Daily Top 5
Property Prices Post Strongest Annual Gain Since December 2025
Article originally posted on Globe St on Oct 28 2026
The property types investors have spent recent years avoiding are now driving the US commercial real estate price recovery. The sector they piled into is moving in the opposite direction. And it is happening while borrowing costs are rising, not falling.
US commercial property prices rose 0.9% through September, according to MSCI’s RCA CPPI US National All-Property Index. That’s the strongest annual growth since December 2025. The quarterly number says more. Prices rose 0.9% from the second quarter, which annualized to 3.6%, four times the annual rate. The market is picking up speed.
Prices Are Rising Without Help From Rates
The timing is what stands out. Commercial real estate financing costs rose in September. Long-term borrowing rates climbed as the Federal Reserve raised its policy rate for the first time since 2023. Rate-cut expectations have faded, and the Fed’s updated projections show rates rising further by year-end. Refinancing costs will likely stay high.
For much of the downturn, the industry assumed prices would recover once debt got cheaper. This quarter’s numbers point the other way. Buyers are paying more for office, industrial and retail assets at today’s borrowing costs instead of waiting for relief that now looks further off. That shows conviction, though it also means the gains rest on fundamentals and pricing rather than on easier money.
Office And Industrial Carry The Gains
Office led all sectors in annual growth. Suburban office prices rose 4.4% from a year earlier, the best of any property type and gained 1.6% in the third quarter. CBD office prices rose 4.2% year-over-year, but the pace is slowing. The segment gained only 0.7% from the second quarter and was flat in September. CBD office remains 47% below its March 2022 peak, compared with a 13% gap for suburban office. Downtown buildings have the most room to recover, but suburban assets are rising faster right now.
Industrial prices reached an all-time high in September. They rose 2.2% from a year earlier and 2.2% in the third quarter alone, an annualized pace of 9.2%. Annual industrial price growth has been positive for 13 consecutive quarters and the latest quarter suggests it’s accelerating.
Retail is gaining too, though its annual figure undersells it. Prices rose 1.4% year-over-year, a number held down by a 1.2% drop in last year’s fourth quarter. Quarterly gains have strengthened since then. Retail prices rose 1.7% in the third quarter, an annualized 7%. Taken together, commercial property prices excluding apartments rose 3.1% over the past year and 1.9% in the third quarter.
Apartments Become The Drag
That 3.1% commercial figure compares with 0.9% for the all-property index and apartments drive the gap. Apartment prices fell 4.6% from a year earlier, the fourth straight quarter of annual declines. They dropped 1.6% from the second quarter, an annualized decline of 6.2%, and slipped another 0.4% in September. The index sits 23% below its July 2022 peak.
The decline isn’t leveling off. It’s speeding up, and rates aren’t helping. Owners facing refinancing are dealing with falling values and higher borrowing costs at the same time. The sector that was once the market’s most reliable bet is now the main drag on the national recovery.
Gateway Cities Lead The Market Rankings
The geography of the recovery has flipped, too. Prices in the six major metros (Boston, Chicago, Los Angeles, New York, San Francisco and Washington, DC) rose 1.8% over the past year. That’s double the 0.9% gain in non-major metros. The major metros also led in the third quarter and in September.
Minneapolis, the DC metro and San Francisco led the past year with gains of roughly 11% each. Central Chicago followed at roughly 8%. The broader Chicago metro, San Jose and Orlando each gained about 6%, with Charlotte and Miami/South Florida close behind at about 5%. Philadelphia, Nashville, Fort Myers/Sarasota/Naples the New York suburbs, Orange County and the Boston metro posted smaller gains. Dallas, Houston and the New York boroughs were roughly flat.
The losses were concentrated in the West and parts of the Sun Belt. The Inland Empire posted the steepest decline at roughly 12%. Central Boston fell about 8% and Las Vegas about 7%. Los Angeles and Tampa each dropped roughly 6%, with Denver and LA’s CBD/West submarket close behind. Manhattan, Seattle, Portland and Jacksonville fell 4% to 5%, and Sacramento, Atlanta, and Phoenix posted smaller declines.
Some of the sharpest contrasts are inside the same metro. The DC metro rose about 11%, but central DC barely moved. The Boston metro gained about 1% while its core lost about 8%.
In New York, the suburbs rose, the boroughs held flat and Manhattan fell. In Southern California, Orange County gained while Los Angeles and the Inland Empire fell. The Inland Empire’s drop stands out given that national industrial prices are at a record. Chicago went the other direction, with its central market outpacing the wider metro.
For investors, the takeaway is that a sector call alone won’t do the job. Office and industrial are leading nationally, and the major metros are ahead of secondary markets. But last year’s results depended heavily on which metro, and which part of it, an owner was in. With rates moving higher, the recovery is real but uneven and market selection is doing as much work as sector selection.