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U.S. commercial property values continued to firm in March, with a key benchmark showing the strongest annual price growth since late 2022. MSCI Real Assets reported that the RCA CPPI US National All Property Index rose 2.1% year-over-year, signaling that pricing is stabilizing and edging higher despite a challenging macroeconomic and geopolitical backdrop.
On a shorter time frame, the index increased 1.1% over the first quarter. That quarterly performance translates into a 4.7% annualized pace of appreciation, indicating that the recent upturn in pricing momentum has been more pronounced than the year-over-year comparison alone suggests.
MSCI Real Assets noted that commercial property pricing has so far remained resilient even as uncertainty has increased, including new risks stemming from conflict in the Middle East. According to the report, both transaction volume and pricing improved in the first quarter, highlighting that investors are still deploying capital selectively and are willing to transact when assets meet their underwriting criteria.
Office performance diverged by location, with suburban assets outpacing their central business district counterparts. Suburban office properties posted a 5.1% price gain from a year earlier, while CBD office prices rose 1.4% year-over-year. Both segments registered their highest annual growth rates since the first quarter of 2022, suggesting that office repricing has, at least for now, given way to modest recovery in certain segments.
Apartment values were unchanged from a year earlier in the first quarter, underscoring a pause in multifamily price growth after a period of rapid expansion prior to the recent interest rate environment. Retail assets remained under modest pressure, with prices declining 1.2% year-over-year, reflecting ongoing adjustments in that sector.
Industrial properties continued to stand out, with the industrial index rising 2.3% year-over-year. MSCI Real Assets reported that industrial remains the only major property sector to have delivered positive returns throughout the period since interest rates began moving higher. This performance highlights the sector’s relative strength compared with other asset classes in the current cycle.
The post U.S. Commercial Property Prices See Strongest Annual Gain Since 2022 appeared first on CRE Market Beat.
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