Commercial Property Prices Inch Up as Market Awaits a New Rate Signal

Commercial real estate prices are moving again. Green Street’s latest Commercial Property Price Index shows U.S. all‑property values up 0.2% in February and 2.5% over the past year, a profile that the firm characterizes as consistent with “fair” pricing and largely stable cap rates.

Beneath that modest headline figure, the index paints a market still digesting the post‑2022 reset, with aggregate values 15.8% below their 2022 peak and a wide spread in performance across property types.

Green Street’s Co‑Head of Strategic Research, Peter Rothemund, puts the current regime bluntly:

In his view, that stasis is unlikely to break until the 10‑year Treasury “breaks out of its recent range,” a nod to the way the risk‑free rate is anchoring transaction underwriting and cap‑rate expectations across institutional portfolios.

Core sectors steady, but still off the highs

The all‑property CPPI now stands at 130.5, with the core sector index—which equally weights apartments, industrial, office and retail—tracking close behind at 130.8. On a trailing 12‑month basis, the all‑property index is up 3%, while the core sector index has gained 2%, indicating that the incremental strength over the past year has come from categories outside the traditional quartet.

Both aggregates, however, remain meaningfully below their 2022 highs, with all‑property down 16% and core sectors off 18%, underscoring how much of the post‑pandemic repricing has persisted despite the recent stabilization.

The pattern is familiar to investors who have followed Green Street’s series over the past two decades. Since 1998, the CPPI has traced a pronounced rise through the mid‑2000s, a sharp drawdown during the global financial crisis, and a long expansion interrupted only briefly by the initial shock of the pandemic.

The current plateau sits well above pre‑GFC levels but meaningfully below the 2022 top, a structure that supports the firm’s framing of today’s market as neither distressed nor overheated. For buyers and sellers active in institutional‑quality assets, that backdrop may help explain why bid‑ask spreads have narrowed enough for “deals getting done” without triggering a broader re‑rating in either direction.

Winners at the margin: data centers and strip retail

At the sector level, data centers posted the strongest monthly gain, with values up 1.3% in February, 7% over the past 12 months and just 9% below their 2022 peak, putting them near the top of the recovery league table.

Industrial assets also logged a positive month, with the sector index up 0.7% in February, 3% year‑on‑year and 12% below its peak, reflecting the durability of logistics demand even as the explosive growth of the early pandemic period has normalized.

Strip retail, health care and manufactured housing all show mid‑single‑digit gains over the past year, even though their February prints were flat. Strip centers are up 5% over 12 months and only 7% off their 2022 high, mirroring the resilience of necessity‑based and service‑oriented retail formats.

Health care properties—an index that blends medical office, senior housing operating portfolios, net‑leased senior housing, skilled nursing and life science—are also up 5% over the period, but still sit 12% below the peak.

Manufactured home parks, the single best‑performing sector in the CPPI by index level at 285.8, have risen 3% over the past year and are 12% off their 2022 high, suggesting that even the most structurally favored sectors have not been immune to valuation compression.

Office and net lease: stability at lower levels

The office index remains the clear downside outlier. Office values were unchanged in February but are still down 35% from their 2022 peak, even after a 2% increase over the last 12 months. With the office CPPI level at 74, the sector is the only major property type in Green Street’s series that is more than a third below its recent high, underscoring how much repricing has already occurred in institutional portfolios.

Net lease also reflects a material reset, albeit from a different set of drivers. The net lease index stands at 94.6, flat in February and over the past 12 months, and down 18% from its 2022 peak. Given the sector’s sensitivity to interest rates and its long‑duration cash flows, the lack of movement over the past year may be read as the market having largely digested the rate shock, with cap rates and pricing now tethered to the same Treasury “range” that Rothemund cites. If and when that range breaks, the net lease segment is likely to be one of the clearer test cases for how quickly cap rates and valuations reprice.

Apartments, lodging and self‑storage: pausing, not reversing

Apartment values were unchanged in February and flat over the past 12 months, with the sector index at 154 and down 19% from its 2022 peak. Lodging shows a similar pattern of stasis at the margin: the index is 101.9, with no change in February or over the past year and a 10% decline from the peak.

In both sectors, Green Street’s data indicate that the sharp moves of the prior two years have given way to a holding pattern, with fundamentals and capital costs broadly in balance at today’s pricing.

Self‑storage, one of the cycle’s standout winners, also appears to be in a consolidation phase. The sector’s index is now 247.4, unchanged in February, up 2% over the past 12 months, and 21% below its 2022 high.

That profile—very high cumulative gains over the last decade, a meaningful drawdown from the peak, and only modest movement over the past year—suggests a sector where value creation from further cap‑rate compression is limited and where incremental returns will depend more heavily on NOI growth and operational execution.