The Real Estate Roundtable’s Economic Sentiment Index dropped to an overall score of 41 in the second quarter, three points lower than in Q1. Survey results from commercial real estate executives indicated that remote work, high interest rates, operating cost escalations and difficult price discovery have created significant uncertainty for the post-pandemic office sector and reduced liquidity across almost all commercial real estate asset classes.
Industry leaders reported relatively healthy demand for industrial, multifamily and strip center retail assets during Q2. Additionally, survey participants noted solid rental growth within multifamily properties as well as senior living facilities such as student housing or assisted living communities.
Roundtable President & CEO Jeffrey DeBoer commented on these findings saying: “The commercial real estate market is at the center of a major transition…Maturing office loans face a new environment with higher operating costs and tighter bank lending requirements along with questions about business space needs.” He continued by noting that while there is good news from non-office CRE sectors currently present; “the combination of reduced liquidity increased costs and post-pandemic business uncertainty threatens to spread to other sectors potentially causing great damage to communities jobs & economy”.
