Commercial real estate prices were nearly flat in the second quarter of 2026 as investors continued to navigate high borrowing costs and an uneven recovery across property sectors.
Commercial Property Values Stall
According to CoStar’s latest Commercial Repeat Sale Indices, commercial property prices increased just 0.1% during the second quarter. The market remained divided, with gains in retail offset by declines in multifamily and mixed performance across office assets.
Despite the sluggish quarter, commercial real estate values were still up 3.9% compared with a year earlier. Transaction activity also remained strong, with repeat-sale volume reaching $156 billion over the 12 months ending in June, up 16.8% from the previous year.
The report suggests investors are still waiting for lower interest rates before making larger pricing moves. The Federal Reserve left rates unchanged for a fifth straight meeting in late July, adding to uncertainty over where commercial real estate values will head next.
Office Market Splits Between Large and Small Buildings
Office assets showed one of the biggest divides in the market.
Large office properties declined 1.8% during the quarter after falling 1.5% in the first quarter, while smaller office transactions rose 0.9%. The trend points to continued demand for smaller office buildings even as higher-value properties remain under pressure.
South Outperforms Other Regions
Regionally, the South posted the strongest quarterly gains, with commercial property prices rising 0.5%, followed by the West at 0.1%. The Midwest was largely unchanged, while the Northeast recorded a slight decline.
Industrial properties led regional gains in both the South and Northeast, while office performance varied sharply. Office values rose 2.3% in the West but fell 2.5% in the Midwest.
