Commercial Property Rents Are Rising But the Recovery Is Fragmenting Article originally posted on Globe St. on September 17, 2026 Commercial real estate rents are still higher than they were a year ago, but the latest national data suggest that the next phase of the market will be defined less by broad sector gains than by where and how recently, those gains occurred. CompStak’s September update of its Columbia CompStak Rent Index shows positive trailing-year growth in office, retail and industrial rents, yet the near-term direction is diverging: office growth has slowed, retail rents are declining at an accelerating pace and industrial rents appear to be finding a more stable floor after a period of cooling. The index tracks constant-quality net effective rents rather than asking rents or simple market averages. By controlling for changes in the quality mix of leased space and incorporating concessions, the CCRI is intended to isolate the rent movement that owners and lenders are actually underwriting. In a market where free rent, tenant-improvement packages and flight-to-quality leasing can distort headline pricing, the gap between an asking-rent narrative and net effective performance can be consequential. Annual Growth Still Favors Office Office posted the strongest national gain among the three sectors, with constant-quality net effective rents up 8.8% in the year through July. The reading indicates that office leasing has produced meaningful rent growth on a trailing-year basis despite the sector’s uneven recovery and persistent differences between higher-quality and lower-quality space. But the index also shows that office growth has begun to lose speed. That creates a more complicated investment picture than the annual figure alone suggests. A market can retain strong year-over-year growth even as more recent leasing activity cools, particularly if the prior year included a sharp rebound in rents or a wave of transactions at the upper end of the market. For investors, the implication is that an 8.8% annual gain should not be treated as a blanket signal of improving office economics. It is evidence of substantial rent growth over the past year, but current underwriting should focus closely on the most recent leasing velocity, concession packages and the durability of tenant demand in individual metros and submarkets. The metro’s data reinforce that point. Using office-specific historical thresholds, CompStak classifies markets with year-over-year rent growth above 6.22% as high tier, while those below negative 0.62% fall in the low tier. Of 39 office MSAs, 22 recorded positive trailing-year rent growth. Fourteen landed in the high-growth row, 15 in the low-tier row and 10 in the middle. That split shows that the office market is not moving as a single national trade. Markets including San Francisco, Denver and Cincinnati are among those in the low-growth group, while other metros have posted gains strong enough to clear the high-growth threshold, in some cases by double digits. The result is a sector in which asset quality, tenant profile and local supply-demand conditions are likely to carry more weight than national office averages. Retail’s Recent Decline Deserves Attention Retail presents nearly the opposite signal: positive performance over longer horizons but worsening weakness in the most recent data. CompStak said retail’s decline accelerated over the last one, three and six months even though the sector remained positive over longer periods. That pattern suggests retail’s prior rent growth may be losing support at the margin. Investors considering acquisitions or refinancing should therefore distinguish between leases signed during a stronger period and current renewal or new-lease economics. A sector can remain up year-over-year even as the leasing environment has become more difficult for landlords. Retail’s market-level figures also call for restraint in interpreting individual readings. The sector’s middle quarter-over-quarter tercile ranges from a 6.14% decline to a 7.66% increase, a 13.8-percentage-point spread. That is much wider than the corresponding ranges for office (5.51 percentage points) and industrial (7.16 percentage points). CompStak attributes part of that dispersion to thin-market coverage noise, which is also visible in its retail exhibit. In practical terms, the broad retail thresholds mean that a single market’s quarterly movement may be less reliable as a stand-alone investment signal, particularly in smaller metros with limited transaction depth. Investors may want to place greater emphasis on markets with deeper verified leasing volume and on property-level evidence such as tenant sales, lease rollover schedules, vacancy and concession trends. New York stands out on that basis. CompStak reported annual retail leasing volume of $407.5 million in the city, making it by far the deepest retail market in the data set. Its trailing-year rent growth of 2.6% placed it in the middle tier rather than an extreme high- or low-growth category. That moderate reading may be more meaningful than more dramatic percentage changes in thinner markets because it is supported by a much larger volume of observed leasing activity. At the other end, eight retail MSAs exceeded the sector’s 10.59% year-over-year high-growth threshold: Boston, Detroit, Miami, Nashville, Riverside, San Antonio, San Francisco and San Jose. Nine markets fell below the negative 4.88% low-growth threshold. The wide divide confirms that retail performance remains highly local, with national figures offering only a broad starting point for investment analysis. Industrial Is Cooling Without Contracting Industrial rents also softened recently, but the data suggest more stability relative to the sector’s performance over the past year. That is a meaningful distinction. A slowdown from exceptional rent growth is not the same as a broad rent correction, and CompStak’s methodology makes clear that investors should be cautious about reading the sector’s “low” classifications as evidence of falling rents. Industrial’s lower year-over-year threshold remains positive at 1.5%. In other words, an industrial market placed in the low row may still be recording rent increases rather than declines; it is simply growing more slowly than has been typical for industrial over the historical period used to establish the thresholds. The median year-over-year growth rate across industrial MSA-quarter observations was 6.38%, according to CompStak, underscoring how strong the sector’s historical rent growth has been. That context is especially important after several years in which industrial owners and investors became accustomed to outsized leasing gains. Markets classified as sluggish or stabilizing may be showing positive rent growth that no longer matches those earlier expectations. For investment committees, that argues for normalizing rent-growth assumptions rather than treating deceleration as either a crisis or a continuation of the prior cycle. New York illustrates the point. The market falls into the bottom industrial row even though its trailing-year rent growth was mildly positive, because the sector-specific low threshold begins at positive 1.5%. About one-quarter of industrial MSAs fall in the middle row, while the remaining three-quarters are split roughly evenly between the high- and low-growth rows. The distribution suggests an industrial market still marked by material geographic dispersion. It also indicates that national industrial rent performance may remain positive even as individual markets reset to more moderate growth rates. That is a different underwriting environment from one in which rents are broadly declining, but it still requires more conservative assumptions on mark-to-market potential and near-term cash-flow growth. Market Selection Becomes More Important CompStak’s analysis distinguishes between a market’s underlying rent performance and its more immediate direction by comparing year-over-year growth with the most recent quarter’s change. Markets with weak trailing-year results but stronger recent growth are rebounding, while those with strong annual gains but softer recent performance are cooling. A market with strong annual rent growth can look attractive in a backward-looking screen even as current leasing has weakened. Conversely, a market with muted or negative annual performance may be entering a recovery phase if recent rent growth is strengthening. Investors who rely primarily on trailing-year growth could miss both situations. The sector-specific thresholds are critical to that analysis. Office is the most intuitive of the three because its low threshold, negative 0.62% year-over-year, is close to zero. In office, a low classification generally means rents are declining, while a high classification means annual growth exceeds 6.22%. Industrial requires more interpretation because even low-tier growth may be positive. Retail requires more caution because its wide quarterly thresholds can be influenced by relatively thin market coverage. Taken together, the latest CCRI data points to a commercial real estate market that is still generating rent growth but is becoming less forgiving of broad-brush assumptions. Office has retained notable annual strength, though its momentum is slowing. Retail’s recent deterioration raises questions about whether longer-term gains can persist. Industrial appears to be transitioning from exceptional growth toward a more normalized pace rather than a uniform downturn. For investors, the key takeaway is not that rent growth has disappeared, but that national gains are increasingly insufficient as an investment thesis on their own. The stronger approach is to evaluate whether a market’s trailing-year rent growth is being reinforced or undermined by current leasing momentum, then test that signal against transaction depth, effective-rent concessions and the specific competitive position of an asset.