Crexi National Commercial Real Estate Report: May 2026

Key Takeaways

• Retail vacancy held at a historically tight 5.40% in May, with effective lease rates of $20.39 per square foot outpacing asking rates, confirming that necessity-anchored retail continues to draw institutional capital and that landlords hold decisive pricing power in a market where new construction has fallen 8% below 2025 levels.
• Office posted the largest year-over-year vacancy improvement of any tracked asset class, dropping 1,100 basis points from May 2025 to 17.70%, while effective lease rates rose 4.77% annually to $21.79 per square foot, signaling that the Class A and prime office recovery documented by CBRE’s Q1 2026 office figures has real substance.
• Industrial vacancy improved 300 basis points year over year to 20.10%, and effective lease rates surged 4.43% annually to $13.55 per square foot, reflecting the industrial leasing momentum that CBRE tracked at 249.8 million square feet in Q1 2026, a 14% year-over-year increase.
• Multifamily vacancy fell 90 basis points month over month to 14.90% as the sector moved through its traditional spring absorption window, consistent with the stabilization that Greystone’s Q1 2026 takeaways and Arbor’s May 2026 snapshot describe as a turning point from supply-driven softening toward a more constructive outlook.
• Across all four sectors, the macro backdrop remains cautious. The most recent jobs report showed only 115,000 new positions, and both J.P. Morgan’s 2026 CRE outlook and MetLife Investment Management’s 2026 CRE outlook both emphasize that capital flows are increasingly concentrated in quality assets with durable cash flow.

Retail Market Analysis

For Sale

Pricing

Retail sale prices rose to $231.53 per square foot in May, a 3.29% gain from April’s $224.15 and a 14.05% increase from May 2025. Asking prices climbed to $358.66 per square foot, up 1.15% month over month and 30.31% year over year. The persistent gap between asking and closed pricing reflects sellers pricing for a tight market while buyers underwrite with more measured yield assumptions.

Cap Rates

Sale cap rates compressed to 6.54% in May, 5 basis points below April and 26 basis points below May 2025. Asking cap rates ticked up 2 basis points to 6.38%, still 12 basis points below May 2025. The gradual compression in closed-transaction yields reflects investor conviction in necessity-anchored retail, where durable cash flow and limited re-leasing risk justify tighter initial yields.

Vacancy

Retail vacancy held at 5.40% in May, unchanged from April and 110 basis points tighter than May 2025. That tightness is unlikely to ease soon, with Cushman & Wakefield reporting that retail construction starts are at multi-decade lows. With only 64.2 million square feet of retail underway nationally in Q1 2026, down 8% from 2025, the supply ceiling that has kept vacancy anchored is unlikely to lift before late 2026 at the earliest.

For Lease

Asking vs. Effective Lease Rates

Asking lease rates held at $19.95 per square foot in May, flat from April and up 1.25% year over year. Effective lease rates of $20.39 per square foot grew 2.26% year over year, maintaining their premium above the asking rate. That inversion, with tenants consistently paying above the landlord’s initial ask, reflects a market where 5.40% vacancy leaves occupiers with very little negotiating leverage. NAR’s May 2026 data showed national retail rent growth of 2.0% in April, the highest of any major property type tracked.

The Big Picture

Retail remained the most fundamentally tight asset class through May. CBRE’s 2026 U.S. Real Estate Market Outlook describes risk-adjusted returns in retail as particularly attractive for well-located grocery-anchored and open-air centers, and the May data supports that framing: vacancy held flat, effective rents remained ahead of asking, and pricing up 14% year over year.

The macro backdrop is more complicated. Consumer confidence faces headwinds from fuel cost increases, a softening labor market, and geopolitical uncertainty that has delayed interest-rate reductions. Discretionary and mall-adjacent formats facethe most exposure there. Necessity-anchored formats, where discount grocers, quick-service restaurants, health and wellness, and service tenants dominate, have remained insulated. PwC/ULI’s Emerging Trends 2026 notes that performance will diverge more sharply by format and location in 2026, with grocery-anchored and neighborhood strip centers positioned to outperform, while weaker malls and older power centers continue to lag.

Investment Implications: Retail fundamentals remain among the strongest in the market, but that quality is priced into most gateway and high-barrier assets. Supply-constrained secondary markets with necessity-anchored tenants and wider initial yields may offer better risk-adjusted entry. Discretionary formats warrant more selectivity given the consumer spending environment. The structural supply ceiling that has underpinned retail valuations is unlikely to lift meaningfully before 2027, keeping landlord pricing power intact for well-positioned centers.

