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Strip Centers, Senior Housing Lead CRE's Cap Rate Compression

Strip Centers, Senior Housing Lead CRE's Cap Rate Compression

Green Street's latest data shows where cap rates are compressing, and which CRE sectors are attracting the most capital.

Nina Dale
July 20, 2026

In partnership with

Good morning. Cap rates may be standing still, but investors aren't. Green Street's latest report shows capital flowing toward a handful of property sectors with the strongest income growth and long-term fundamentals.

🎙️ This Week on No Cap: Josh Zegen of Madison Realty Capital shares how the firm helped pioneer real estate private credit, navigated the GFC, and is approaching today's maturity wall. (Thanks to our sponsor, Lennar Investor Marketplace)

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CRE Trivia 🧠

Which U.S. state enacted the first American condominium ownership law in 1961, laying the legal foundation for modern condo development?

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Market Snapshot

S&P 500

GSPC

7,457.69

Pct Chg:
-1.01%

FTSE NAREIT

FNER

879.72

Pct Chg:
+0.074%

10Y Treasury

TNX

4.551%

Pct Chg:
-0.018%

SOFR

30-DAY AVERAGE

3.62%

Pct Chg:
-0.00

*Data as of 07/17/2026 market close.

Sector Winners

Strip Centers, Senior Housing Lead CRE's Cap Rate Compression

Commercial real estate pricing has largely stabilized, but investors are becoming far more selective about where they deploy capital.

Selective capital wins: Green Street's Q1 Cap Rate Observer found cap rates were largely unchanged across most sectors, signaling pricing has stabilized. Rather than a broad recovery, investors are targeting property types with stronger NOI growth and better relative value. Market selection now matters more than macro timing.

Strip centers shine: Strip centers were among the quarter's biggest winners, with cap rates compressing about 15 bps and values rising roughly 2%. Power centers saw even stronger pricing gains as institutional demand increased. Secondary markets also outperformed many gateway cities thanks to limited supply and healthy leasing fundamentals.

Senior housing leads: Senior housing delivered the strongest performance of any major property type, with values climbing 13% year over year. Stable cap rates combined with robust NOI growth and large portfolio transactions helped drive the sector higher. Green Street continues to view the asset class as one of CRE's best relative-value opportunities.

Stability with pockets of strength: Apartments, industrial, hotels, self-storage, and SFRs remained largely stable nationally, though performance varied by market. Southern California apartments and several industrial markets saw cap rate compression, while Seattle, Boston, and parts of the Sun Belt softened. Office remains divided between high-quality assets attracting capital and average properties facing ongoing challenges.

➥ THE TAKEAWAY

Picking the winners: A stable cap rate environment is making property selection more important than ever. Investors are increasingly chasing income growth rather than simply waiting for rates to fall.

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✍️ Editor’s Picks

Instant intel: Brokers who answer zoning and feasibility questions on the spot are the ones developers call back. Prophetic gives brokerages AI-native site intelligence to present with authority and expand into new markets. (sponsored)
Loan landscape: U.S. bank real estate lending reached $6.1T in Q1 2026, with multifamily leading growth rates while residential and core CRE added the most dollars.
CRE momentum: CRE was gaining stability across most U.S. markets before renewed Iran tensions introduced new risks for energy, inflation, and investor confidence.
Beachfront bet: Trevato Development Group broke ground on a $120 million, 415-unit mixed-income community in Jacksonville Beach, marking a major milestone as it accelerates its Southeast expansion strategy.
Cap rate: CRE pricing remains mostly unchanged as investors favor strip centers, senior housing, and data centers with stronger fundamentals and growth potential.

🏘️ MULTIFAMILY

Rent rebound: U.S. multifamily rents gained momentum in June 2026, with growth accelerating nationwide as more markets showed signs of recovery despite regional disparities.
Demand surge: Multifamily demand reached its strongest level since mid-2024 as absorption outpaced deliveries and vacancy improved despite softer asking rents.
Insurance squeeze: Rising multifamily insurance costs are pressuring affordable housing returns, pushing owners to adopt risk mitigation, smarter underwriting, and alternative coverage strategies.

🏭 Industrial

Data comeback: Data center companies are returning to public markets as rising AI demand drives a new wave of IPOs to fund digital infrastructure expansion.
Industrial revival: Industrial demand is accelerating as stronger leasing, manufacturing incentives, and large tenant requirements push speculative development back into the pipeline.
Prologis momentum: Prologis exceeded expectations with record leasing activity and expanding data center growth as demand strengthens across industrial markets.
CSquare IPO: Brookfield-backed CSquare raised $1.05B in its IPO, falling short of its target as investors continue favoring AI-driven data center infrastructure.

🏬 RETAIL

Grocery slowdown: U.S. grocery sales are weakening as inflation-weary consumers buy fewer items, pushing retailers to compete through value, promotions, and loyalty strategies.
Retail rebound: Southern California retail investment surged 62% in the first half of 2026 as limited new supply and improving sentiment boosted deal activity.
Grocery anchor: Intercontinental acquired Seattle-area Lakeland Town Center for $69.5M, targeting upgrades and stable daily-needs retail in a supply-constrained market.

🏢 OFFICE

Pyramid reboot: Yoda PLC’s $691M Transamerica Pyramid acquisition gains momentum with 113K SF of new leases and planned upgrades designed to attract AI and growth-focused tenants.
Office rebirth: Silicon Valley cities are accelerating office demolitions and conversions into multifamily projects as housing demand, zoning changes, and rising rents reshape the Peninsula.
Conversion caution: A structural failure at Manhattan’s largest office-to-residential project is raising new safety concerns as developers push increasingly complex conversions to create housing.

🏨 HOSPITALITY

Hotel recovery: New York’s hotel market remains below pre-pandemic performance as slower international tourism weighs on occupancy and revenue despite leading U.S. construction growth.
Travel resilience: Americans are adjusting summer travel habits with closer destinations, road trips, and value-focused hotel stays instead of canceling vacations amid rising costs.

📈 CHART OF THE DAY

CRE sentiment is steadily improving, with the U.S. CRE Sentiment Index rising from 7.5 in May 2024 to 9.2 in May 2026, signaling that capital markets are gaining momentum as the real estate recovery takes hold.

CRE Trivia (Answer)🧠

Hawaii. The Horizontal Property Regime Act was the first state law to enable individual ownership of units in shared buildings; every other U.S. state had enacted similar legislation by the end of the 1960s.

Strip Centers, Senior Housing Lead CRE's Cap Rate Compression

Green Street's latest data shows where cap rates are compressing, and which CRE sectors are attracting the most capital.

CRE Trivia 🧠