Are U.S. Commercial Real Estate Prices Dropping in 2025–2026?

🇺🇸 Hutfin.com’s Take: “It Depends on the State”

On Hutfin.com, we track listings and transaction data across states. The story isn’t uniform: some states show stabilization or modest gains, others continuing softening. It all hinges on local demand, supply, and regulatory environment.

Sector-by-Sector Reality Check

Visualizing the CRE landscape: Office pricing continues to slide while industrial and multifamily remain comparatively resilient amid uneven demand across sectors.

Office

• Yardi Matrix reports a dramatic 11% drop in national office prices in 2024, and investors expect further declines through 2025. Since 2019, average sale prices have fallen ~37%, the worst hit segment in CRE. Business Insider
  
• National Association of REALTORS® (NAR) data shows office vacancy still hovering at ~14–20% in early 2025, with net absorption tracking negative. Class A space is under the most pressure. National Association of REALTORS®+1National Association of REALTORS®+1
  
  

Industrial & Retail

• Industrial rent growth decelerated slightly, but fundamentals remain solid, especially in logistics hubs. National Association of REALTORS®+2Baker Tilly+2National Association of REALTORS®+2
  
  
• Retail absorption has weakened (net absorption negative ~‑6 million sq ft in Q1), though value chains are expanding. Baker Tilly National Association of REALTORS®
  

Multifamily

• Vacancy rates are stabilizing; rent growth is moderating but holding up (~1% YOY). Multifamily remains relatively resilient. National Association of REALTORS®+2Baker Tilly+2National Association of REALTORS®+2
  
  

Broad Pricing Outlook

• Green Street CPPI: U.S. commercial property values rose a modest 3.4% over the past 12 months, and index was flat in June. Elevated cap rates and interest rates have kept pricing muted. Green Street
• PwC Emerging Trends (2025): forecasting a cautious, cyclical recovery as higher interest rates top out and capital returns, but only for well-positioned markets and high-quality assets. Green Street+5PwC+5Business Insider+5
  
• CRE Daily Outlook (mid‑2025): sentiment is weakening office + retail green lights, but industrial, multifamily, and data center continue steady or grow. Top‑tier assets outperform, creating greater bifurcation. CRE Daily
  

Overall Trend: Decline or Reset?

In some hot‑spot states, industrial or multifamily pricing has seen modest gains or at least stabilization. In many others, especially with oversupply and weak demand, pricing remains under pressure, particularly in office.

At Hutfin, analysis of transactional listings across states shows exactly that: state‑by‑state divergence. California, New York, and Washington have continued softness in office; Texas and Florida see stronger industrial and logistics activity.

Policy & Trump‑Era Levers: What It Means for CRE

Regional shifts define the U.S. commercial real estate landscape, as some areas see growth while others face declining demand.

1. Project 2025 / Agenda 47 & HUD Oversight

Trump’s Project 2025 and Agenda 47 outline ambitions to downsize federal programs and freeze broad aid, even revisiting Affirmatively Furthering Fair Housing provisions. New York Post+7Wikipedia+7Wikipedia+7
Scott Turner, confirmed as HUD Secretary in early 2025, aligns with CRE and development lobbies. His leadership may shape land-use policy and low-income housing incentives. Wikipedia

2. Affordable Housing Cuts & New Incentives

The administration proposed a ~$27 billion cut to Section 8 rental assistance, creating uncertainty in affordable‑housing development pipelines. That has stalled projects despite expansions to tax credits like LIHTC and Opportunity Zones. The Wall Street Journal

3. Mass Sale of Federal Properties

Trump directed sale of 443 federal properties, over 80 million sq ft, across 47 states. This flood of supply could depress CRE valuations in some local markets, though many buildings need renovation before sale. New York Post

4. Homelessness Crackdown & Shifting Funding

On July 25, 2025, Trump signed executive orders to dismantle homeless encampments, promote involuntary civil commitment, and redirect federal grants away from “housing-first” and harm-reduction models, toward enforcement-based solutions. Funding rewards go to cities enforcing anti‑camping/drug laws. New York Post+7theweek.com+7reuters.com+7
Critics argue this punishes vulnerable populations and will worsen homelessness rather than solve it. National Homelessness Law Centeraxios.com

Hormozi‑Style Key Takeaways

1. Not all CRE is created equal – Check sector: office continues bleeding; industrial and multifamily more resilient.
   
   
2. Location matters – State-level split: markets like Texas/Florida outperform; coastal hubs still lag.
   
   
3. Policy shock incoming – Cuts to rental assistance, mass sales of federal buildings, and funding shifts to enforcement pose headwinds and uncertainty.
   
   
4. Opportunity for sharp investors – Distressed property, older assets, and high‑yield industrial or multifamily can reward those with capital and local knowledge.
   
   

Final Verdict

Are U.S. commercial real estate prices dropping in 2025–26? Yes, broadly for office and lagging assets. But in resilient pockets and sectors like industrial and multifamily, prices are stabilizing or even modestly improving. And state-by-state differences matter, what you see on Hutfin listings backs it up.

With Trump-era policies reshaping funding, homelessness management, and federal property ownership, both opportunity and risk are amplified. Investors need to be surgical: go where fundamentals are solid, assets are modern, and policy impact is manageable.

Would you like Hutfin to analyze specific states or asset classes, or compare electoral scenarios for CRE pricing outlooks?