According to the CRE Finance Council (CREFC), their Second-Quarter 2024 (2Q 2024) Board of Governors (BOG) Sentiment Index survey has shown a decrease to 102.4, representing a decline of 3% from the previous quarter’s score of 105.4. This change reflects an increase in caution regarding the economic outlook and ongoing impacts from higher interest rates, as reported by CREFC.
A closer look at the survey’s core questions reveals significant shifts in expectations and insights, including:
Overall Sentiment: The sentiment within the industry has become more moderate with only 22% reporting positive views and majority at neutral with a percentage of61%, down from last quarter’s35%.
Economic Outlook: Confidence in the U.S economy has decreased significantly with only11% expecting better performance overthe next12 months compared to24%inthe previousquarter.
Federal Policy Impact: Neutral sentiment towards federal legislative and regulatory actions increasedto67%, while negative sentiments decreasedto26%.
Mortgageand Cap Rates: There is an increasein positivity towards rate impactswith41 %of respondents viewing it positivelycomparedto31 %from1Q.
CRE Fundamentals:The industry expects stabilitywith24 %anticipating improvement consistentwithlastquarter’sresults.
Transaction Activity:Demand for investment remains strong as54%donot expect any changescomparedtorecentquarters(55%).
Financing Demand:The expectation for borrower demand slightly declinedfrom69 percentdown to65 percentthis quarter.
Liquidity:The anticipationfor improved liquidity fellfrom57percentinthefirstquarterto46percent this time around.
CMBS Market:
Positive sentiments toward CMBSand CRE CLOdemand have also fallen slightly from51 percent downto43 percentsince last quarter.
Lisa Pendergast, Executive Directorof CREFCsaid,”The results of our2Q2020surveyreflectthe industry’s efforts to navigate through uncertain times. As we continue to face these challenges, the industry’s resilience and abilityto innovate will be crucial in taking advantage of emerging opportunities while managing potential risks.”
