Commercial real estate prices climbed overall in the first quarter, but persistent weakness across the western U.S. and sharp discounts on large properties in major office markets show the recovery remains selective.
Even with a price drop for some big properties, offices as a whole still posted the biggest price gains in the past 12 months, according to the latest CoStar Commercial Repeat Sale Indices. The monthly report tracks properties that have sold more than once, a methodology known as a repeat sale.
The CoStar value-weighted index, a measure heavily influenced by the sale of large buildings in urban markets, climbed in three of the four major property types in the 12 months ended in March. Offices, led by smaller markets, had the biggest gains with a 9.9% increase. Industrial rose 1.2% and multifamily grew 0.9%. Retail was the exception, with prices down 2.3% in the same time.
Office properties accounted for much of commercial real estate’s annual growth, though gains were uneven. Prices in prime office markets were affected by large office towers selling at steep discounts to prior sales. Collectively, those office prices fell 8.7% year over year in March. By contrast, equal-weighted office prices — more heavily influenced by smaller deals in secondary markets — rose 1.8%.
“Markets such as Boston, New York and San Francisco had some relatively large properties trade for significant discounts in March when compared to their prior sales. At the same time, we saw deals in Dallas, San Jose and Richmond, major non-gateway markets, post some decent repeat-sale price gains,” said Chad Littell, national director of U.S. capital markets analytics for CoStar and author of the report.
He added that “when analyzing these repeat sales, it’s important to keep in mind that not all trades in prime markets are for newer [top-tier buildings], many of them can sell for less than $5 million."
Large discounted office sales
A couple of notable examples of discounted repeat office sales in the quarter included the following:
- 123 Mission St., a 362,061-square-foot property in San Francisco, sold for $100 million. That was $297 million less than its previous price in June 2019.
- Park Square Building at 31 Saint James Ave. in Boston’s Back Bay neighborhood sold in foreclosure for $95 million. That was $150 million less than its previous price in March 2020.
On the plus side, the Pinnacle Tower offices at 5005 Lyndon B. Johnson Freeway in Dallas sold for $163.3 million, $75.8 million more than its previous price in January 2016.
Industrial real estate showed a similar split. Smaller properties outperformed larger ones due to their relative ability to support higher rents, with the equal-weighted index climbing 3.7% over the past 12 months compared with a 1.2% rise for value-weighted assets. Prices in prime industrial markets slipped 1.9% from March 2025.
Multifamily prices also varied by deal size. Equal-weighted prices fell 0.8% year over year in March, while value-weighted prices increased 0.9%.
Retail continued to lag behind other sectors. Prices declined under both measures, falling 0.3% on an equal-weighted basis and 2.3% on a value-weighted basis over the past year.
Persistent West Coast weakness
Price trends differed sharply by region, with the West showing the most weakness. All four major property types in the region posted year-over-year price declines.
The South delivered the strongest results nationwide. The region’s equal‑weighted repeat‑sale index rose 2.5% in the first quarter from the prior quarter, while the value‑weighted index increased 1.7%. Compared with a year earlier, equal‑weighted prices were up 2.2% and value‑weighted prices climbed 6.8%, with gains across all four property types.
In the Northeast, results were mixed. The equal-weighted index rose 2.2% from the prior quarter and 4.6% year over year. The value-weighted index increased 2.5% quarter over quarter but slipped 0.1% from the first quarter of 2025. A 0.5% annual decline in office prices offset gains in industrial properties.
The Midwest posted modest quarterly gains in small-property sales, with the equal-weighted index up 2.2% in the first quarter. Prices for larger properties fell 2.2% over the same period. On an annual basis, both measures rose, supported by a 6.4% increase in industrial prices.
In the western U.S., equal-weighted prices fell 0.4% from the prior quarter and were down 3.1% from a year earlier. While value-weighted prices rose 1.7% in the first quarter, they remained 1.3% lower year over year. Retail saw the steepest annual drop in the region, with prices down 6.7%.
This month’s CCRSI was based on 1,455 repeat-sale pairs in March and 343,718 repeat sales since 1996.