Orlando and San Francisco are leading a narrow advance in U.S. commercial property prices over the past year, even as some coastal and gateway markets lagged or slipped into decline, according to new first-quarter data from MSCI's RCA CPPI US. The picture that emerges is less a broad-based rebound than a patchy recovery shaped by property type and market-level risk appetite.
National Index Shows Measured Momentum
MSCI reported that its National All-Property Index rose 2.1% year over year in March, the strongest annual gain since late 2022. On a quarterly basis, prices were up 1.1%, implying an annualized growth rate of 4.7% and underscoring that momentum has improved in recent months despite persistent macro uncertainty and geopolitical tensions.
The firm said both transaction volume and pricing strengthened in the first quarter, suggesting investors are still willing to deploy capital but are concentrating on specific sectors and markets rather than taking broad exposure.
Sector Performance Reveals Selective Repricing
The clearest sign of that selectivity shows up in the one-year performance of major property types. Suburban office prices rose 5.1% from a year earlier, outpacing the broader market and marking their fastest annual growth rate since the second quarter of 2022.
CBD office values also moved higher, up 1.4% year-over-year, but that modest gain comes after a deep reset: CBD office prices now sit 49% below their July 2022 level, when interest-rate shocks began, while suburban office remains 14% below that mark, MSCI's data shows.
The figures point to a tentative stabilization rather than a full recovery for office, with investors distinguishing between locations and asset quality even within the same metro.
Apartments, a focus of repricing over the last several years, appear to have found a floor. MSCI said apartment prices were flat year-over-year in the first quarter, ending a run of annual declines that lasted more than 3 years. On a quarter-over-quarter basis, apartment prices edged up 0.3%, an annualized rate of roughly 1.4%, which suggests investors may be testing the waters again in a sector that had been marked down sharply as financing costs rose.
Retail continues to show a split between short-term weakness and hints of near-term support. MSCI's data shows that retail prices are down 1.2% year-over-year in March, the third consecutive month of annual declines after a 15-month streak of gains. Yet prices crept up 0.2% from February, implying a 3% annualized rate of growth, indicating that while investors remain cautious on the sector, especially in weaker locations, they are not uniformly marking retail down.
Industrial remains the most resilient of the major property types, though the sector's pace has cooled. The industrial index rose 2.3% year-over-year in March and, crucially, is the only major sector to have posted positive returns since the onset of rate shocks, up 11% over that period.
Metros Diverge As Non-Gateways Pull Ahead
The one-year RCA CPPI numbers also highlight a growing divergence between large coastal markets and the rest of the country. MSCI's All Types index for the six major metros—Boston, Chicago, Los Angeles, New York, San Francisco and Washington, D.C.—rose 1.7% year-over-year in March.
By contrast, the All Types index for non-major metros climbed 2.2% over the same period, beating both the major-metro composite and the national 2.1% gain. Over longer horizons, non-major metros have outperformed by an even wider margin, with a ten-year gain of 50.1% versus 19.3% for the six major metros.
Within individual markets, the past year's moves have been even more uneven.
Orlando sits at the top of MSCI's ranking for one-year, all-property price changes, followed closely by San Francisco, with both markets recording double-digit percentage gains. After Orlando and San Francisco, growth moderates through a cluster of secondary and Sun Belt markets such as Baltimore, Sacramento, Raleigh/Durham, Atlanta and Phoenix, where one-year price changes remain positive but step down from the leaders.
By the time the list reaches large, mature markets like Chicago, New York and Washington, D.C., gains are thinner and the distribution includes metros where prices have barely moved or slipped into modest decline.
The interplay between sector performance and local market dynamics is reshaping which metros look most attractive on a risk-adjusted basis. Orlando, for example, combines strong population and job growth with a heavy concentration in sectors that have seen less structural disruption than office-heavy CBDs, helping drive its outsized all-property price gain over the past year.
San Francisco's top spot, despite ongoing office vacancy challenges, points to investor interest in select assets and property types, particularly industrial and high-quality residential, that can benefit from a potential tech-led rebound. Meanwhile, slower growth or mild declines in some gateway markets suggest that price discovery is still underway where office exposure is high and capital remains selective.
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