U.S. commercial real estate prices increased in July, marking the first monthly gain since early spring as institutional investors begin to reenter a market that has struggled for more than two years.
Following a prolonged slump triggered by the Federal Reserve’s 11 interest rate hikes in 2022 and 2023, the market is showing signs of stabilization, according to the latest CoStar Commercial Repeat Sale Indices (CCRSI) report. Elevated borrowing costs had previously deterred many buyers, contributing to a downturn that began in mid-2022.
“The uptick in prices suggests that major players like institutional investors, pension funds, REITs, and large investment firms are gradually returning,” said Chad Littell, national director of U.S. capital markets analysis at CoStar and author of the CCRSI report. The index is based on repeat sales—when previously sold properties are sold again.
A key metric for high-value transactions, the value-weighted U.S. Composite Index rose 1.3% in July—the first monthly increase in five months. This points to a potential rebound in buyer confidence.
Annual price declines also moderated. Prices were down just 1.1% compared to July 2024, an improvement over steeper year-over-year losses in June. However, the index remains 21.4% below its peak in July 2022.
Smaller markets also saw some gains. The equal-weighted composite index, which better reflects lower-priced assets in secondary and tertiary markets, rose 0.3% in July. On a yearly basis, these markets posted a 0.7% increase and are now just 1.9% below their March highs.
Sales Activity Paints Mixed Picture
Despite the price increase, overall transaction volume in July dipped slightly from June. However, year-over-year comparisons revealed solid growth. Roughly 1,500 repeat sales were completed in July, totaling $10.7 billion—down 4.4% from the prior month but up 9.1% from July 2024. The monthly decline stemmed from fewer small-dollar deals, as individual investors continued to show caution.
Over the 12 months ending in July, total repeat sale volume reached $133 billion, a 27% increase from the previous year. Investment-grade properties led the way, with a 33% jump in annual volume. The report also highlighted a growing trend of seller patience. The rate of properties pulled from the market before selling rose to nearly 27% in July—its fifth consecutive monthly increase.
“This may indicate that sellers expect prices to improve and are willing to wait to capture those gains,” Littell said.
Sellers in July, on average, accepted 92.7% of their asking prices, the same as a year earlier. Distressed sales remained relatively rare, making up just 3.4% of all repeat transactions. Among those, investment-grade distressed sales accounted for 7.7% of transactions, while distressed sales of general commercial properties made up 2.6%.
The July CCRSI data includes 1,482 repeat-sale transactions and contributes to a historical database of 329,377 sales since 1996, offering one of the most comprehensive views of commercial real estate pricing trends.
Source: CoStar