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U.S. commercial real estate prices eked out a minor gain to start 2026, but high financing costs, economic concerns and slow deal volume have prevented parts of the market from finding solid footing.
Pricing across all major property types rose 0.3 percent year over year in January, a modest growth as pricing momentum has moderated over the past couple of months, according to MSCI’s RCA commercial property price index.
Market conditions, however, remain uneven, according to the report, as interest rates are still elevated and deal volume is under typical levels. There is also a geographic divide. Commercial pricing in the top six metropolitan areas — Boston, Chicago, Los Angeles, New York, San Francisco and Washington, D.C. — has slid by 1.5 percent year over year. Meanwhile, in secondary and tertiary metros, pricing had edged up by 0.8 percent.
One sector bucking the trend is industrial, which has benefitted by growing investor appetite. In January, pricing for industrial properties climbed 3.7 percent year over year, representing the strongest growth rate among the property types researched by MSCI. Industrial has also had the best post-pandemic rebound; pricing has increased by nearly 40 percent over the past five years.
It’s a sector that JLL Income Property Trust has become increasingly bullish toward.
“We have been adding to industrial more than any other segment of our fund,” said Sean Meehan, JLL IPT’s portfolio manager. Ten years ago, the fund was just 6 percent industrial and 50 percent traditional office. Now, about 38 percent of the fund is invested in logistics properties, and it has just three office buildings in its portfolio.
“We’re thankful for that change,” he said.
Office has been lingering on the bumpy road to recovery, after employers swapped physical workplaces for virtual ones during the pandemic. In January, its prices had the second-highest growth rate, rising 1.5 percent year over year. However, they were down by 0.6 percent compared to the month before.
And again, there is a stark location difference: offices in central business districts saw their pricing plummet by 1.3 percent year over year, whereas they rose by 1.9 percent in suburban areas during the same time period.
Another sector Meehan said his firm is particularly optimistic about, especially during times of geopolitical and economic uncertainty, is medical outpatient facilities. Medical offices benefit from the aging Baby Boomer population, the rise in outpatient procedures and stickier tenant bases. Many of the properties are built to suit by hospital systems and doctor practices.
“A lot of that leads to just a very resilient cash flow profile,” he said. “In good times and bad, people still want access to health care and have health care needs met.”