We're writing this in late spring, with the first quarter of 2026 fully in the books and a second quarter that has been anything but quiet well underway. Analyzing the data from our recent US Commercial Real Estate Investment & Transactions Quarterly for Q1 2026, one story keeps surfacing: commercial real estate prices are at records, but the market underneath those prices is quietly evolving. Smaller buildings, older buildings, but bigger checks.

Before we get into the property data, let's set the stage. Because the macro backdrop in Q1 was a genuine shock (on multiple fronts), and it did not touch commercial real estate (CRE) the way you'd, or at least we’d, expect.

Markets were rocked, while CRE continued to roll

The first quarter of 2026 was the quarter the software trade broke. The selloff, nicknamed the "SaaSpocalypse," caused tech-software stocks to fall more than 24% in Q1 2026, its steepest quarterly plunge since the fourth quarter of 2008. The trigger was a growing fear that AI agents could hollow out the recurring-revenue model that software companies have been built on. By March, software's forward price-to-earnings multiple had fallen below the broad market's for the first time, and roughly $2 trillion in software market value had been erased. Whether that fear proves right or wildly overdone is a debate for another day. The point for us is what it did to the rest of the market.

It dragged the index down with it. The S&P 500 finished Q1 2026 down about 4.6%. At the same time, a conflict in the Middle East seized energy markets. Pushing the price of oil up nearly 85% on the year (through Q1), reviving inflation fears and freezing central banks in place while they tried to assess the impact.

In the US, the Federal Reserve (“Fed”) sat still, holding the Federal Funds rate at 3.50% to 3.75% in January, with two members dissenting in favor of a cut. Then holding again in March, citing the uncertain implications of the Middle East developments, with another dissent. In fixed income markets, the yield on the 10-year Treasury settled in the mid-4% range, up from where it started the quarter, while credit spreads widened only modestly off historically tight levels.

Here is the part worth sitting with. Despite the stock selloff, materialization of geopolitical risk, resurgent inflation, reduced monetary policy easing, and rising rates, CRE transaction activity continued to recover and CRE prices kept climbing. The composition kept shifting in the same direction it has been shifting for three years. The two macro stories that should matter most to property, a tech-tenant scare that hits office demand and an oil shock that lifts the cost of capital (or at least keeps it elevated), did not show up in the Q1 numbers. They may show up later, and we'll be watching, but they were not in the Q1 data.

CRE transaction prices set another record

The headline is $129 per square foot(SF), that's the Q1 2026 median transaction price across every property type we track. It's a record and also the twelfth consecutive quarter of price gains. For comparison, the median was $56/SF at the 2009 trough, meaning that since then, prices have risen 2.3x in sixteen years.

While the expansion seen in the headline CRE price metric is still healthy, the pace of acceleration of price gains appears to be slowing. Year-over-year growth peaked at 11.7% in Q3 2025, but slowed to 8.7% in Q1. On a rolling 4-quarter average basis, every major property type set a record this quarter. On a single-quarter basis, four of the six pulled back from Q4 2025 levels. You can call this market "still ripping" or "rolling over." Both are defensible, although we think the truth sits in between.

CRE pricing by property type

The dispersion across pricing by property types is the real story. Multifamily is now the most expensive product at roughly $150/SF, industrial is the cheapest at $110/SF. But if you look at the price growth, the ranking inverts. Industrial pricing is up 88.5% since the last pre-COVID quarter (Q4 2019), while office is up 36.6% - a gap that has been discussed at length, and will continue to get attention. Hospitality is the only CRE sector sitting below its peak, off about 1.9% from its Q3 2025 high. Everything else is making new highs.

CRE pricing by property subtype

Drop down to the CRE property subtypes, and the dispersion gets sharper. Every one of the fifteen subtypes posted price gains both quarterly and annually. Storage led the year-on-year comparison at 22.9%, followed by automotive at 14.0% and warehouse and distribution at 12.8%. At the bottom, manufacturing grew 2.0%, big-box retail 3.4%, and full-service hotels 3.5%. On a quarterly basis, the fastest mover of the quarter was an unlikely one, limited-service hotels, up 4.3% quarter-over-quarter, a subtype that looked challenged six months ago.

The single most expensive subtype in the entire dataset is bars and restaurants at $226/SF, which is pricing like trophy product, and is likely reflective of the still-surprisingly resilient consumer spending. Within office, medical office trades at $199/SF and general office at $129/SF; while they are in the same property sector, their functional differences are reflected in their pricing. Similarly, industrial, warehouse and distribution sells at $117/SF while manufacturing sells at $71/SF, a 65% gap which has widened every year since 2020.

