San Francisco CBD office cap rates peaked at 7.34% in 2026, up roughly 190 basis points since 2022 — the steepest increase of any property type in the market.
Key Takeaways
- San Francisco CBD office cap rates reached a peak of 7.34% in 2026, up from 5.44% in 2022 — an increase of roughly 190 basis points, the largest of any property type.
- Office assets command the highest cap rates across both the CBD and Urban submarkets, reflecting investors’ continued demand for a higher risk premium as leasing fundamentals remain uneven.
- Since 2022, office has experienced the largest cap rate expansion of any asset class, increasing roughly 160–190 basis points through its 2026 peak, compared with generally less than 100 basis points for industrial, retail, and multifamily.
- Even with this expected compression, office cap rates remain well above pre-pandemic levels, indicating investors continue to price in elevated leasing risk and a longer recovery timeline.
- By comparison, industrial, retail, and multifamily appear to have stabilized more quickly, with relatively modest forecast changes over the remainder of the decade.
- Forecasts suggest the sharp repricing cycle may have largely run its course. Cap rates for all four property types are expected to gradually compress through 2031, with office projected to see the greatest improvement.
San Francisco CBD Cap Rates by Property Type — 2016–2026
| Year | Industrial | Office | Retail | Multifamily |
|---|---|---|---|---|
| 2016 | 5.02% | 4.22% | 4.08% | 3.82% |
| 2017 | 5.11% | 4.47% | 4.07% | 3.79% |
| 2018 | 4.98% | 4.46% | 3.96% | 3.77% |
| 2019 | 4.89% | 4.57% | 4.08% | 3.94% |
| 2020 | 4.57% | 4.80% | 4.02% | 4.38% |
| 2021 | 4.12% | 4.71% | 3.83% | 3.98% |
| 2022 | 4.36% | 5.44% | 4.19% | 4.67% |
| 2023 | 4.82% | 6.33% | 4.62% | 5.43% |
| 2024 | 4.94% | 7.00% | 4.95% | 5.66% |
| 2025 | 4.98% | 7.46% | 5.07% | 5.59% |
| 2026 | 4.99% | 7.34% | 5.19% | 5.37% |
Data as of August 2026. Source: Kidder Mathews Research, SF Market Cap Rate Dashboard. Prepared by the Kidder Mathews Research Group.
Frequently Asked Questions
What is the current office cap rate in San Francisco’s CBD?
San Francisco CBD office cap rates peaked at 7.34% in 2026, up from 5.44% in 2022 — an increase of roughly 190 basis points, the largest of any property type.
Which property type has the highest cap rates in San Francisco?
Office assets command the highest cap rates across both the CBD and Urban submarkets, reflecting investors’ continued demand for a higher risk premium as leasing fundamentals remain uneven.
Are San Francisco cap rates expected to fall?
Yes. Cap rates for industrial, office, retail, and multifamily are all expected to gradually compress through 2031, with office projected to see the greatest improvement, though office rates are expected to remain well above pre-pandemic levels.
How have industrial, retail, and multifamily cap rates changed compared to office since 2022?
Industrial, retail, and multifamily cap rates have generally risen less than 100 basis points since 2022 and appear to have stabilized more quickly, with relatively modest forecast changes over the remainder of the decade — a much smaller move than office’s roughly 160–190 basis point increase.
ContactGARY BARAGONA |
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