🚨High-value U.S. commercial real estate posted a second straight monthly gain, with the value-weighted index rising +1.3% in August. This marks the first back-to-back improvement since the 2022 downturn and brings prices even with year-ago levels. By contrast, smaller deals softened further (–0.1% MoM), underscoring investor preference for institutional-grade assets. With $10.7B in August repeat-sale volume (+3.6% YoY) and distressed sales only 2.7%, liquidity is returning cautiously to the top end, offering owners and buyers a narrow window to re-engage.
Value-Weighted CRE Price Index: 239 (Aug 2025), +1.3% MoM, flat YoY — [Source: CoStar].
Equal-Weighted CRE Price Index: 312 (Aug 2025), –0.1% MoM, +0.9% YoY — [Source: CoStar].
Repeat-Sale Volume: $10.7B (Aug 2025), +3.6% YoY — [Source: CoStar].
Distressed Share of Sales: 2.7% of transactions (Aug 2025) — [Source: CoStar].
Loan Performance. Rising trophy values improve DSCR coverage for stabilized institutional assets; B/C assets remain exposed as valuations slip. Cap floors stabilize large-deal refis but pressure persists for small-balance borrowers.
Demand Dynamics. Nonresidential (office/retail) posted ~3.5% gains over three months; multifamily values fell –3.7% in six months. Core office and anchored retail see tentative absorption, while secondary apartments absorb rent pressure.
Asset Strategies. Owners of prime assets may test sales at a ~20% discount from 2022 peaks; smaller properties should prioritize NOI protection and leasing concessions.
Capital Markets. Lender tone softens on top-tier assets with clear comps; CMBS/CLO appetite skews toward high-quality collateral. Smaller property financings remain conservative with higher cap rate cushions.
Trophy assets show early price recovery.
Multifamily values remain weak; retail/office see modest upside.
Financing windows open for prime assets.
Limited distress keeps spreads tight.
🛠 Operator’s Lens
Refi. Institutional assets may secure more favorable appraisals; lock rate caps through maturity.
Value-Add. Keep capex tied to leasing; underwrite flat near-term exit values for B-tier assets.
Development. Build interest rate cushions into pro formas; remain selective until broader price stabilization.
Lender POV. Banks and CMBS desks are warming to prime collateral but remain disciplined on leverage for smaller, less-liquid assets.
Seasonal Q4 deal activity and ample dry powder could extend the rebound in high-end CRE pricing over the next 60 days. A true market-wide recovery requires the equal-weighted index to stabilize. Fed policy remains the swing factor: stable or lower Treasury yields would support momentum, while another rate shock risks halting gains.
CoStar News — “Property recovery shows more promise with second monthly rise in big-ticket prices” (Sept 26, 2025). https://www.costar.com Dataset — CoStar CCRSI (Aug 2025). https://www.costargroup.com
