The recovery in U.S. commercial real estate hit a speed bump in May as prices fell for both high-end and low-value property, with office buildings posting the biggest declines.
For the second straight month, top-dollar transactions weakened, but this month so did the smaller deals that had been helping to support overall pricing. That's according to CoStar’s analysis of properties sold more than once in a method known as repeat sales.
The most recent results mark the first time in 2026 that both measures of the CoStar Commercial Repeat Sales Indices declined in tandem.
Elevated interest rates are compounding the slowdown. Even with expectations for eventual easing, borrowing costs remain high relative to recent years, constraining deal flow and widening the gap between buyer and seller expectations — an imbalance that continues to weigh on pricing.
"Both investment grade and general commercial segments are in negative territory in nearly equal measure in the quarter ending June 2026," the analysis found.
The CCRSI value-weighted index, driven by trades in major markets, fell 0.6% from April, its second straight monthly drop. The index remains 16.4% below its July 2022 peak, underscoring how that pricing has yet to recover from the interest-rate shock that followed the pandemic.
The equal-weighted index — reflecting the more numerous, lower-priced deals typical outside large areas — fell 1.3% month over month. Prices in that index now sit 1.9% below their all-time high that was reached just two months earlier, in March.
Limited distressed sales
Even with prices softening, signs of forced selling remain limited — a key indicator that distress has not yet broadly taken hold across the market.
Only 25 of the 1,355 repeat sales recorded in May, or 1.9%, were classified as distressed, meaning they involved situations such as foreclosures, bankruptcies or sales by financially strained owners. Among investment-grade properties, just eight deals — or 3.9% of that subset — were distressed.
Among standout properties, a vacant Houston office tower was the biggest loser in absolute dollar terms, and it was one of the relatively few distressed transactions during the month. The 3000 Post Oak building in the city’s Uptown district was foreclosed on in May at $10.5 million — $159.5 million below its November 2014 purchase price.
The property’s value had been under pressure since engineering firm Bechtel, its primary tenant, vacated at lease expiration in October 2024, leaving the 19-story building empty. It is scheduled to be auctioned this month, which could further reset its pricing.
Office assets were largely absent from the list of gainers: Only one property from the sector appeared among the 25 biggest price increases in May.
Instead, the strongest gains came from sectors benefiting from clear demand tailwinds. Data centers led the way, fueled by surging demand tied to artificial intelligence and cloud computing.
In that category, the biggest gainer in May was a Silicon Valley data center. Global investment firm Brookfield Asset Management paid more than $90 million for the property at 255 Caspian Drive in Sunnyvale, California — up from roughly $50 million when it last sold in 2017.
High-end leisure properties have also shown resilience. One notable example is the Park Hyatt Beaver Creek Resort and Spa in Colorado. Braemar Hotels & Resorts sold the 193-key luxury mountain resort to Sixth Street, in partnership with Riller Capital, for $176 million — about $30.5 million more than its 2017 sale price.