The Green Street Commercial Property Price Index is slipping modestly. It was down 0.1% in July, offering confirmation of a pattern that has defined the U.S. commercial real estate market for the past two years: limited movement and muted sales activity. Over the last twelve months, property values have inched up just 3.2%, and remain nearly 18% below their 2022 peak—further evidence of the ongoing stalemate between buyers and sellers.
This recent snapshot doesn’t reveal a sudden shift, but rather serves as another instance of the prevailing inertia. It underscores what most market participants already know—that a climate of elevated interest rates, persistent borrowing costs and economic uncertainty continues to dampen transaction volumes. The market is not seeing the kind of steep price drops that characterized earlier downturns. Instead, a lack of forced selling has instilled a surprising degree of stability; many owners are choosing to wait out market turbulence rather than accept significant price cuts.
This so-called “shadow freeze” in values—evident in both index data and analyst commentary—shows that liquidity, or more specifically, its scarcity, has become the main influence on pricing. With fewer deals being struck, traditional supply-and-demand dynamics have taken a back seat to the willingness and ability of owners to hold firm, propping up valuations but obscuring where prices might settle if distressed sales returned.
Sales activity, or the lack thereof, remains the key feature of today’s market.
As Peter Rothemund, co-head of strategic research at Green Street, emphasized to GlobeSt. that prices are unlikely to move much unless interest rates decline. This standoff is likely to persist barring an unforeseen economic shock that would force more assets onto the market.
While sectors like office have seen steep declines (down 37% from the 2022 peak), even these have not experienced the volume of capitulation trades typically seen at a market bottom. Sectors such as strip retail and manufactured home parks have held steadier, largely as a result of even lighter transaction activity.
For now, this snapshot suggests that, unless monetary policy shifts or an external shock introduces new distress, the commercial property market is set to continue in its current holding pattern. The interplay between sluggish sales activity and owner reluctance to cut prices will likely define CRE valuations for the foreseeable future—serving as both a floor beneath existing prices and a ceiling on rapid recovery. The Federal Reserve won't meet again until the middle of September, when it will decide on interest rates.
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