CRE Price Growth Slows Leaving Outlook Unclear Article originally posted on Globe St. on September 8, 2025 After showing early signs of recovery earlier this year, commercial real estate prices have hit a wall, with momentum now reversing in several sectors. The latest data from Trepp paints a picture of a market stuck in neutral, caught between the drag of new tariffs and the potential lift of Federal Reserve rate cuts. According to Trepp’s Q2 2025 Trepp Property Price Index, prices are “largely stalling or even slightly receding” across almost all asset classes. Just three months earlier, signs of improvement suggested that a turnaround might be underway. Now, the outlook is less certain, with prices appearing to teeter between another downturn and the possibility of stabilization. Trepp notes that the shift reflects competing forces. Tariffs are introducing new headwinds across the economy, even as the Federal Reserve considers supportive monetary policy moves. For now, the results are mixed, with some asset classes showing stability, while others continue to decline. The firm’s methodology draws on repeat-sales data from its proprietary transaction database, with 8,711 new sales pairs added during the quarter. Trepp’s equally weighted index, which balances property types and deal sizes, ticked down just 0.08% from Q1 but was still up 2.32% year-over-year. Its value-weighted index, which gives larger deals greater influence, fell 0.44% quarter-over-quarter but managed a 1.01% gain compared with last year. While both measures remained relatively stable, the divergence between them highlights the unevenness of the market. The equally weighted index has crept higher since mid-2022, gaining 3.2% through Q2 2025, although it is far from the sharp 29% rally seen between 2020 and 2022. The value-weighted index, by contrast, has slipped nearly 9% since mid-2020 after an early pandemic-era surge. Multifamily properties, one of the most closely watched CRE sectors, showed softness. Over the past year, the equally weighted index rose 1.55%, but the value-weighted measure dropped 1.94%. Since June 2022, multifamily has lost 1.8% on an equally weighted basis and more than 15% on a value-weighted basis. Trepp attributes the gap to rent growth that has been unable to keep pace with rising expenses, particularly in markets with heavy new supply. The office sector continued to reflect stress. While the equally weighted measure was up 5% year-over-year, the value-weighted side was down 1%. Since mid-2022, value-weighted office has fallen nearly 20%, underscoring steep discounts. Nearly half of transactions in the sector are closing at a discount, according to Yardi Matrix, illustrating persistent challenges facing the asset class. Retail properties posted relatively stable results, with the equally weighted index up 1.03% year-over-year and the value-weighted index up 2.58%. Strong consumer spending has supported the sector, although Trepp cautioned that the effects of tariffs could disrupt both consumer budgets and retail demand going forward. Industrial remained the strongest performer, buoyed by logistics and data center demand. The equally weighted index rose 0.30% from Q1 and 3.24% year-over-year, while the value-weighted measure gained 0.25% quarter-over-quarter and 2.24% year-over-year. Even so, Trepp flagged potential risks tied to supply-chain disruptions stemming from tariff actions. Lodging proved the weakest link, with steep declines across both measures. The equally weighted index dropped 2.69% from the first quarter and nearly 10% year-over-year. Weaker consumer confidence, sluggish business travel and higher financing costs have weighed heavily on performance. Many hotel owners have postponed capital expenditures since the pandemic, and tighter traveler budgets threaten to pressure room pricing even more.