NAIOP Commercial Real Estate Sentiment Index Is Stagnant: Many Continue to Expect Some Conditions to Worsen

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October 05, 2023 | Washington, D.C.

The NAIOP CRE Sentiment Index is 46, slightly lower than it was in April, indicating that respondents expect conditions for commercial real estate to worsen over the next 12 months, though perhaps at slower rates. The survey comes as completions outpace demand for multifamily and industrial buildings and the office sector struggles with low occupancy rates. High interest rates continue to limit the volume of commercial real estate transactions and make refinancing existing buildings more difficult.

Among the key findings of the survey:

  • Respondents expect capital market conditions to weaken, though less rapidly than they had predicted in April. They expect future equity availability will be almost as high as it is now, suggesting that equity flows may be close to bottoming out. They still expect debt to be less available than it is now, and for cap rates to increase.
  • Effective rents are expected to fall slightly more than was predicted in April and the outlook for occupancy rates remains negative.
  • Developers and building owners expect their own deal volume to decrease but at a slower rate than they projected in April. Their outlook for a reduction in the dollar volume of new projects and acquisitions echoes respondents’ expectations for a slowing decline in capital availability.
  • Respondents now expect employment in their own firms to decline slightly over the next year, suggesting that deteriorating market conditions are now being felt more directly by commercial real estate firms.
  • The score for general industry conditions also suggests less favorable conditions over the next year but has improved since April; its continued rebound is most likely due to a less pessimistic outlook for the economy overall.

“There is no question that challenging times will continue, largely due to a higher interest rate environment,” said Marc Selvitelli, president and CEO of NAIOP. “There are some signs that the industry is closer to turning a corner, with respondents signaling that equity markets and deal (or transaction) volume have nearly stabilized. We are concerned that some commercial real estate firms will experience employment declines until the market turns around.”

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