Multifamily real estate has seemingly regained its luster as an investment as concerns about the coronavirus pandemic's effect on demographic changes wane.

Apartment buildings rose in price by 1.2% from April to May, which amounted to 10.1% higher than their average price last May, according to Real Capital Analytics' monthly Commercial Property Price Index, released Thursday. The year-over-year change was the largest of any asset class tracked by RCA, outpacing industrial's year-over-year growth of 9.5%.

May was also the first month in which multifamily real estate saw double-digit year-over-year price growth since March 2020.

Part of the pricing surge for multifamily, especially when compared to industrial, could be chalked up to a one-month blip, RCA Senior Vice President Jim Costello told Bisnow. But key fundamentals have undoubtedly driven confidence higher; multifamily analytics platform RealPage found that "new lease trade-out" — its term for the change in rents for the same unit when one lease ends and a new resident moves in — was nearing record levels as of mid-June.

“Underwriting in multifamily has been accounting for relatively stable yields recently, but throw some good rent growth on top, and it likely makes for increasing values,” Costello said.

The only asset class that has declined in price since May of last year was that of office buildings in central business districts, RCA reported. Urban office has declined in price by 5.5% year-over-year and by 0.4% from April to May. Despite widespread efforts to either entice or require employees to return to offices, the slow recovery of occupancy has weighed down outlooks in the sector.

Overall, the highest-density markets in the U.S. have lagged behind all other metro areas in terms of commercial real estate price growth, RCA reports. Taken together, commercial assets in New York, San Francisco, Chicago, Los Angeles, Boston and Washington, D.C., have grown in price by 3.6% over the past year, while all other markets RCA tracks have grown by 10.3%.

Still, industry sentiment is more positive for commercial real estate investing overall than it had been before the pandemic. Trade group CRE Finance Council's Board of Governors Sentiment Index held largely steady from the first to second quarter of this year at 118, its highest number since the index established its baseline of 100 in Q1 2017, CREFC announced.