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CRE Sales Surge as Property Prices Rebound Despite Rising Rates

CRE Sales Surge as Property Prices Rebound Despite Rising Rates

Commercial real estate's rebound is back, but it's dividing winners from losers by sector and city.

Nina Dale
October 29, 2026

In partnership with

Good morning. The Fed held interest rates steady as expected ahead of next week's midterms, keeping borrowing costs in focus. But CRE investors aren't sitting on the sidelines, with investment sales hitting a four-year third-quarter high and property prices showing signs of a rebound.

🎙️ This Week on No Cap: Former 7-Eleven and Blockbuster CEO Jim Keyes reveals what really led to Blockbuster’s collapse, the deals that could have saved it, and how 7-Eleven reinvented retail.

CRE Trivia 🧠

Which U.S. interstate passes through the most states?

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Market Snapshot

S&P 500

GSPC

7,743.98

Pct Chg:
+0.28%

FTSE NAREIT

FNER

808.15

Pct Chg:
-0.70%

10Y Treasury

TNX

5.024%

Pct Chg:
+0.031%

CME Term SOFR

1-Month

3.93%

Pct Chg:
-0.00

*Data as of 10/28/2026 market close.

Capital Markets

CRE Sales Surge as Property Prices Rebound Despite Rising Rates

Commercial real estate is staging a comeback, with investment sales reaching a four-year third-quarter high and property values gaining momentum—even as borrowing costs climb.

By the numbers: U.S. investment sales totaled $143 billion in Q3 2026, bringing year-to-date volume to $389.3 billion, up 17.9%, according to Avison Young. Meanwhile, MSCI reported property prices rose 0.9% year-over-year, their strongest annual gain since December 2025.

Private capital leads the charge: Private investors accounted for nearly 60% of transactions, targeting discounted properties and relying less on debt. However, renewed Fed rate hikes are clouding the outlook, prompting Avison Young to lower its full-year sales forecast to $520 billion.

Office and industrial make a comeback: Industrial sales surged 41.5% to $113.3 billion, while property values reached record highs. Office sales climbed 22.4%, with suburban office prices rising 4.4% annually. Retail also gained traction, with property values increasing 1.7% in Q3.

Multifamily misses the party: Despite leading all sectors in investment volume at $119.6 billion, apartment sales grew just 3%. Property values fell 4.6% annually, as oversupply, higher financing costs and refinancing pressures continued to weigh on the sector.

Source: MSCI

Gateway markets gain ground: Chicago led major metros with a 76.5% surge in investment sales, followed by Washington, D.C., at 51.3% and San Francisco at 30.9%. Major gateway metros also outperformed smaller markets in price appreciation, while supply-heavy markets like Denver and Phoenix lagged.

➥ THE TAKEAWAY

A selective recovery: CRE is rebounding without cheaper debt, but the gains are uneven. Investors are favoring discounted assets, stronger fundamentals and markets with limited supply—making asset and location selection critical heading into 2027.

INVESTOR SENTIMENT

What’s Your Q4 Outlook?

Is the market finding its footing, or are higher rates still holding deals back? Share your outlook in our Q4 2026 Fear & Greed CRE Survey.

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✍️ Editor's Picks

Captive advantage: Real Property Captive is launching the first member-owned captive for $100M - $3B real estate portfolios. Own your insurance and align your incentives with other disciplined owners, rather than subsidizing the general market. (sponsored)
Spread squeeze: CBRE sees cap rates climbing 40-60 bps as the 10-year nears 5%, with the premium over Treasuries at a record-thin 160 bps, leaving values exposed to sharp repricing.
Debt pullback: Yields on data center bonds and loans are climbing into double digits as insurers balk, with one $5B neocloud loan pricing above 11% to clear the market.

🏘️ Multifamily

Pipeline thins: Miami apartment rents held at $2,545, up 0.1% over three months, while groundbreakings fell 34.4% YoY, draining a pipeline that should tighten the market.
Building eases: US apartment deliveries should drop to about 314K units in 2026, the first below-average year since 2022, letting demand finally catch up to supply.
Vacancy dips: National apartment vacancy fell to 7.8%, the lowest since late 2023, yet concessions climbed to 4.2% as oversupplied Sun Belt metros keep discounting.
Growth gap: Welltower shares fell over 5% even as senior-housing NOI rose 21% and occupancy hit 90.2%, as its $21B buying spree still missed Wall Street's higher targets.
Photo rules: New AI-disclosure laws in California and Wisconsin take effect Jan 1, forcing landlords to flag altered listing photos, a mandate owners warn could cost thousands per property.

🏭 Industrial

Risk reprices: Data center CMBS AAA bonds have widened 60 bps since year-end, far more than other sectors, as an AI selloff reprices risk even with every loan still current.
Storage slows: Self-storage construction keeps tapering into 2026, with completions on pace for the smallest slate since 2016, easing the oversupply that has held down rents.
Logistics buy: Morgan Stanley Real Estate paid $172.1M for a new 935K SF Stafford, Virginia warehouse net-leased to a data center contractor serving Northern Virginia's digital buildout.
Flex discount: Epicenter Landcorp paid $11M for a 25K SF Culver City flex building, well below its $30M 2022 price, a repositioning bet as LA leasing fell 21.5% QoQ.

🏬 Retail

Streets rebound: Visits to top US high-street corridors like Fifth Avenue and Rodeo Drive hit a four-year high this summer, lifting families to about half of foot traffic from the usual 46-47%.
Tourist pull: Santa Barbara retail is defined by scarce supply and steady tourism, a mix keeping prime storefronts in demand even as the broader consumer economy cools.
Grocery grab: Barings paid $66.2M, or $557/SF, for a fully leased Ralphs-anchored Orange County center, extending institutional appetite for necessity-based, grocery-anchored retail.

🏢 Office

Strategic shift: Half of occupiers already treat facilities management as a competitive edge and 82% expect to by 2030, with AI adoption in the function climbing toward 86%.
Boutique bet: Shorenstein bought a fully leased SoHo office building from Tishman Speyer, a bet that well-leased Manhattan boutique space still trades at a premium even in a soft office market.
Smart edge: Office landlords are treating building intelligence as a leasing differentiator, not a perk, betting sensors and AI controls help win tenants in a flight-to-quality market.

🏨 Hospitality

Budget flag: Wyndham's year-old Dazzler Select brand keeps adding US hotels, converting independent economy properties into a lifestyle flag as it scales in the budget segment.
Silicon refi: A Cupertino Hilton hotel landed fresh refinancing, a sign lenders will still back well-located Silicon Valley lodging even with hotel debt costs elevated.
Airport listing: Vista Hospitality listed its 385-key DoubleTree near JFK Airport for $75M to $80M, testing investor appetite for big airport-adjacent hotels.

📈 CHART OF THE DAY

U.S. industrial leasing activity has rebounded to historic highs, fueled by strong demand from large tenants in major logistics hubs like Dallas-Fort Worth and Austin.

CRE Trivia (Answer)🧠

Interstate 95, passing through 15 states.

CRE Sales Surge as Property Prices Rebound Despite Rising Rates

Commercial real estate's rebound is back, but it's dividing winners from losers by sector and city.

CRE Trivia 🧠