- Commercial real estate prices rose 1.3% in July, the first monthly increase since February, per CoStar’s value-weighted index.
- Institutional investors are re-entering the market, focusing on large, high-dollar assets.
- Year-over-year transaction volume jumped 9.1% in July, with investment-grade deals leading the gains.
- More sellers are pulling listings, expecting better prices later.
Market Shows Early Signs of Recovery
After a prolonged slump, US commercial real estate is showing signs of stabilization. In July, CoStar’s Commercial Repeat Sale Indices (CCRSI) posted the first monthly price gain in five months. The value-weighted index, which tracks large institutional deals, rose 1.3%.
Chad Littell, national director of US capital markets at CoStar, said big buyers — including pension funds and REITs — are gradually returning.
Large Markets Lead the Rebound
Major cities like Chicago, New York, and Los Angeles drove July’s gains. Smaller markets also improved. CoStar’s equal-weighted index, which tracks lower-value trades, rose 0.3%.
Despite the monthly rise, prices are still 21.4% below the July 2022 peak. However, annual losses narrowed. Prices fell only 1.1% from July 2024, improving from steeper drops in June.
Deal Activity Mixed but Improving
July saw nearly 1,500 repeat sales worth $10.7B. That’s down 4.4% from June but up 9.1% year-over-year. Investment-grade deals fueled the growth, rising 33% from last year.
Smaller investors remain cautious, which dragged down overall monthly volume. Still, 12-month transaction volume hit $133B — a 27% increase from the prior year.
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Sellers Are Holding Out
More property owners are delaying sales. In July, 27% of listings were pulled before a deal closed — the fifth straight monthly increase. Many owners expect prices to improve and are willing to wait.
On average, sellers received 92.7% of their asking price. That figure has remained stable year-over-year, suggesting price expectations are aligning between buyers and sellers.
Distress Remains Low
Distressed sales made up just 3.4% of all repeat transactions in July. Within the investment-grade segment, 7.7% of deals involved distressed properties. That compares to 2.6% for general commercial assets.
Why It Matters
The July rebound suggests renewed confidence in commercial real estate. Rising demand for top-tier assets could signal a broader recovery. If capital continues to return and borrowing costs ease, prices may climb further.
What’s Next
The fall season will test this early momentum. With $133B in annual deal volume and more institutional activity, the market may continue to recover. Sellers who waited may soon find better conditions to close deals.
