The latest commercial property price report from MSCI Real Capital Analytics said that multifamily property prices were down 0.4 percent month-over-month in May compared to the revised level of the month before. Prices were down 1.12 percent year-over-year.
Defining CPPI
MSCI tracks an index called the Commercial Property Price Index (CPPI). The index is computed based on the resale prices of properties whose earlier sales prices and sales dates are known. The index represents the relative change in the price of property over time rather than its absolute price. Note that, as new property transactions are added to the MSCI dataset each month, they recalculate the CPPI for the months in which the transactions occurred, potentially all the way back to the beginning of the data series.
Multifamily property price drop continues
The first chart, below, shows how the CPPI’s for all commercial property as a single asset class and for apartments have changed since January 2016. Both CPPI’s have been normalized to values of 100 in January 2012. The chart also contains trend lines showing the straight-line average rates of price appreciation for the two asset classes based on their performances from January 2012 to December 2019, a period in which property price appreciation was remarkably steady.
The chart shows that multifamily property prices seemed to have hit a low point last fall and were on the upswing at the end of last year. However, they have been falling for the last 4 months and are now at their lowest level since April 2021.
Multifamily property prices are now down 19.7 percent from their peak but are 11.5 percent above their level in January 2020. They are 16.2 percent below their pre-pandemic trend line.
Prices for all commercial property as a single asset class were down 0.2 percent month-over-month in May and were down 1.0 percent year-over-year. They are now 12.7 percent below their peak but are 11.0 percent above their level in January 2020. They are 14.6 percent below their pre-pandemic trend.
The next chart plots the month-over-month changes in the values of the CPPI over the last 13 months for all commercial property as a single asset class and for apartments. It also includes the same metrics based on the data included in last month’s report and the report from the month before that.
The chart shows that transactions added to the dataset over the last two months have tended to make the multifamily property price trajectory appear worse. For example, the month-over-month price decline for March was seen as being -0.04 percent two months ago, but the decline was increased to -0.18 percent with last month’s revisions and to a decline of -0.24 percent with this month’s revisions. The month-over-month multifamily property price change for April was reported as -0.37 percent last month but was changed to -0.39 percent in this month’s report.
The chart also shows that the revisions to the pricing data for all commercial property considered as a single asset class were not all in the same direction. Revisions to the data from two months ago in last month’s report turned the price gain reported for February into a loss and the price decline reported for March into a larger price decline. Revisions to last month’s price history in this month’s report made the price history from November 2024 through February 2025 look worse. However, the revisions lessened the price declines seen in March and April. For example, April’s 0.40 percent price decline reported last month was reduced to a price decline of 0.30 percent in this month’s data.
Other property prices mixed in May
In May, MSCI found that prices rose month-over-month for suburban office and retail properties but fell for industrial property and for offices within central business districts (CBDs). Prices for retail property rose by 0.2 percent while prices for suburban offices rose 0.5 percent for the month. Industrial property prices fell by 0.2 percent for the month while prices for offices within CBDs fell 0.4 percent.
Retail property prices again rose by the greatest amount on a year-over-year basis with a 4.0 percent increase. Industrial property prices were up 0.1 percent. Prices rose 1.1 percent for suburban offices, but prices fell 6.2 percent for offices in CBDs.
Commercial property prices continue to fall
The MSCI report provides data comparing the price changes of commercial property in 6 major metro* areas against those in the rest of the country, although it does not separate multifamily property prices from those of other commercial property types in this comparison. The next chart, below, plots the history of the relative price indexes since January 2016 for both market segments, along with trend lines based on straight-line fits to the changes in these indexes between January 2012 and December 2019. For purposes of this chart, both price indexes were set to values of 100 for January 2012.
The chart shows that the CPPI for major metro commercial property has been on a downward path for the last 3 years and is now at its lowest level since February 2019. In the latest report, major metro property prices are down 0.2 percent month-over-month and 4.6 percent year-over-year. They are down 16.5 percent from their peak and are now 4.0 percent below their level in January 2020. They are 28.2 percent below their long-term trend.
Over the last two years, property prices in non-major metros have experienced periods of rising prices starting in August, followed by periods of falling prices starting in the winter months and continuing through mid-summer. The non-major markets CPPI is down 0.1 percent month-over-month but up 0.2 percent year-over-year. It has now fallen 10.8 percent from its peak but is 17.8 percent above its level in January 2020. The non-major metro CPPI is 8.6 percent below its pre-pandemic trend.
The final chart plots the history of the month-over-month changes in the price indexes for the two property market segments over the last 13 months along with the monthly price change data from the last two reports.
The chart shows that the most recent data indicates smaller pricing declines over the two prior months than was reported last month. However, some of the earlier pricing data for the major metro markets shows slightly steeper price declines than had been shown in last month’s data.
The major metro month-over-month price drop for April was initially reported to be -0.35 percent, but it was revised to a decline of -0.30 percent this month. The non-major metro month-over-month price drop for April was initially reported to be -0.25 percent, but it was revised to a decline of -0.16 percent this month
The full report provides more detail on other commercial property types. Access to the MSCI Real Capital Analytics report can be obtained here.
*The major metros are Boston, Chicago, Los Angeles, New York, San Francisco and Washington DC.