Office Market Analysis

For Sale

Pricing

Office sale prices edged up to $169.31 per square foot in May, a 1.01% gain from April but 0.67% below May 2025. The near-zero year-over-year change reflects an office market that has largely found a price floor after its multi-year correction rather than entering appreciation. Asking prices of $264.53 per square foot, up 19.54% year over year, sustain the wide gap between asking and closed pricing.

Cap Rates

Sale cap rates registered 7.15% in May, 4 basis points below April and flat with May 2025. That zero-basis-point year-over-year change is notable: the office transaction market has reached cap-rate equilibrium after years of expansion. Asking cap rates of 7.23%, only 8 basis points above closed deals, indicate that seller and buyer expectations are converging, a precondition for the 20% increase in total office investment volume CBRE forecast for 2026.

Vacancy

Office vacancy held at 17.70% in May, flat month over month and 1,100 basis points below the 24.80% recorded in May 2025, marking the largest year-over-year improvement of any tracked asset class. CBRE’s Q1 2026 office report showed overall vacancy falling to 18.6% with the prime vacancy rate declining to 12.7%, while Midtown Manhattan’s Class A rate reached just 2.9%. The Crexi national figure is directionally consistent and supports this broader office recovery.

For Lease

Asking vs. Effective Lease Rates

Office asking lease rates rose to $19.37 per square foot in May, up 1.20% from April and 2.84% above May 2025. Effective lease rates of $21.79 per square foot, up 1.16% from April and 4.77% above May 2025, are running well ahead of asking rates. The $2.42 per square foot premium, combined with a 4.77% annual effective-rate gain that is nearly double the asking-rate growth, confirms that where tenants are competing for quality space they are paying up. AI-company demand in gateway markets has been among the strongest drivers of this dynamic, with technology and AI occupiers absorbing large blocks of Class A space and sharpening landlord pricing power in best-in-class buildings.

The Big Picture

The May office data reflects a market that has cleared its price-discovery phase and is translating leasing momentum into more stable fundamentals. CBRE documented 6.9 million square feet of net absorption in Q1 2026 and estimated that annual office leasing activity in 2026 will surpass 2019 levels. NAR’s May 2026 data showed national office net absorption of 8.5 million square feet year over year in April, reversing the 27.1 million square foot decline from the prior year, with vacancy falling to 13.9% on their measure.

The flight to quality remains the defining dynamic of the sector. PwC/ULI’s Emerging Trends 2026 notes that office performance tied to generalized return-to-office narratives is unreliable; what matters is location, talent pool, and building quality. MetLife Investment Management’s 2026 outlook flags office as still mispriced in select markets and segments, an observation that aligns with the effective lease-rate momentum Crexi’s May data shows.

Investment Implications: Office investment in 2026 rewards precision. The 1,100-basis-point year-over-year vacancy improvement and 4.77% effective lease-rate growth confirm that the recovery is real and concentrated in prime product. Investors approaching well-located Class A office assets are doing so in a more competitive environment than a year ago, with improving liquidity and growing institutional conviction that yields have peaked. Commodity and older office space remains a conversion or workout opportunity, not a yield play.

Industrial Market Analysis

For Sale

Pricing

Industrial sale prices pulled back slightly to $112.03 per square foot in May, 0.43% below April’s $112.51, though still 4.48% above May 2025. Asking prices rose to $130.30 per square foot, up 2.88% month over month and 15.23% year over year. The roughly $18 per square foot spread between asking and closed pricing reflects buyers retaining leverage on older product and secondary-market assets even as leasing momentum strengthens in well-positioned submarkets.

Cap Rates

Industrial cap rates continued to compress in May, with sale cap rates falling to 7.09%, 5 basis points below April and still 10 basis points above May 2025. Asking cap rates of 7.07%, nearly aligned with closed rates, signal that the industrial market is approaching pricing equilibrium after the past two years of repricing.

Vacancy

Industrial vacancy improved meaningfully in May, falling 100 basis points month over month to 20.10% from April’s 21.10%, and 300 basis points below May 2025. That 300-basis-point year-over-year improvement is the largest annual vacancy improvement of any tracked sector in this report. Kidder Mathews’ 2026 Western U.S. Industrial Outlook noted that Western vacancy ended 2025 at 8.3% and appears to have peaked, signaling the most supply-intensive phase of the cycle is likely behind the sector nationally.

