Commercial real estate prices posted their strongest annual increase since 2022, rising 2.1% year-over-year in March, according to MSCI’s U.S. index. Prices also climbed 1.1% from the previous quarter, signaling renewed activity after a period of declines and slower growth.
The increase comes as investors continue to pursue select opportunities, even as broader economic conditions remain unsettled, according to BisNow.
Performance varies by asset type
Price movement across asset classes remains uneven. Suburban office assets recorded the largest annual gain, increasing 5.1%, while central business district offices rose 1.4%. Both segments posted their strongest gains in nearly two years.
Industrial properties also saw moderate growth, with prices rising 2.3% year-over-year.
Multifamily pricing held flat during the first quarter, following multiple years of declines. Retail assets moved in the opposite direction, with prices slipping 1.2% compared to the previous year.
Regional shifts shape the market
Price growth has not been consistent across markets. Cities including Orlando, San Francisco and Baltimore saw some of the largest annual increases. Over a longer horizon, Miami, Orlando and Baltimore have recorded the strongest gains over the past five years.
At the same time, Nashville, Seattle and Southern California’s Inland Empire experienced the most significant price declines over the last year.
Interest rates and geopolitics in focus
The recent pricing uptick coincides with a period of stable interest rates. The Federal Reserve held rates steady in its last two meetings, maintaining a wait-and-see stance as it assesses economic factors including immigration policy, tariffs and ongoing conflict in the Middle East.
Market outlooks remain cautious. Green Street researchers have indicated that further price growth may be limited in the near term due to geopolitical uncertainty.
Investors remain active, but cautious
Despite the uncertain backdrop, investor activity has not slowed significantly. Pricing trends suggest continued demand for certain asset types, even as risks tied to global events and economic policy persist.
Commercial property values have remained resilient so far, though the current environment is adding a layer of caution to investment decisions.
