Commercial real estate prices barely budged in the second quarter, rising an average of just 0.1% across the market as gains in retail property were offset by weakness in multifamily and a widening divide between large and small office assets.
The performance underscores how commercial property values remain largely stuck as investors wait for lower borrowing costs. Buyers continue to bid up certain property types and markets while pulling back from others, leaving pricing mostly unchanged despite steady transaction activity.
The repeat sales volume of $156 billion during the 12 months ended in June was 16.8% above the 12 months ended in June 2025, according to Chad Littell, national director of U.S. capital markets analytics for CoStar and author of the report.
The uncertainty remains a theme for commercial real estate. Federal Reserve policymakers on Wednesday left interest rates unchanged for a fifth consecutive meeting in 2026, though a 9-3 vote highlighted growing disagreement within the central bank over the path of monetary policy.
The latest pricing data suggests investors are divided over where values are headed next. Half the categories tracked by CoStar’s Commercial Repeat Sale Indices posted quarterly gains while half declined, a near-even split that suggests the market is still searching for direction. The quarterly average slowed from 0.5% growth in the first quarter, signaling that momentum weakened even in sectors where prices continued to rise.
Even with prices largely treading water in the second quarter, the market has posted modest gains over the longer term. "While quarterly results were mixed, year-over-year values climbed 3.9% during the 12 months," Littell said in the report.
The findings are based on 5,096 repeat-sale pairs of commercial properties during the quarter and 349,413 pairs since 1996, offering a broad view of how pricing has changed for properties that have sold more than once.
The report measures pricing in two ways. The value-weighted index gives greater influence to larger, higher-priced transactions that tend to occur in major markets. The equal-weighted index gives each sale the same weight, better reflecting the far greater number of smaller transactions in secondary and tertiary markets.
Office sector splits
Office property delivered the quarter's clearest example of the market's growing divide. Large office properties fell 1.8% from the first quarter, marking a second consecutive quarterly decline after a 1.5% drop in the first quarter. At the same time, smaller and more numerous office transactions posted a 0.9% gain.
The divergence suggests investors are increasingly favoring smaller assets over the trophy properties that have values that rose fastest before the sector's downturn. Although higher-value office assets remain up 6.5% over the past year, recent declines have begun to chip away at those gains.
Two first-quarter transactions illustrate the contrast. In Tampa, Banyan Street Capital and Ally Capital Group recapitalized the 590,000-square-foot Rivergate Tower, better known as the "Beer Can Building," for $94 million, up from its $70 million sale price in 2015.
In Chicago, meanwhile, the 44-story, 967,000-square-foot office tower at 500 W. Monroe St. changed hands at a discount of more than $300 million from its previous sale price, one of the city's most striking examples of office values resetting since the onset of COVID-19.
Retail was the quarter's brightest spot. Prices increased under both measures, with the equal-weighted index rising 2% and the value-weighted index climbing 2.4%. That was the strongest quarterly performance among the major property types and kept retail values positive on a year-over-year basis in both indices.
Industrial pricing split along deal-size lines. The broader pool of transactions gained 0.3% in the equal-weighted index, while larger transactions pulled the value-weighted index down 2%.
Multifamily was the quarter's weakest major property type. Apartment prices fell 1.8% in the equal-weighted index and 2.1% in the value-weighted index as a wave of new supply continued to pressure the sector.
Regional performance
Among the 16 region-property combinations tracked in the data, the South delivered the strongest quarterly performance, with prices rising 0.5%, followed by the West at 0.1%. The Midwest was essentially flat, while the Northeast slipped 0.1%.
The South led despite weakness in one of its key sectors. Multifamily ranked among the region's softer performers even as gains elsewhere lifted overall pricing.
Industrial produced the quarter's strongest regional gains despite lagging nationally over the past year. South industrial properties posted the largest increase of any segment, rising 2.4%, while Northeast industrial assets gained 2.1%.
Office properties generated some of the sharpest regional contrasts. West office values climbed 2.3%, making them one of the quarter's top-performing segments. Midwest office prices, by contrast, fell 2.5%, the steepest decline among all tracked categories.
Multifamily weakness was broadly spread. Apartment prices declined in most regions, including drops of 2.4% in the Northeast, 1.9% in the West and 1.9% in the South. The Midwest was the lone exception. Prices there rose 2.3%, placing the region among the quarter's top performers, though not enough to offset declines elsewhere.
Retail trends were mixed. Midwest retail properties gained 2.3%, ranking among the best-performing segments. West retail properties rose 1.9% during the quarter but remained the weakest retail market over the past year, down 6.2% from a year earlier.