Small Deals Are Near a Record While Big Ones Sit 19% Below Peak

CoStar tracks commercial property prices two ways. One index leans toward big, expensive deals. The other counts every sale the same, so it mostly reflects smaller properties in secondary markets. In August the two moved in opposite directions. Big deals fell again. Small deals came within half a point of an all-time high. Phoenix shows the same pattern up close, with rents still down from a year ago and buyers still closing deals.

Big Deals Kept Falling

The big-deal index dropped 1.3% in August. That was five monthly declines in a row, and a 4% drop over three months. It ended August 1.4% below where it stood a year earlier and 19.4% below its July 2022 record. Four years past the peak, none of that ground has come back.

Small Deals Went the Other Way

The small-deal index rose 1.4% in August, its first monthly gain since March. It was up 1.2% for the quarter and 2.2% for the year, finishing 0.5% under the record it set in March. The simplest explanation is debt. Big deals lean harder on borrowing, so higher rates hit them first and hit them harder.

Volume Stayed Thin

Better prices did not bring more deals. August had 1,534 repeat sales, 8.6% fewer than a year ago, worth $11.3 billion, down 10.3%. Industrial properties sold for about $825.9 million more than they last traded for, across 391 deals. Multifamily gained about $349.8 million across 231 deals. Retail lost $42.4 million across 455. Prices are firming in a market most owners are sitting out.

Phoenix Rents Have Started to Turn

Phoenix rents are up 0.3% so far in 2026, the first positive stretch the metro has strung together since 2024. Yardi logged the first trailing three-month increase since May 2024 this spring, and the first quarter produced the strongest quarter over quarter gain in two years. The twelve-month figure is still negative, down 2.1%, but that number is carrying last year's declines inside it. Occupancy held at 93.2%, which tells you renters never left. What hurt Phoenix was the number of new units competing for them, and that is a problem that ends when the building stops.

Buyers Are Still Closing in Phoenix

On September 25, Institutional Property Advisors announced the sale of Ascend at Black Canyon, a 260-unit community in north Phoenix, for $58.7 million. That works out to $225,769 a unit. D.R. Horton sold it and Millburn & Company bought it. The property opened in 2024, so that price is for new construction, and it cleared in a market where rents are lower than they were a year ago.

The Bigger Picture

The cost of borrowing is sorting this market more than the quality of the buildings. Deals that need less debt are pricing near records. Deals that need more sit a fifth below their peak. Fewer of both are trading than a year ago. Phoenix sits right in the middle of that, with soft rents, full buildings, and buyers still willing to pay today's prices. The question is how long rents take to catch up to the occupancy that is already there.

For Neighborhood Ventures, this is the spread we look for. We buy Class B and C properties at a basis well below what it would cost to build today, at the smaller end of the market where pricing has held up and where a deal does not live or die on the institutional debt market. That's the kind of setup we want to be transacting in.