New signs are emerging of a possible bottom to a more than two-year run in commercial property price declines.
Prices slumped 0.4% in January from a month earlier, according to the January CoStar Commercial Repeat Sale Indices report. However, while marginally lower, pricing data behind the results point toward a stabilization.
The CCRSI report tracks when a previously sold property trades hands again, a process called a repeat sale. A value-weighted index reflects high-dollar trades common in major cities, while an equal-weighted index tracks the more numerous, lower-priced property deals typical in small markets.
The equal-weighted index accounted for the month-to-month dip in pricing. The value-weighted index showed prices holding steady from December to January and turned positive on an annual basis for the first time in 26 months.
That the higher-dollar transaction index was flat is an important indicator for the overall condition of the market, according to Chad Littell, national director of U.S. capital markets analytics for CoStar Group and the report’s author.
“That prices did not decline in the value-weighted price measure suggests the worst of the market’s decline may be over,” Littell said. “The value-weighted index has followed a clear cycle: a sharp decline from late 2022 to mid-2024, followed by steady improvement from last summer’s lows.”
Annual price increases may continue to hover around zero for now, Littell added, but other data in the CCRSI report increasingly point to a likely bottom forming. Other indicators show more properties are selling and at a faster pace. And of the properties that are being sold, fewer are distressed sales.
January transaction volume was up from the same month a year and two years earlier. The 1,267 repeat-sale transactions were higher than the 1,155 in January 2024 and 1,201 in January 2023.
Less time on market
In addition, the January transaction volume was also higher than trade volumes in the first month of 2018 and 2019, before the coronavirus pandemic upended real estate markets.
January also witnessed a meaningful increase in year-over-year sales volume by dollar amount. For the first month of 2025, repeat sales totaled $9.1 billion, a 34.6% increase over the $6.7 billion in repeat sales in January 2024.
The average number of days a property was on the market after being listed for sale also declined. The drop is an indicator that buyer and seller expectations on pricing are moving closer together. After three months of no change, the sale-price-to-asking-price ratio moved down to 93.1%, favoring buyers.
“That is the tightest this ratio has been since November 2023,” Littell said. “The number of days commercial properties spend on the market continues to fall, now just under six months — down from a long-term average of nearly nine and a half months since 2006. Just before the pandemic, the figure was seven months.”
January CCRSI results also showed that buyers are less interested in finding distressed properties.
In a declining trend, only 29 of the 1,267 repeat-sale trades, or about 2.3%, were distressed sales, a decrease of 0.8% from a year ago.