Daily Top 5
Larger Properties Lag as CRE Prices Approach a Floor
Article originally posted on Globe St on Oct 9 2026
Commercial real estate prices are approaching a floor, but larger properties are still losing ground—a divide that makes the market’s apparent stability a better starting point for investors than evidence of a broad recovery. Trepp’s second-quarter 2026 Property Price Index shows smaller and mid-sized assets generally holding their value, while higher-dollar transactions continue to decline.
Retail was the only sector to gain under both measures and renewed interest-rate pressure threatens to slow the market’s progress.
A nearly flat market-wide reading can conceal very different investment conditions. Office and multifamily properties remain substantially below their June 2022 value-weighted pricing levels, while retail has moved higher. Industrial falls between those extremes: smaller transactions continue to show gains, but pricing for higher-value assets has stalled.
A Stable Market Masks A Size Divide
Trepp’s equal-weighted composite index slipped just 0.12% in the second quarter and was essentially unchanged from a year earlier, rising 0.06%. Its value-weighted counterpart fell 0.70% during the quarter and 2.03% over the year.
The two measures capture different aspects of the market. The equal-weighted index prevents large transactions from dominating the results, while the value-weighted index gives greater influence to higher-dollar sales. Trepp uses repeat sales of the same properties to measure price changes and added 9,508 new sale pairs in the second quarter.
The longer-term gap is more pronounced. The equal-weighted composite stood 4.96% above its June 2022 level, while the value-weighted index remained 9.89% below that benchmark. That divergence suggests the market has not reached a common pricing floor: smaller and mid-sized properties have generally found firmer footing, but larger assets continue to face downward pressure.
The report notes that improved transaction and lending activity has not yet translated into a broad increase in prices. For investors, that separates a more active market from a recovering one. Deals can close more easily without sellers regaining the values they commanded earlier in the cycle.
Retail Leads While Industrial Splits
Retail offered the clearest evidence of pricing strength. Its equal-weighted index rose 0.31% in the quarter and 1.34% over the year. The value-weighted index rose 0.57% and 1.29% over the quarter and year, respectively. Both measures also remained above June 2022 levels, by 8.98% on an equal-weighted basis and 2.84% on a value-weighted basis.
Those gains distinguish retail from sectors where stability depends more heavily on transaction size. Trepp attributes the sector’s resilience to limited new supply and continued demand for necessity-based and service-oriented space, even as consumer spending and tenant performance become more uneven. The results indicate that those supports are reaching both smaller transactions and higher-dollar deals, rather than benefiting just one end of the market.
Industrial’s performance was less consistent. Its equal-weighted index gained 0.15% during the quarter and 2.07% over the year, leaving it 12.55% above June 2022. But the value-weighted index declined 0.47% in the quarter and was virtually unchanged over the year, down 0.01%. It stood only 0.85% above its June 2022 level.
That contrast complicates any claim that industrial prices are broadly advancing. Smaller transactions continue to show appreciation, while higher-value deals have made little progress over the past year. Trepp says easing supply pressures and solid demand for well-located logistics properties are supporting values, but the index results suggest those conditions have not been enough to lift pricing across the sector.
Multifamily Slows Its Slide As Office Retreats
Multifamily’s second-quarter results point to a slowing decline, not yet a rebound. The equal-weighted index dipped just 0.01%, while the value-weighted measure fell 0.54%. Annual declines were larger, at 2.56% and 3.41%, respectively.
The distance from June 2022 underscores how much more repricing has occurred among higher-dollar properties. Multifamily’s equal-weighted index was down 3.49% from that level, compared with a 17.80% drop in the value-weighted index.
Trepp reports that new supply pressure is easing in some markets and expenses are moderating. Those improvements help explain the slower price declines, but operating fundamentals have not strengthened enough to overcome the higher cost of capital relative to 2022. The near-flat quarterly reading therefore marks progress toward stabilization without establishing that values have turned upward.
Office provided a sharper reminder that the recovery can reverse. Its equal-weighted index fell 1.50% in the second quarter, surrendering the first quarter’s gain. The value-weighted index dropped 2.41%, the largest quarterly decline among the sectors included in that measure.
Here, too, the longer-term results diverged. Equal-weighted office pricing remained 4.80% above June 2022, despite a 0.65% annual decline. Value-weighted pricing was down 4.63% over the year and 19.53% from June 2022.
Trepp describes the divide as increasingly a question of establishing what large buildings are worth at the new level of demand and securing financing, rather than simply adjusting to post-pandemic changes in space use. For investors, this implies that signs of stability in smaller office transactions do not set a pricing floor for larger buildings. Those assets are still working through a more substantial valuation adjustment.
Higher Rates Test An Uneven Floor
Lodging remained the weakest sector in the equal-weighted index, falling 1.27% during the quarter and 6.53% over the year. Prices were 16.98% below June 2022, the largest decline from that benchmark among the equal-weighted sector indices. Trepp did not provide a value-weighted lodging measure in its results.
Unlike multifamily, where quarterly losses have narrowed toward zero, lodging has yet to show signs of stabilization, according to the report. Higher labor, insurance and capital costs continue to weigh on valuations, particularly for older or less competitive properties. Its weakness also shows why the office sector’s difficulties should not eclipse pricing pressure elsewhere in commercial real estate.
The next test extends beyond individual property types. Trepp warns that increases in longer-term interest rates since June, including further upward movement in the third quarter, create additional challenges for transaction prices and volume. Second-quarter stability does not resolve that subsequent financing pressure.