Cap Rate Signals Return and Risk in Real Estate, but Variations Show Context Weighs More Than the Number

According to SiiLA’s analysis, in the industrial property market, as the sector matured and assets became increasingly sought after, investors grew comfortable accepting lower returns in exchange for the security and predictability this type of real estate offers — a trend strongly driven by the rise of e-commerce.

For office buildings, however, cap rate volatility reflects a decade marked by uncertainty for the corporate market, which has faced oversupply and structural shifts in space usage patterns, further accelerated by the pandemic.

When comparing the two segments, the average cap rate for industrial properties tends to be slightly higher than that of office buildings. This suggests that despite strong demand for industrial assets, the market still associates a slightly higher risk with logistics operations than with prime office spaces. This gap is also influenced by the lease profile: industrial leases typically offer longer terms and predictable adjustments, whereas office lease rates are more sensitive to economic cycles and fluctuations in supply and demand.

Looking at the data, some transactions clearly stand out as outliers. In the industrial segment, for instance, Icon Realty Cajamar posted a cap rate of 14.9% in February 2025. The property was purchased by real estate fund MCLO11 for R$ 138.9 million. The deal involved the acquisition of a broader Icon Realty portfolio, which overall posted an average cap rate of 9.6%.

In the office market, the Santa Catarina building, located on São Paulo’s iconic Avenida Paulista, remains one of the most notable outliers. The asset posted a cap rate of 15% back in 2016 when Arnês Holding acquired a 3.5% stake from the Gianni estate for R$ 1.6 million.

However, it's a mistake to assume that an outlier Cap Rate always signals a good deal. In the case of the Icon Realty acquisition, the main tenant is Casas Bahia — a retailer currently facing financial difficulties and holding outstanding debts with the landlord, which contributed to the higher Cap Rate. Additionally, the company's instability poses a significant leasing risk, as it occupies 87% of the total leased area in the transaction.