For Lease

Asking vs. Effective Lease Rates

Industrial asking lease rates held flat at $13.27 per square foot in May, unchanged from April and up just 0.38% year over year. Effective lease rates, by contrast, accelerated to $13.55 per square foot, a 2.81% month-over-month gain and a 4.43% year-over-year increase. That divergence between near-flat asking rates and 4.43% effective-rate growth is the clearest signal in May’s industrial set: assets in supply-constrained submarkets are transacting meaningfully above ask, even as the national average remains subdued.

The Big Picture

Industrial moved further along its normalization path in May, and the effective lease-rate data now contains a genuine upside signal. CBRE’s Q1 2026 industrial figures showed 249.8 million square feet of leases executed, up 14% year over year, with big-box facilities over 1.2 million square feet posting the strongest gains. JLL separately documented big-box leasing surging 80.7% year over year in Q1 2026. Both firms noted that 71.6% of executed industrial leases were new leases rather than renewals, meaning occupiers are actively committing to space, not merely renewing in place.

PwC/ULI’s 2026 industrial outlook notes that demand is anchored in domestic consumption, and that occupiers are prioritizing long-term network optimization over short-term market fluctuations. The LinkedIn U.S. Industrial Market Analysis: 2025 in Review and 2026 Outlook is directionally consistent: vacancy appears to be approaching its cyclical peak nationally, and with construction starts down 65% from their 2022 high, the pipeline pressure that has kept rents subdued is diminishing.

Investment Implications: Cap rates near 7.1%, 300 basis points of year-over-year vacancy improvement, and effective lease-rate acceleration of 4.43% annually make a compelling long-term hold case for well-positioned infill and last-mile assets. The risk is submarket specificity: older bulk product in secondary markets with legacy supply is absorbing slowly and lacks the pricing power of modern logistics facilities in tight locations. Investors who can identify industrial assets where effective rents are outpacing asking rates are best positioned for the recovery that CBRE and JLL’s Q1 leasing data suggest is gaining momentum.

Multifamily Market Analysis

For Sale

Pricing

Multifamily sale prices softened in May, declining 3.07% month over month to $180.58 per square foot from April’s $186.29, and 9.78% below May 2025. Asking prices moved in the opposite direction, rising 1.31% to $171.15 per square foot and up 4.92% year over year. The divergence between rising asking prices and declining closed pricing reflects buyers staying disciplined about the concession environment while sellers underwrite ahead of the demand recovery they expect. NAA’s Q1 2026 Apartment Market Pulse reported that transaction volume fell to $20.6 billion in Q1, down 52% quarter over quarter and 13.5% year over year, with average price per unit down 7.5% annually.

Cap Rates

Sale cap rates expanded modestly in May, rising 11 basis points month over month to 6.04% from April’s 5.93%, though they remain 26 basis points below May 2025. Asking cap rates of 7.17% are 113 basis points above where deals are actually closing, a spread that reflects ongoing buyer-seller tension over where multifamily pricing should settle. Arbor’s February 2026 multifamily snapshot noted that 2025 closed with investment volume at a three-year high and cap rates at the tightest levels across major real estate sectors, a baseline that makes the May reading a modest step back, not a reversal.

Vacancy

Multifamily vacancy fell 90 basis points month over month to 14.90% from April’s 15.80%. Year over year, vacancy is 240 basis points above the 12.50% recorded in May 2025, reflecting cumulative supply from the 2023 through 2025 apartment delivery cycle. The sequential improvement into May is consistent with the seasonal demand acceleration typical of  peak leasing season. CBRE’s Q1 2026 multifamily figures showed national vacancy falling to 4.8% as net absorption surpassed completions for the first time in three quarters, providing broader confirmation that supply and demand are rebalancing.

The Big Picture

The May multifamily data reflects a market at an inflection point, where seasonal demand and a shrinking supply pipeline are producing the first clear signals of multifamily fundamental improvement. Greystone’s Q1 2026 multifamily takeaways documented Q1 net absorption of approximately 65,200 units and a 30% year-over-year decline in new deliveries, while vacancy held steady at 9.4% quarter over quarter. Yardi Matrix’s April 2026 national report showed average advertised asking rent at $1,758, down 0.2% year over year, with gateway and Midwest metros outperforming, while supply-heavy Sun Belt markets continued to post negative annual rent growth.

