While these numbers may appear discouraging, MSCI analysts suggest they reflect a return to normalcy, as the market adjusts to higher post-pandemic interest rates. The report’s long-term trends suggest the sector is moving past the disruptions that followed the pandemic, MSCI said.
Performance across property sectors was mixed. Multifamily and office properties continued to face headwinds. Year-over-year growth remained negative in both sectors for the past two years. However, multifamily registered an annual increase of 0.1%—its first year-over-year improvement since 2022. MSCI attributed this stabilization to the Federal Reserve’s rate cuts last year, which helped ease pricing pressures. The RCA CPPI Index for multifamily properties was unchanged from May, dipping 0.2% since March, and rose just slightly—0.1%—since June 2024. Even with recent stabilization, multifamily values remain 18.5% lower than their June 2022 peak.
Office properties continue to struggle. Prices dropped 1.9% compared to June 2024. Central business district offices saw a sharper 4.2% annual decline, while suburban offices fared somewhat better, down 2.1%. The narrowing gap marks the smallest spread since mid-2022, before the surge in hybrid work that reshaped demand. The RCA CPPI Index for all offices fell 0.2% since May and 0.1% since March.
By contrast, industrial and retail properties showed greater resilience. Retail led all sectors in annual price growth, with values rising 3.5% year-over-year in June, continuing a trend seen in recent months despite significant financial challenges among major chains. Values in the asset class were flat month-over-month and up 0.1% since March, according to MSCI’s index. Industrial properties—a standout in February—posted a 1.6% annual gain, with prices up 0.3% from May and 0.5% since March.
