Commercial Real Estate Recovery Splits by Asset Tier and Geography

Commercial real estate pricing is no longer a single story. Three independent benchmarks—tracking transactions, appraisals, and REIT valuations—now agree that the recovery underway since late 2023 is bifurcated. Gateway markets and institutional-grade assets are seeing price stabilization and modest gains, while secondary Sun Belt multifamily continues to reprice downward.

The divergence is sharpest in multifamily. Class A properties in coastal metros have regained footing as cap rates compress and buyers return. But lower-tier Sun Belt assets—properties built during the 2021-2022 construction boom in Phoenix, Austin, and parts of Florida—are still adjusting. Appraisers and transaction data both show persistent downward pressure, driven by oversupply, elevated vacancies, and rent concessions that have yet to clear.

GlobeSt reports that the repricing wave in this segment has left the deepest mark on B and C assets in Sun Belt metros. Buyers remain scarce and sellers are still reluctant to meet bids, leaving a gap that keeps transaction volume muted. The properties that do trade are establishing new price floors, but those floors are still moving.

Meanwhile, industrial and core office in gateway cities are showing resilience. Pricing on these assets has stabilized or ticked up in recent months, reflecting a flight to quality and renewed institutional appetite. The three benchmarks converge on this read: the recovery is real, but it is narrow.

The implication is that CRE as an asset class is no longer a single bet. Investors are now pricing tier, location, and vintage as distinct risk factors. The assets that repriced early are beginning to clear. The assets that held are still waiting for a bid.