The latest NAIOP CRE Sentiment Index reveals a notable uptick in the outlook for commercial real estate market conditions over the next 12 months. The Index now stands at 56, reflecting a positive shift from the March 2025 score and indicating expectations of improving conditions across the commercial real estate landscape.

Published by the NAIOP Research Foundation, the 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. An Index below 50 indicates unfavorable CRE conditions are expected in 12 months; 50 means no change in CRE conditions is expected in 12 months; and above 50 indicates favorable CRE conditions are expected in 12 months.

Improved Outlook for Capital Markets and Construction Costs Lead Rebound in Sentiment

Respondents now predict that construction material costs will increase much less sharply over the next year than was the case in March. This likely reflects easing concerns that tariffs will significantly raise these costs, though several respondents indicated that U.S. trade policy remains a significant concern for developers, tenants and the broader economy.

An expectation that interest rates will decline also helped drive the rebound in the Index, as respondents reported greater optimism about improved capital market conditions. The Federal Reserve’s September rate cut arrived when the survey was still in the field. Forward expectations for debt and equity availability and cap rates are also more optimistic than they were in March.

Among the additional key findings:

• Respondents are more optimistic about the direction of cap rates than at any point since the survey was launched in 2015.
• Developers and building owners plan to increase their deal volume over the next 12 months.
• Respondents are slightly more optimistic about occupancy rates and rents than they were in the spring.
• Respondents expect to be most active in the industrial and multifamily sectors over the next 12 months, with data centers, retail and office properties attracting the next highest levels of interest. Notably, interest in both data center and retail investments has increased compared to the March survey.
• “The latest Index reflects a meaningful shift in industry confidence,” said Marc Selvitelli, president and CEO of NAIOP. “With improving capital market conditions, signs of a stabilization in vacancy rates, and a more favorable economic outlook, the industry is poised for growth.”

Survey respondents are NAIOP members in the U.S. who are developers, building owners, building managers, brokers, analysts, consultants, lenders and investors in commercial real estate. A total of 276 respondents from 232 distinct companies participated in the Fall 2025 survey. Responses were collected September 16-24, 2025.