U.S. commercial real estate prices dropped across most sectors in the second quarter, though performance varied sharply by region and property type.
That’s according to the latest monthly CoStar Commercial Repeat-Sale Indices that track when a previously sold property trades hands again in a process called a repeat sale.
The June data showed that two indicators tumbled for the full quarter. An equal-weighted index that tracks the more numerous, lower-priced property deals typical in small markets slid 2.7%, while a value-weighted index reflecting high-dollar trades more common in major cities fell 4.1%.
In both indices, office, retail and multifamily price performance trailed industrial in the quarter.
Even so, commercial real estate prices show signs of stabilization, according to Chad Littell, national director of U.S. capital markets analytics for CoStar Group and author of the CCRSI report. For most property types, values are not far off their recent peaks.
The equal-weighted property index in June hovered within 10% of its recent high. Multifamily, by contrast, slid in the month 12.7% below its high. Value-weighted results showed more dramatic swings: June industrial and retail prices sat within half a percentage point of their recent high, while multifamily plummeted 21.1% and office collapsed 46% below post-pandemic peaks.
“Value-weighted industrial and retail prices have already resumed modest growth — up 4% and 2% year-over-year respectively — after brief declines in 2023,” Littell said. “Multifamily is amid a rebound, now up 5% year-over-year after bottoming out at -17% at the lows. Office remains the laggard, but the pace of value-weighted declines has slowed dramatically from -28% year-over-year to just -4% in the second quarter, suggesting a potential return to appreciation in early 2026 if current momentum holds.”
Sector performance
Industrial property pricing rose in both indices during the second quarter, according to the report, while office as well as retail declined and multifamily showed mixed results. Here’s a look at the major sectors’ quarterly performance:
Industrial: The equal-weighted index gained 0.5%. Value-weighted results were stronger at 1.4%.
Multifamily: Equal-weighted pricing edged up 0.1%. The value-weighted index dropped 0.4% but surged 5.5% on an annual basis.
Office: Equal-weighted prices fell 2.3%. Total losses from the 2022 peak have now reached 8.2%. Value-weighted office prices declined 0.8% and sit 46% below their late-2021 high.
Retail: The equal-weighted index dropped 2%. Value-weighted retail slipped 0.3% yet climbed 2.5% over the past year.
Regional results
Price performance declined across both indices in three of the four U.S. regions in the second quarter. Only industrial property pricing in the South boosted that region's results.
The indices cover four regions across office, industrial, multifamily and retail property. This creates 16 total property-type regions. Eleven of these 16 regions showed price declines over the prior quarter. The remaining five saw increases.
Here are the quarterly CCRSI numbers by region:
South: The South's equal-weighted index increased 0.9%. However, the value-weighted index declined 1%. Three property types posted negative price changes: multifamily fell 0.1%, office dropped 1.2%, and retail declined 2.1%. Industrial was the exception, rising 1.3%.
Northeast: The equal-weighted Northeast index declined 1.9%. The value-weighted index slid 0.5%. Multifamily was the sole bright spot, witnessing 1.8% price growth. Industrial gave back 1.8% of value, while office prices shed 1.9% and retail discarded 2.3%.
Midwest: The Midwest equal-weighted index fell 1.2%. The value-weighted segment remained unchanged. Multifamily stood out with 1.8% growth over the first quarter. Retail, office and industrial all declined about 2%.
West: Both indices declined for the West region. The equal-weighted index lost 1.7%, and the value-weighted index fell 1.8%. Industrial performed best, up 2.2%, while retail gained 1.8%. Multifamily and office both saw declines of 2.1% and 1.8%.
The June CCRSI data is based on 1,370 sale pairs in June and 327,322 repeat sales since 1996.