U.S. commercial real estate prices climbed in October, extending multiple gains over the past five months in a sign of stabilization after years of decline.
That's according to the latest monthly CoStar Commercial Repeat-Sale Indices report that tracks when previously sold properties trade hands again in a process called a repeat sale.
CCRSI's value-weighted index, reflecting expensive deals in large cities, rose 0.5% in October from September. Its equal-weighted index, indicative of the more numerous but lower-priced property sales, jumped 0.9%.
October's gains extended a recent recovery as the U.S. Federal Reserve has cut interest rates twice since September, dropping borrowing costs to their lowest point since 2022. Commercial property professionals say lower rates spur more sales.
The results suggest "commercial real estate markets are finding a floor,” said Chad Littell, national director of U.S. capital markets analytics for CoStar and author of the report. “Improving deal flow and stabilizing values may encourage investors waiting on the sidelines to become more active.”
The equal-weighted index posted its third positive month in the past four, while the value-weighted index notched its fourth gain in five months.
Sale price totals jump
The trending price gains come as trailing 12-month sales volume rose 27% in October to $138.3 billion, Littell said.
Repeat-sales transactions surged more than 16% in October to $13.5 billion from the year-earlier total. The activity complemented 10% month-over-month growth.
“Investment-grade assets, characterized by larger properties in primary and secondary markets, are setting the foundation for price recovery, up 2% year over year in October, after three years of price declines,” Littell said.
Investment-grade deals rose 10.9% in October from the prior month to $8.1 billion.
The sales growth was most prominent in this investment-grade segment, with the index spiking 29.2% over the 12 months ended in October. The segment accounted for 60% of all deals in that time.
“While encouraging, the recovery still remains subdued, for now, with office and multifamily prices still notably below 2022 peaks,” Littell noted.
As transactions increase, it's taking less time for a property to be sold. The average time on the market fell to 173 days over the past 12 months, a 0.9% decline from the previous year.
CoStar's October data covered 1,640 repeat-sale pairs and drew from more than 334,595 repeat sales since 1996.