Commercial Real Estate Industry Sentiment Returns to Pre-Pandemic Level

October 12, 2021

WASHINGTON, D.C. –NAIOP, which has created a commercial real estate industry Sentiment Index, reports that sentiment has increased from April and returned to pre-pandemic levels, according to the results from the Fall 2021 survey.

The NAIOP Sentiment Index is designed to predict general conditions in the commercial real estate industry over the next 12 months by asking industry professionals to predict conditions for their own projects and markets. It asks questions about jobs, space markets, construction costs, capital markets and other conditions for real estate development. If every participant in the survey selected the most optimistic answer to every question, the index would be 100. Conversely, if all the participants chose the most pessimistic response to every question, the index would be 0.

The current sentiment index is 56, up from 54 in April and equal to March 2019, one full year before the pandemic began. At the pandemic’s worst point – March through September 2020 – the Sentiment Index sank to 45.

“The sentiment for commercial real estate is the most positive has been since the pandemic began,” said Thomas J. Bisacquino, president and CEO of NAIOP. “Our industry plays a significant role in the U.S economy, and we remain cautiously optimistic that commercial real estate and the nation’s economy will continue to expand.”

Commercial real estate professionals expect construction costs to continue to rise, but they see the pace of material price inflation slowing, according to the report. Most respondents indicate that construction material and labor costs will increase over the next 12 months, though they are less pessimistic about material costs than in the April survey. This indicates that inflation is less of a concern than it was in the spring.

A large majority (62.7%) of respondents expect to be most active in projects or transactions related to industrial properties over the next year. Multifamily properties attracted the next largest share of interest (22.6%), followed by office properties (11.9%). Only 2.8% of respondents indicated that they expect to be most active in retail properties.

Respondents are more optimistic about face rents, effective rents, occupancy rates and employment in their own firms than in April, and they expect cap rates to decline in contrast to past expectations that cap rates would increase or remain flat.

A total of 357 respondents from 263 distinct companies participated in this survey. When individuals were asked what property types they worked on, 71.5% indicated they work on industrial properties, 65.0% work on office properties, 39.8% work on retail properties and 38.4% work on multifamily properties. A regional breakdown shows that 51.4% of respondents are active in the West, 34.5% are active in the East, 36.7% are active in the South and 26.0% are active in the Midwest.

View the full report.

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NAIOP, the Commercial Real Estate Development Association is the leading organization for developers, owners, investors and related professionals in office, industrial, retail and mixed-use real estate. NAIOP provides unparalleled industry networking and education and advocates for effective legislation on behalf of our members. NAIOP advances responsible, sustainable development that creates jobs and benefits the communities in which our members work and live. For more information, visit

NAIOP Contact: 
Kathryn Hamilton, NAIOP vice president for marketing and communications
703-904-7100, ext. 165

David Harrison
Harrison Communications