive year in 2023. Yields were the lowest in Paris (central business district), at 4.5 percent. Outside of Paris, the region with the lowest office yields was Lyon.

Multifamily buildings had some of the lowest cap rates in Canada in the first quarter of 2023. For class A multifamily high rise buildings, investors could expect a capitalization rate of **** percent, while for class AA downtown offices, the cap rate was **** percent. The capitalization rate measures the rate of return on commercial properties and is calculated by dividing the net operating income of a property by its asset value. While a higher rate might promise higher return, it is also an indication of a riskier asset.

Vacancy rates across the office real estate sector in the U.S. increased in the second quarter of 2025. This was in line with a general trend of rising vacancies that started in 2020 during the COVID-19 pandemic. In the second quarter of 2025, about **** percent of office space across the country was vacant. In some major U.S. markets, vacancies exceeded ***percent. With a considerable part of the workforce working from home or following a hybrid working model, businesses are cautious when it comes to upscaling or renewing leases. Workplaces may never be the same again The COVID-19 pandemic has changed the way that companies operate, with working from home becoming the new normal for many U.S. employees. The function of the office has evolved from the primary workplace to a space where employees collaborate, exchange ideas, and socialize. That has shifted occupiers’ attention toward spaces with modern designs that can accommodate the office of the future. Many businesses used the pandemic time to revisit their office guidelines, remodel, or do a full or partial fit-out. With so much focus on quality, older buildings with poorer design or energy performance are likely to suffer lower demand, resulting in a two-speed market. What do higher vacancy rates mean for investors? Simply put, if landlords do not have tenants, their income stream is disrupted, and they cannot service their debts. April 2023 data shows that several U.S. metros had a significantly high share of distressed office real estate debt. In Charlotte-Gastonia-Concord, NC-SC, more than one-third of the commercial mortgage-backed securities for offices were delinquent, in special servicing, or a combination of both. As of March 2025, offices had the highest delinquency rate in the commercial property sector.

Kievskaya Ploschad was the leading commercial real estate company in Russia in 2023, having secured nearly *** billion U.S. dollars in rental revenue from the lease of its commercial facilities in Moscow. Ranking second and third were the Tashir Group and the Safmar Group with rental revenues of *** million U.S. dollars and *** million U.S. dollars, respectively.