The universe

The ARCA SoCal Cap Rate Index covers four asset classes — Multifamily, Office, Retail, and Industrial — tracked across two geographies: California and the United States as a whole. The California series is what we publish in our quarterly headline; the U.S. series is the baseline against which we calculate the spread.

The data source

All cap rates and transaction counts are sourced from CoStar SaleComp, the industry-standard transaction database for U.S. commercial real estate. We pull the raw export ourselves at the close of each quarter and apply our own filters and aggregations — we do not republish CoStar’s own averages.

How a quarter’s cap rate is calculated

For each asset class and geography, we take the simple arithmetic mean of the actual cap rate on every closed transaction in the quarter that has a verified, non-zero, in-place cap rate disclosed by either party. We do not weight by deal size; the index is a transaction-count average, not a dollar-weighted one. We publish the median in the downloadable workbook for transparency.

The spread

The California-vs-U.S. spread is reported in basis points as: CA cap rate − U.S. cap rate. A negative number means California is pricing tighter than the U.S. national average (a premium — lower cap rate, higher price per dollar of NOI). A positive number means California is pricing wider (a discount).

Filters we apply

• Property type: CoStar primary type matches the asset class. Multifamily excludes manufactured housing and student housing. Industrial excludes flex/R&D under 50% warehouse use.
• Deal size floor: $1.0M minimum sale price, to drop noise from interest transfers and partial-stake recordings.
• Cap rate sanity bounds: 2.0% ≤ cap ≤ 15.0%. Outside this range we treat the disclosed cap rate as a data error and exclude the record.
• Disclosure type: we keep both buyer-disclosed and seller-disclosed caps; we exclude broker-estimated caps and pro-forma caps.
• Status: closed transactions only. Under-contract and listed deals are excluded.

Frequency & release schedule

The index is published quarterly, on the 15th of the month following each quarter-end. Q1 2026 was published April 15, 2026. The next release (Q2 2026) is scheduled for July 15, 2026. The most recent quarter is always shown alongside the prior five for trend context.

The current-quarter QTD column

The right-most column in the trend tables is labeled “2026 Q2 QTD”. This is a partial-quarter snapshot of transactions that have already cleared and been recorded in CoStar as of the publish date. It is informational only — sample sizes are small and the figure should be expected to drift as the rest of the quarter’s deals close. We do not headline it.

What this index is not

• It is not a forecast. It reports what closed, not where we think pricing is going.
• It is not a forward-yield index. Cap rates here are actual / in-place, not stabilized or pro-forma.
• It is not appraisal-based. Every data point is a disclosed transaction.
• It is not submarket-level. The headline is a state-wide California number; we publish submarket cuts separately on request to clients.

Limitations to be aware of

Industrial and Retail in California carry small quarterly samples (often 50–90 transactions). Quarter-to-quarter movement on those rows can therefore reflect mix shift between coastal and inland deals as much as genuine yield movement. We disclose the transaction count in the downloadable workbook and recommend reading any single-quarter Industrial or Retail print alongside its trailing-twelve-month equivalent.

Citation

You are welcome to cite the index in research notes, investor materials, broker opinions of value, and press. Suggested citation:For high-resolution charts, prior-quarter archives, or methodology questions, contact our research desk: contact us. ← Back to the index