📢 Commercial property values rose 1% in August per Green Street’s CPPI, extending a +2.7% gain over 12 months. The report underscores that debt is widely available and deal flow is “healthy,” despite Treasury yields around 4.2% capping upside. The gap between public and private pricing is narrowing, signaling convergence and greater confidence that CRE values bottomed in mid-2025
Green Street CPPI: +1.0% MoM (Aug 2025); +2.7% YoY
MSCI RCA CPPI: +0.9% YoY (July 2025)
10-Year Treasury yield: ~4.2%
Cap rate ceiling: pricing constrained by elevated base rates.
Public-private convergence: REIT NAVs and private values now aligned
Loan Performance. High yields remain the primary constraint. While defaults are not surging, refinancing risk persists for leveraged owners. The availability of debt is meaningful: life insurers, debt funds, and select banks are active, though at lower leverage (55–60% LTV). This liquidity ensures maturities can often be extended or refinanced, preventing spikes in delinquency despite NOI pressure from high financing costs.
Demand Dynamics. Transaction activity is described as “healthy,” which signals that buyer and seller pricing expectations have aligned at the new equilibrium. Investors are selectively targeting institutional-quality assets—industrial, apartments, and necessity retail—where liquidity is deepest. Office demand remains bifurcated; Green Street’s broad index masks stagnation in commodity offices that still lack tenants and capital flows.
Asset Strategies. Institutional-quality properties are capturing modest value gains. Investors are shifting toward defensive positioning: core assets with stable NOI, where cap rates have plateaued. Lesser assets (secondary offices, tertiary market retail) remain vulnerable. The bifurcation requires nuanced strategies: reposition or hold weak assets, while quality portfolios may justify renewed value-add investment as the market stabilizes.
Capital Markets. Capital flows are cautious but engaged. REITs, private equity, and sovereign wealth funds are re-entering as the valuation gap between public and private narrows. This reduces arbitrage but signals alignment across capital channels. High Treasury yields cap valuations, but widespread debt availability supports liquidity. Any downward move in yields could spur rapid cap rate compression and a sharper rally in values.
Market has turned the corner; values gently rising.
Transactions functioning normally; debt costly but available.
Quality bias: top-tier assets lead appreciation; weaker assets lag.
Interest rates are the cap on further gains
🛠 Operator’s Lens
Re-engage lenders now: refinancing is easier with values stabilizing and debt accessible.
Consider selective capital improvements in high-quality assets to capture NOI upside, as market rewards stability.
Monitor asset quality differentiation: don’t extrapolate value gains from institutional assets to weaker holdings.
Test dispositions: buyers are active for quality product at current yields.
Through year-end 2025, Green Street’s CPPI likely posts continued modest monthly gains, totaling ~+5% from mid-2025 levels. If Treasury yields remain near 4.2%, appreciation will stay incremental. Should the Fed begin rate cuts in 2026, cap rates could compress, accelerating price recovery. Sector divergence persists: industrial and multifamily lead; office lags. The narrowing public-private gap indicates a healthier flow of capital, enabling more cross-border and public-private transactions. Overall, CRE enters a stabilization phase—fragile, but building momentum.
Green Street CPPI (Aug 2025); MSCI CPPI
