10-year Treasury near 5% tests cap rate stability

What's happening

The 10-year Treasury yield stood at 5.01% on September 18, 2026, according to the Federal Reserve's H.15 release, up from 4.97% on September 14. The 2-year yield rose to 4.76%. Long rates have climbed through the year: CBRE noted the 10-year had already spiked to 4.67% in mid-May.

Even so, CBRE's H1 2026 Cap Rate Survey, compiled in late June from 3,600 estimates across more than 50 markets, found the all-property average cap rate essentially flat. Sentiment, however, has become more divided than in December 2025.

• 10-year Treasury: 5.01% on September 18.
• Cap rate outlook: About 60% of respondents expect no change over six months.
• Deal-flow threshold: Median respondent said the 10-year would need to reach 3.75% to lift sales volume.
• Most compression: Neighborhood retail, hotels and industrial.

What it means for owners, tenants and investors

With the risk-free rate near 5%, the spread between Treasuries and many cap rates is thin, which puts pressure on buyers relying on leverage. Sellers holding out for early-2026 pricing may find fewer bids. Industrial remains among the favored sectors, which matters for Southern California owners weighing a sale: quality infill buildings still attract capital, but underwriting will lean harder on rent growth than on cap rate compression.

For owners, the practical question is whether a buyer can make the numbers work with debt. When borrowing costs exceed going-in yields, buyers either reduce leverage, ask for lower prices or wait. Tenants are not directly affected by cap rates, but owners facing higher capital costs tend to hold firmer on rents and renewals.

Cap rates held steady in the first half, but a 5% 10-year leaves little room before pricing adjusts.

What to watch

CBRE's H2 survey and fourth-quarter trades will show whether cap rates finally move toward higher Treasury yields.

Photo: Chris Li / Unsplash.