CHART OF THE MONTH: RETAIL CAP RATE BY PROPERTY TYPE PAST 5 YEARS

Written by: Collin Fitzgerald

Collin specializes in research capabilities, providing support for the Colliers Columbus Office, Industrial, Retail and Capital Market groups. He is responsible for executing data reports, maintaining a commercial property database, reporting quarterly trends, performing data analysis, and utilizing statistical information to predict future behavior in the market. Keep reading for his take on market trends in the Columbus multifamily sector.

Source: CoStar

• Over the past five years, retail cap rates in Columbus, Ohio have followed a nuanced trajectory—rising modestly during the peak of interest rate hikes in 2022 and 2023 but recently showing signs of soft compression as borrowing costs begin to stabilize and investor confidence gradually returns. For retail centers, particularly multi-tenant strip and neighborhood centers, cap rates increased from lows in the mid-6% range in 2019 to highs around 7.25% by late 2023. However, over the past 6-12 months, these cap rates have edged slightly downward, settling closer to the high-6% range. This shift is due in part to growing demand for well-located, stabilized assets, as investors become more comfortable underwriting future rent growth and capitalizing on Columbus’ steady economic and population trends.

  
  

• The slight decline in cap rates, particularly in a stabilizing interest rate environment, signals renewed confidence in the Columbus retail market and is likely to have a positive ripple effect. Buyers who had paused acquisitions during the peak volatility are beginning to re-engage, and sellers are adjusting pricing expectations accordingly. This could lead to a moderate rebound in transaction volume in 2025. For owners, the shift also presents an opportunity to refinance or reposition assets at favorable valuations. Columbus’ continued residential growth, mixed-use development and strong suburban retail corridors support a healthy outlook for retail real estate. If cap rates continue to trend downward modestly, competition for quality assets will increase, encouraging more strategic investment and development across the region.