Commercial real estate prices ended 2025 slightly higher but still well below their recent peak, leaving investors positioned for a year in which income, not appreciation, is likely to do most of the work.
Green Street’s Commercial Property Price Index (CPPI) shows that U.S. property values rose about 2% over the past year and are roughly 16% under their 2022 high, underscoring a market that has found a floor but not yet a new upcycle.
A Narrow Band for 2026
The latest CPPI reading slipped 0.1% in December, a rounding error that nonetheless reinforces the sense of a market treading water at current cap rate and financing levels.
“Property prices increased 2% last year, and that’s about where I’d set the line for ’26,” said Peter Rothemund, co-head of strategic research at Green Street, adding that real estate screens as fairly valued versus corporate bonds and that stronger price gains would likely require lower medium- to long-term interest rates.
For investors who spent the last two years underwriting more downside, it appears that 2026 will be a year of tight valuation ranges, not a big directional bet on the asset class.
Beneath the placid headline number, Green Street’s sector-level pricing shows a market that has been decisively repriced and is now sorting winners from laggards. The all-property index stands at 130.3, down 16% from 2022, while the firm’s core-sector basket of apartments, industrial, office and retail is at a similar level and roughly 18% below its peak.
That repricing, driven primarily by changes in market cap rates and net operating income expectations in the underlying REIT universe Green Street tracks, sets the entry points against which 2026 performance will be measured.
Industrial and Retail Set the Pace
Industrial continues to anchor the upper end of the pricing spectrum, with Green Street’s industrial index at 221.3, up 2% over the past 12 months and still about 13% below its 2022 top.
The data suggest that much of the rate-driven adjustment in logistics has already occurred, leaving investors to focus on whether demand and rent growth can sustain today’s valuations rather than on another step-change in pricing. If cap rates remain rangebound, incremental returns in 2026 will likely come from leasing and execution of development rather than a further rerating of the sector.
Retail tells a more nuanced story, with strip centers quietly emerging as one of the relative winners in Green Street’s data. The strip retail index stands at 122.7, up 5% over the past year and only about 7% below its 2022 high, while malls sit at 91.0, flat year-over-year and similarly about 7% under their peak, reflecting both persistent skepticism around regional malls and investors’ comfort with necessity-based, open-air formats.
That divergence suggests 2026 capital decisions in retail will continue to favor grocery-anchored and service-heavy centers where pricing has already adjusted, footprints are right-sized and tenants have demonstrated staying power.
Apartments Pause, Offices Absorb the Shock
Apartments, by contrast, are still digesting the cycle. Green Street pegs the apartment index at 154.0, unchanged over the past 12 months and roughly 19% below the 2022 peak, signaling that last year’s rent deceleration and capital markets reset translated into a pause rather than a rebound in valuations.
A flat 2025 performance sets the stage for 2026 to hinge on whether supply and demand imbalances in key metros resolve in favor of landlords quickly enough to offset higher-for-longer debt costs embedded in today’s pricing.
Office remains the most impaired major sector in the CPPI, and the gap is unlikely to close quickly. The office index is at 74.0, roughly flat over the past year but down about 35% from its 2022 high, a level that reflects not just cap-rate expansion but also structural questions about long-term demand.
With values already marked down by more than a third, the path through 2026 is less about predicting another systemic leg lower and more about sorting which assets can still command liquidity and NOI growth and which will remain stranded, even at discounted prices.
Specialty Sectors Chart Their Own Course
Specialty sectors show a similarly wide spread in outcomes that will shape capital allocation decisions this year. Manufactured home parks sit at one end of the spectrum, with an index level of 285.8, a 3% gain over the past 12 months and about 12% below their peak, reflecting durable income streams and limited new supply.
Self-storage, by comparison, carries an index of 247.4, up 2% over the past year but still roughly 21% below its 2022 high, suggesting the sector is working through a normalization after an exceptional pandemic-era run.
Data centers and health care also stand out in Green Street’s figures as sectors that delivered meaningful appreciation in 2025 despite the broader market plateau. The data center index is at 115.6, up 5% year-over-year and about 10% below its high, while health care comes in at 132.3, up 5% but about 12% below its peak.
Those moves hint at where investors have been willing to pay up for growth and defensive characteristics, and where there may still be room in 2026 for selective cap rate compression if secular demand trends and capital flows remain supportive.
Lodging and net lease, by contrast, illustrate how far some sectors still sit from a convincing re-rating. Green Street’s lodging index is 101.9, flat over the past 12 months and around 10% below its 2022 level, while net lease stands at 94.6, also unchanged year over year and roughly 18% under its peak.
Those readings imply that, absent a shift in financing costs, investors in these income-focused sectors may continue to lean on lease structures and operating performance rather than expecting pricing to do much of the heavy lifting in 2026.
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