Commercial Real Estate Sentiment Index Indicates Conditions Will Worsen

WASHINGTON, D.C. –The NAIOP CRE Sentiment Index reveals that overall sentiment is down from the spring 2022 report, suggesting that respondents expect unfavorable conditions for commercial real estate over the next 12 months.

The current index is 47, down from April’s reading of 53, and from 56 in fall 2021. Just prior to the pandemic, the index was 57, before sinking to a low of 45 in March 2020. The survey was conducted from September 14 to 22.

Key findings:

Responses show that higher interest rates, higher cap rates, and a decrease in the supply of equity and debt are expected over the next 12 months. Respondents predict a sharper increase in cap rates and greater contraction in the supply of equity and debt than in any previous survey.

Their outlook for occupancy rates, face rents and effective rents is also less optimistic, though they still expect rents to grow.

A positive sign in the September 2022 survey is that respondents expect a slower pace of construction cost inflation over the next year. Rising interest rates appear to have dampened inflation expectations. Respondents predict that construction material and labor costs will continue to rise but at a slower rate than was projected in the April 2022 survey or in the two surveys from 2021.

Despite the outlook, developers plan to maintain recent deal volume over the coming year. Developers and building owners plan to complete about the same dollar volume of new projects and transactions over the next 12 months as in the past 12. The reason for the disparity may be a greater optimism for the sectors and markets they are active in than for the commercial real estate industry as a whole.

Most respondents (54.9%) expect to be most active in projects or transactions related to industrial properties over the next 12 months.

“Uncertainty with respect to interest rates and inflation certainly contribute to the current index; however, we do see signs of long-term strength in our industry.” said Marc Selvitelli, CAE, president and CEO of NAIOP.

The NAIOP CRE Sentiment Index is designed to predict general conditions in the commercial real estate industry over the next 12 months by surveying industry professionals on the future conditions of their projects and markets. The survey includes questions about jobs, space markets, construction costs, capital markets and other real estate development fundamentals. 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.  

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About NAIOP: 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