The last quarter of 2025 came with price haircuts across much of the U.S. real estate landscape. Urban offices were hit particularly hard.
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While MSCI's commercial property price index last month rose 0.2% year-over-year, it fell 0.4% from November to December. And the drop from the third quarter to the fourth implies an annualized pace decrease of 3.5%.
“Price growth has been softening in recent months,” the analysis says.
The office sector was hit the hardest, with central business district properties falling in the fourth quarter at an annualized pace of 7.9%. That metric for their suburban counterparts showed a 1.2% drop.
Retail and industrial prices edged down slightly in December, and the only sector to see prices rise was multifamily, with a monthly increase of less than 0.1%.
Still, the value of apartment properties was down 1.3% year-over-year.
“Apartment’s softening prices mark a reversal of earlier momentum, as what had been nearly two years of moderating annual declines has given way to renewed pressure,” MSCI's report says.
The report also broke down geographic differences in commercial price changes.
The markets with the largest price increases over the last year were Orlando, Florida; Houston; Baltimore; Phoenix; and Sacramento, California.
The sharpest price drops in 2025 were found in Boston's central business district, New York City's outer boroughs, Seattle, San Francisco's East Bay and Nashville.
Boston's CBD also had the largest price decline over the five-year period ending in 2025, the report found. The other markets with the biggest five-year slides were D.C.'s central business district, San Francisco, Los Angeles' central business district and San Jose, California.
The markets with the most price growth over the last five years were South Florida; Orlando and Fort Myers/Sarasota/Naples, Florida; Charlotte; and LA's Inland Empire.
MSCI Executive Director Jim Costello said the data center boom masked distress in other parts of the market last year.
“In the beginning of the year, there was optimism and some price growth, but it’s weakened as of late,” he told Bisnow last month.
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