📢 U.S. commercial property pricing has stopped falling. The all-property RCA CPPI rose 0.6% MoM in July and is up 0.9% YoY, marking the first back-to-back YoY gains since 2022. Momentum is broad: every major sector increased in July, with retail and industrial leading. Prices remain ~11% below peak, but the trend has pivoted from drift to climb. Secondary markets are outperforming primary gateways
All-Property CPPI: +0.6% MoM, +0.9% YoY.
Sector YoY: Retail +4.2%; Industrial +3.4%; CBD Office +1.9%; Multifamily +0.4%; Suburban Office +0.2%.
Geography: Non-major markets +2.6% YoY vs major metros −3.8% YoY.
Levels: Pricing still ~11% below 2022 peak
Loan Performance. Stabilizing values ease DSCR pressure at the margin and improve refi math, but lenders will still size to today’s higher coupons. Expect modestly better appraisals versus Q1/Q2 comps, yet underwriting cushions stay intact. Cure rates improve where NOI is steady; forced extensions remain common on weaker office.
Demand Dynamics. Price gains align with solid tenant demand in necessity retail and logistics. Apartments have largely ended their slide but lack rent power pending supply digestion. Office remains split: select CBD assets show small YoY gains while commodity suburban stock barely stabilizes.
Asset Strategies. In rising but uneven markets, prioritize capex that drives NOI within 12–18 months. For retail/industrial, lean into lease-up and blend-and-extend to lock in spreads. For office, focus on mixed-use adjacency and amenity upgrades to defend occupancy; assume longer lease-up outside prime nodes.
Capital Markets. The 10-year near ~4.2–4.3% caps upside, but tighter spreads and functioning debt channels support a pricing floor. Equity sidelined in 2024 is re-engaging selectively, with more confidence in secondary markets where price discovery is clearer.
Floor found; recovery is shallow and uneven.
Retail/industrial lead; apartments stalled; office bifurcated.
Secondary markets are first through the bottom.
Underwrite stability, not snap-back appreciation.
🛠 Operator’s Lens
Renew lender dialogues now; updated CPPI support can lift proceeds modestly. In retail/industrial, push term certainty—early renewals at today’s rents beat vacancy risk. In apartments, bias to retention over rent lifts near term. For office, only pursue capital projects that demonstrably shorten downtime or raise renewal odds
Baseline: modest appreciation into year-end if rates hold, with sector divergence intact. Scenario upside requires lower base yields; otherwise gains stay mid-single-digit annualized at best. Expect transaction volume to improve as bid-ask narrows in favored sectors, while distress in legacy office injects noise into local indices.
MSCI Real Assets CPPI (July 2025).
Chart 2 - CRE Price Index YoY, Major vs Non-Major Markets. Non-major +2.6% vs major −3.8%. Secondary markets led the bottoming process.
Chart 2 - CPPI YoY by Sector, July 2025. Retail (+4.2%) and industrial (+3.4%) lead. Multifamily (+0.4%) and suburban office (+0.2%) flat. All-property index +0.9%.