The tell is in the buildings, not the prices

The pricing data tells us what people are paying, the building data tells us what is actually being transacted. And right now, that's arguably the most interesting question.

Let’s start with the size of properties transacted. The median multifamily building that sold in Q1 2026 was 9,713 square feet(sqft), while in Q4 2019 it was 12,687 sqft. That's a 23% contraction, and multifamily is the only major type whose property size has materially shrunk. Over the same time period, the median size of office and industrial properties transacted are each down approximately 7%, while retail, hospitality, and commercial general are flat. Sizes have been recovering from their 2024 lows for a few quarters now, but multifamily remains in a category of its own.

Now look at the size of the checks being written. Median deal sizes set fresh all-time highs in every property type this quarter. Hospitality leads at $4.5 million per deal, commercial general trails at just over $1 million, the widest top-to-bottom spread in the series. Multifamily deal sizes are up 18.7% year-over-year, the largest increase across the property sectors, though all six of the property sectors saw annual growth of median deal size in the double digits. This is a sign that the market is continuing to function, albeit at a new level. One interesting dynamic that we saw in the data, was (again) in the multifamily sector, where the median check size for multifamily transactions increased by 47.4% since Q4 2019, while the median property size decreased by 23.4% over the same period. One might say that CRE has seen its own version of shrinkflation.

Median deal size by property type ($)

And a final property characteristic that we looked at in this report was the vintage, or age of building being transacted. The buildings trading keep getting older, and faster than the calendar. While the trend is a bit difficult to see on a quarter-over-quarter or year-over-year basis, because it moves slowly, it becomes very clear when looking back two or more decades. The median multifamily building that sold in Q1 was 61 years old, up from 39 in 2000. So, while 26 calendar years have passed, the median age of multifamily properties being traded today haven’t maintained 2019’s age, instead they’ve gotten more than 50% older. Similar trends can be seen in office (2000 median age of 22 vs Q1 2026 median age of 39), industrial (24 vs 41), and retail (29 vs 41). New construction slowed hard after 2022, owners of modern commercial properties are holding rather than selling into higher rates, and the longer that holds, the more pressure builds for whatever new supply eventually does come online.

As buildings that trade get older, one would expect a consistent pricing premium for newer properties. That assumption is right for some sectors (i.e., office, retail, and hospitality), mixed for others (i.e., industrial, commercial general), and simply not true for multifamily.

Two market behaviors that surprised us

At the highest level, the first major surprise from the Q1 2026 CRE transaction data was the seemingly muted effect of the macro and market environment on transaction activity and pricing. The gradual CRE market recovery that has been underway appeared to prove resilient against the volatile macro and market shocks that hit during the same period:

• A massive software crash in equity markets

• Rising treasury yields

• Hot inflation

• A major geopolitical conflict that led to a widespread oil spike

We would have thought it would have left a mark somewhere in the CRE transaction data. But they haven't, at least not yet. The lag between capital-market stress and property-market pricing is real, and that's what we're most focused on for the Q2 data. The second major surprise was the multifamily data. The surprise in multifamily was really on two fronts, the vintage inversion and building size-versus-check size comparison:

• The vintage inversion: Pre-1970 apartments out-pricing brand-new ones by 42% per square foot is not what we would have expected, but it also serves as a reminder that in housing, you're often buying the location, not just the building.

• The size-versus-check divergence in multifamily: Buildings are 23% smaller than in 2019, yet deal sizes are at record highs, up nearly 19% on the year.

Combined, these surprises capture trends seen across property types, but are most pronounced in multifamily: aging properties, smaller buildings, and bigger checks. That's a market where pricing has outrun physical scale.

Looking ahead

The Q1 2026 data tells a coherent story. Prices are at record levels but cooling. Industrial is the structural winner, office is the structural laggard, and the gap between them is the widest it's ever been. The shift in the characteristics of properties that are trading shows smaller and older properties bought with bigger checks.

But the ground is shifting under all of it. The rapidly evolving tech landscape continues to leave a question mark over office demand for tech-exposed buildings, exactly the risk we flagged coming out of 2025. The oil shock and materialization of geopolitical risk have lifted inflation risk and frozen the Fed, which keeps the cost of capital higher for longer. While neither of these pressures showed up in the Q1 transaction data, the honest expectation is that one or both will surface in the quarters ahead.

For now, the read remains the same. The market is functioning, capital is moving, and selectivity, not exuberance, still defines the moment.

For the full data behind this analysis, explore the complete Q1 2026 US CRE Investment & Transactions Quarterly report.

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