Secondary and tertiary markets quietly outperformed marquee assets in January
Smaller commercial properties in secondary and tertiary US markets continued to edge higher in January, even as prices for marquee, investment‑grade assets slipped, according to new data from CoStar’s Commercial Repeat‑Sale Indices.
The indices tracked 1,298 repeat sales totaling about $9.2 billion for the month. It showed a 1.3% monthly gain in the equal‑weighted measure that captured lower‑priced properties, while the value‑weighted index for premier assets fell 0.4%.
Over the prior 12 months, the equal‑weighted index rose 1.1% compared with a 0.8% increase for the value‑weighted gauge, which still sat roughly 17% below its July 2022 peak.
Secondary markets defy big city drag
CoStar’s equal‑weighted index, which treated each transaction the same regardless of price, captured the steady bid for smaller properties often found outside the biggest coastal metros.
On the other hand, the value‑weighted index, which tilted toward large, institutionally owned assets in major cities, reflected ongoing price pressure at the top of the market.
“The January report marks the fourth consecutive month that CoStar’s equal‑weighted and value‑weighted composite indices moved in diverging directions,” said Chad Littell, national director of US capital markets analytics at CoStar and author of the report.
Littell said professional investors largely stepped back from the market over the past year as rates rose and price discovery stalled.
“Professional investors have been in a wait‑and‑watch stance, and we are now seeing a combination of inflection points such as a floor in pricing,” he said.
He added that January’s underperformance in the value‑weighted index was “the recent anomaly” and that he expected large‑asset pricing to regain some ground in the first half of the year.
Investors waited on rates and clarity
Financial markets were generally pricing in between one and three Federal Reserve rate cuts in 2026, a shift that has begun to thaw sentiment among developers and large investors and helped push trailing 12‑month commercial sales volume up 20% year over year to $146.8 billion.
However, many buyers still hesitated in the face of policy uncertainty and uneven fundamentals.
“Everybody was anticipating some sort of big rush and accelerator being stepped on for acquisitions, and it just wasn’t happening,” Brian Good, CEO of iBorrow, told Mortgage Professional America in 2025, describing a “choppy” deal environment with “a lot of money on the sidelines.”
At the same time, rising distress in parts of the commercial market have started to create more work for brokers focused on workouts and forced sales.
Distressed and near‑distressed properties in weaker sectors are expected to come to market as lenders move on from stalled projects, offering mortgage brokers and investors a chance to lock in wider discounts, particularly outside trophy locations.
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