Commercial real estate pricing took a step back in April, interrupting what had been a steady, if modest, recovery over the past year.
CoStar Group's latest Commercial Repeat-Sale Indices show both major measures of pricing moved lower during the month, marking the first broad-based decline after several months of incremental gains. The shift does not erase the progress made since last year, but it does suggest the market's upward trajectory is starting to level off.
The value-weighted U.S. Composite Index, which tracks larger, institutional-grade transactions in core markets, fell 1.3% from March. It was the index's first monthly decline in nearly a year. The equal-weighted index, which captures a wider range of smaller deals across secondary and tertiary markets, dropped 0.9%, ending a five-month stretch of increases.
On an annual basis, pricing is still higher. The value-weighted index has risen 3.5% over the past 12 months, while the equal-weighted measure is up 1.2%. Even so, values remain below their 2022 highs, and the latest data point to a market that is no longer moving in a straight upward line.
"Seeing prices up 1% to 3% year over year, or anything similar, is historically what we'd expect to see in a stabilizing market. It's just not the boom numbers we saw in 2021," said Chad Littell, national director of U.S. capital markets analytics for CoStar and author of the CCRSI report. "The commercial real estate recovery, after a downturn, is a multiyear process that accelerates and decelerates as it progresses through a broader trend higher. Markets rarely recover in a straight line."
The CCRSI tracks properties that have sold more than once, allowing for direct comparisons of pricing over time. April's results show that while many assets continue to trade above prior values, the mix of deals is starting to shift, particularly at the top end of the market.
Large transactions remain relatively limited, and that can make monthly readings more sensitive to a handful of outliers. In April, several high-value deals closed at losses, pulling down the overall index. Office properties were a significant factor in that trend, continuing to face weaker demand and pricing pressure.
Across the office transactions included in the repeat-sale data, sale prices came in a combined $130.8 million below their previous levels. The largest drop was tied to Woodland Pointe, a 185,000-square-foot office complex in Herndon, Virginia, which sold for $40.2 million. That represents a $59.8 million decline from its prior sale price of $100 million in 2008.
Other sectors told a different story. Multifamily assets, particularly at the institutional level, continued to show resilience. In total, those properties traded for $79.4 million above their previous sale prices.
The largest gain in April came from the sale of Iconic on Alvarado, a 712-bed student housing property serving San Diego State University. The asset sold for $144.3 million, up $46.2 million from its 2016 purchase price.
Smaller deals also held up better. The equal-weighted index, which tends to reflect a broader cross-section of the market, showed more consistent appreciation across property types. Retail sales in April were $34.8 million higher than their previous transaction values, a 26% increase, while industrial properties posted $87.5 million in gains, roughly doubling prior pricing.
That divergence is becoming more pronounced. Office continues to weigh on overall performance, while sectors tied to housing demand and logistics are still pushing higher. The result is a market that is technically improving year over year, but doing so unevenly and with less momentum than it had just a few months ago.
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