What is the typical exit cap rate range for office properties?

The typical exit cap rate range for office properties often falls between 5% and 6.5%. This range reflects the general market perception of risk and the income-generating potential of office assets. A lower cap rate indicates a higher perceived value and lower risk associated with the property, which is typical for stable, well-located office buildings that have a reliable income stream. As investors seek predictable returns in investments like office properties, the cap rate tends to align with these expectations, accounting for factors such as location, tenant quality, and current market trends.

In contrast, lower or higher ranges suggest either a highly desirable investment situation or a greater degree of risk and uncertainty associated with the property, which may not be representative of the typical state of office properties in most markets. Thus, the selected range is grounded in prevailing market conditions and investor expectations regarding office property performance.