The structural multifamily story is becoming clearer. Yardi Matrix’s Q1 2026 data showed the first monthly rent gain since the prior summer in March 2026, while projecting 0.5% advertised rent growth nationally for 2026 and 1.0% for 2027 before a more meaningful reacceleration in 2028. PwC/ULI’s 2026 multifamily outlook emphasizes limited development of workforce housing as the key driver of tightening in non-luxury segments, while NAA’s Q1 2026 Apartment Market Pulse notes that performance will vary significantly across metros depending on local supply conditions, with a clear split between supply-heavy markets facing downward pressure and constrained markets still exhibiting rent growth.

Investment Implications: The entry window for acquiring below-peak multifamily assets is narrowing in better-positioned markets. The 90-basis-point sequential vacancy improvement and 26-basis-point year-over-year cap-rate compression confirm that the demand recovery is advancing. The IPA’s 2026 U.S. Multifamily Investment Forecast cites improving liquidity and durable demand as the sector’s primary long-term tailwinds, with easing construction activity providing the structural support that was absent in prior years. Markets where supply pipelines have already thinned offer the clearest risk-adjusted entry, while supply-heavy markets require more conservative underwriting and longer recovery assumptions extending into 2027.

Regional Breakdown: Median Cap Rates & Changes MoM by Top MSAs – May 2026

Frequently Asked Questions

What does the Crexi May 2026 CRE report cover?

The Crexi National Commercial Real Estate Report for May 2026 tracks sale pricing, cap rates, lease rates, and vacancy across retail, office, industrial, and multifamily, with month-over-month and year-over-year comparisons drawn from Crexi’s listings database and contextualized with external research from NAR, CBRE, JLL, Yardi Matrix, Greystone, Arbor, NAA, PwC/ULI, J.P. Morgan, and MetLife Investment Management.

What is the national retail vacancy rate as of May 2026?

Retail vacancy held at 5.40% in May, unchanged from April and 110 basis points tighter than May 2025. It remains the tightest major asset class tracked in this report, supported by record-low new construction and steady demand from necessity-oriented tenants.

Is the office market recovering in 2026?

Selectively, and with real momentum in prime office product. Office vacancy improved 1,100 basis points year over year to 17.70%, and effective lease rates grew 4.77% annually to $21.79 per square foot. The recovery is concentrated in well-located, Class A buildings where tenants are competing and paying above asking. Older commodity office continues to face structural vacancy that market stabilization alone will not resolve.

What is happening with industrial real estate in 2026?

Industrial real estate is advancing through its normalization phase. Vacancy improved 300 basis points year over year to 20.10%, effective lease rates grew 4.43% annually to $13.55 per square foot, and CBRE tracked a 14% year-over-year surge in Q1 leasing activity to 249.8 million square feet. The strongest momentum is in big-box and infill assets, where new supply constraints are restoring pricing power.

What are the multifamily market conditions in May 2026?

Multifamily vacancy fell 90 basis points month over month to 14.90% as spring leasing demand accelerated. Year over year, vacancy is still 240 basis points above May 2025 due to the 2023–2025 apartment delivery cycle. Sale cap rates of 6.04% remain 26 basis points below May 2025, reflecting improving investor confidence even as a 113-basis-point spread between asking and closed cap rates signals ongoing buyer-seller tension.

Which commercial real estate sector is performing best in 2026?

Retail holds the strongest vacancy fundamentals at 5.40% with effective rents ahead of asking rates. Office leads in effective lease-rate momentum at 4.77% annual growth, reflecting intense demand for prime space. Industrial posts the largest year-over-year vacancy improvement at 300 basis points. Across sectors, asset quality and location remain the primary performance differentiators.

What should commercial real estate investors focus on in 2026?

Necessity-anchored retail in supply-constrained markets, prime and Class A office in well-located buildings, infill industrial in tight submarkets, and multifamily in markets where supply pipelines have already thinned may offer the most defensible risk-adjusted entry. Capital is increasingly concentrating in quality, and the spread between top-tier and commodity product is widening across every sector.

Disclaimer: This article's information is based on Crexi's internal marketplace data and additional external sources. While asking price in many ways reflects market conditions, variations in pricing are affected by changes in inventory, asset size, etc. Nothing contained on this website is intended to be construed as investing advice. Any reference to an investment's past or potential performance should not be construed as a recommendation or guarantee towards a specific outcome.

Get more data-driven insights with Crexi Intelligence.