Cap rates by city / London
London cap rates in 2026
Apartment buildings in London traded at cap rates of 4% to 6% in CBRE's second-quarter 2026 survey, in the middle of the 13 Canadian cities CBRE surveys. Here is what sits behind that number, what CMHC says about vacancy and rents, and what a building is worth at the local yield.
Apartment cap rate
4% to 6%
CBRE, Q2 2026, Class A to B
Vacancy rate
4.0%
CMHC, October 2025
Average two-bedroom rent
$1,651
CMHC purpose-built, October 2025
Rent growth, 2025
4.1%
CMHC, two-bedroom, year over year
Run a London building through the calculator
Preloaded with a six-unit building at London's CMHC average two-bedroom rent, the city's vacancy rate, and generic expense assumptions ($1,800 tax and $600 insurance per unit, 8% maintenance, 5% management, $900 utilities per unit). The price is set so the building lands at the middle of the local range. Replace every number with your own.
Property & income
The price you would actually pay, not the tax assessment
All units combined
Operating expenses (annual)
Of gross rent; 5% to 10% is typical
0 if self-managed
Condo fees, snow, lawn care
Your market
What similar properties trade at in this market
Cap rate
5.00%
$78,864 of net operating income (NOI) on a $1,577,000 price
Cap rate ignores financing on purpose. It is NOI divided by price, so two buyers with different mortgages can compare the same building. The value at your target cap rate is the price at which this NOI would hit that yield, which makes it a negotiating anchor.
What the same building is worth across the range
The six-unit example above produces $78,864 of net operating income a year. Value is NOI divided by cap rate, so a half-point move in the market's cap rate changes the price by more than most renovations would:
| Cap rate | Building value |
|---|---|
| 4%low end | $1,971,594 |
| 5%middle | $1,577,275 |
| 6%high end | $1,314,396 |
Per unit: $328,599 at the low end to $219,066 at the high end.
Why London trades where it does
London prices like a bigger city than it is. Western University and Fanshawe College underpin steady demand, the drive from Toronto pulled in capital during the 2020 to 2022 run-up, and the result is a 4% to 6% cap rate range whose low end sits only a little above Toronto's despite rents 20% lower, while older low-rise Class B stock goes to 6%. The market is thin, so a handful of trades move the survey.
Vacancy, rents and the 2026 outlook
Vacancy reached 4% in October 2025 as the international student permit cap cut demand near the campuses and new supply arrived. Two-bedroom rents still rose 4.1% on the survey. Expect softer turnover rents around Western and Fanshawe through 2026 and firmer conditions in family-oriented neighbourhoods.
Rent rules in Ontario
Ontario's 2026 guideline is 2.1% for sitting tenants, with 90 days' written notice. Units first occupied after November 15, 2018 are exempt from the guideline. That rule sets how fast in-place income can grow, which is why two buildings with identical rent rolls can trade at different cap rates depending on how far below market their tenants sit.
Cap rate against your mortgage rate
At a 5% cap rate, a mortgage costing more than 5% makes leverage work against you: every borrowed dollar earns less than it costs until rents grow. In London that is roughly a wash at 2026 mortgage rates, so cash flow depends on the down payment and how far below market the rents sit. Put the same building through our rental property calculator to see the cash flow with the Canadian semi-annual mortgage formula.
Office, industrial and retail cap rates in London
Apartments (multifamily, in CBRE's terms) are the tightest-priced asset in London. The same survey puts downtown Class A office at 7% to 8%, Class A industrial at 5.5% to 6.25%, and neighbourhood retail at 5.75% to 6.75%. The spread over the 4% to 6% apartment range reflects leasing risk. A vacant apartment re-lets within weeks, while a vacant office floor can take years.
| Property type | Cap rate, Q2 2026 |
|---|---|
| Downtown office, Class A | 7% to 8% |
| Downtown office, Class B | 7.75% to 8.75% |
| Suburban office, Class A | 5.5% to 6.5% |
| Industrial, Class A | 5.5% to 6.25% |
| Industrial, Class B | 6% to 7% |
| Retail, regional mall | 6.75% to 7.75% |
| Retail, neighbourhood centre | 5.75% to 6.75% |
| Retail, strip | 5.5% to 6.75% |
CBRE Canadian Cap Rates & Investment Insights, Q2 2026 cap rate summary. Class A and B as defined by CBRE; regional, neighbourhood and strip are retail formats. Next refresh late October 2026.
Frequently asked questions
What is a typical cap rate in London, Ontario?+
4% to 6% for apartment buildings in CBRE's Q2 2026 survey: 4% to 4.75% for high-rise Class A, up to 6% for low-rise Class B. Small multi-unit houses near the universities often trade closer to 6% because buyers price in student turnover and heavier wear.
Is London, Ontario a good city for rental investment?+
It offers better cash flow than Toronto at prices roughly half as high, with two-bedroom purpose-built rent averaging $1,651 in October 2025. The risk is concentration: student demand swings with federal permit policy, and 4% vacancy is high by London's own history. Underwrite a vacancy rate of at least 5% near the campuses.
How London compares
| City | Cap rate | Vacancy |
|---|---|---|
| Vancouver | 3.5% to 4.75% | 3.7% |
| Toronto | 3.85% to 5.15% | 3.0% |
| Montreal | 4.25% to 4.75% | 2.9% |
| Victoria | 4.25% to 5% | 3.3% |
| Winnipeg | 4.5% to 5.25% | 2.8% |
| London | 4% to 6% | 4.0% |
| Calgary | 4.5% to 5.5% | 5.0% |
| Halifax | 4.5% to 5.5% | 2.7% |
| Quebec City | 4.25% to 6% | 2.4% |
| Edmonton | 4.5% to 5.75% | 3.8% |
| Ottawa | 4.5% to 5.8% | 3.0% |
| Kitchener-Waterloo | 4.5% to 6% | 4.1% |
| Saskatoon | 5.25% to 6.75% | 3.3% |
Sources: CBRE Canadian Cap Rates & Investment Insights, Q2 2026 (cap rate summary, high-rise and low-rise Class A to B); CMHC Rental Market Report, October 2025 survey. Next refresh: CBRE Q3 figures in late October 2026, CMHC data in December 2026. Survey ranges describe stabilized, professionally managed buildings; individual sales print outside them. Measure your own deal with the cap rate calculator.