The astronomical price growth of commercial property over the last year subsided in March from its all-time high, according to a new report from Real Capital Analytics.

Overall deal activity was up 93% from the end of March compared to the year prior, but RCA’s all-property price index dropped by 0.4% between February and March, marking the first decrease since June 2020.

The dip was largely caused by sagging prices in the retail and office markets, but it stands in contrast to steady increases to demand for apartments and surging appetite for industrial. Apartments and industrial properties both recorded small price increases from February to March this year, at 1.1% and 1.9%, respectively.

Jim Costello, the chief real estate economist at MSCI, RCA's parent company, said the dip is a sign that property markets are beginning to normalize.

“Think about it like you take a rubber band and you pull it down and you let go of it — it just snaps back up really high. That's really what happened with a lot of prices in 2021,” Costello told Bisnow. “So we're starting to see the first signs of things kind of going back to normal with price growth decelerating from that high double-digit rate.”

Prices for apartments increased by 22.4% from March 2021 amid nationwide demand for housing. The increase follows a long-term pattern of increasing apartment prices: Over the past decade, RCA’s data shows that the price of apartments has almost tripled, increasing by 191.7%.

Industrial prices recorded a 30% increase from a year ago, with market demand pushing prices up far enough for industrial to exceed all other sectors. As with apartments, warehouse prices demonstrated a dramatic 10-year trajectory, with prices up by almost 169%.

But office and retail both showed slight declines in price growth from the previous month, dipping by 0.2% and 0.7%, respectively. Suburban office prices dragged down modest gains for CBD office prices.

“People were scared of buying offices because they weren't sure that people were going to be coming back,” Costello said. “Everybody is still a little bit uncertain about what happens next on offices, but there's some clarity in certain subtypes and locations, and so you have more liquidity than a year or two years ago.”