In the years following the pandemic, industrial and multifamily properties were the darlings of commercial real estate investors. Meanwhile, the office sector, weighed down by high vacancy rates and screaming headlines about “urban doom loops,” was relegated to the bottom of many investment strategies.
That dynamic could be changing.
According to MSCI’s Q2 2026 Real Capital Analytics Commercial Property Price Index, office property prices posted year-over-year gains, as industrial and apartment prices declined. Although the report didn’t indicate an immediate recovery in office markets, it suggested that investor sentiment toward the sector could be improving.
Office Shows Signs of Life
After years of struggling behind other property sectors, office pricing is showing some positive momentum.
The office index increased 2.2% year over year, led by suburban office properties, which rose 3%. Central business district office prices also increased, climbing 1.2%.
But the gains carry a caveat. CBD office values remain roughly 50% below their March 2022 peak, compared with suburban office properties, which are about 15% below their July 2022 high. That gap underscores the sector’s bifurcation and uneven recovery.
Industrial Loses Momentum
Industrial, one of commercial real estate’s strongest performers in recent years, began to soften.
The index showed that industrial prices declined 0.4% year over year, a sharp reversal from the sector’s 7.5% annual growth rate in June 2024. However, price movement improved from a 0.7% decline in Q4 2025 to a 0.1% increase in the second quarter of 2026.
Apartment Prices Continue to Slide
Apartments, which benefited from surging rents and cheaper financing earlier in the cycle, continued to face pressure from slowing rent growth and supply overhang in several markets.
The apartment index declined 1.7% year over year in June, marking its 10th consecutive month of annual price declines. Quarter over quarter, prices fell 1.2%, equivalent to an annualized decline of 4.8%.
Retail Remains Mixed
Retail prices dropped 0.1% from a year earlier, marking a sixth consecutive month of annual declines.
But quarterly performance was more encouraging. Prices increased 1.4% from the previous quarter, an annualized pace of 5.7%.
The Bigger Picture
The report measures changes in commercial property pricing rather than absolute pricing, using metrics that determine market direction rather than value.
MSCI also noted that secondary and tertiary markets generally outperformed major urban markets, while performance within property sectors, such as office, remains bifurcated.
The second-quarter data suggested that investor attitudes toward office properties may be changing. While the sector continues to face challenges, pricing trends indicate investors’ belief that the worst might be behind them.
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