CRE 12-month Sentiment Highest Since 2016

The Fall 2018 reading of the NAIOP Sentiment Index registered at 0.66 – the highest posted since the survey began as respondents indicate that the fundamentals underpinning commercial real estate will be stronger in 12 months than they are today.

The survey is a composite of nine survey questions that represents the outlook of commercial real estate developers, owners and investors, designed to predict general conditions in the commercial real estate industry over the next 12 months. Participants were asked to respond to questions based on their ongoing work, including projects in their pipelines.

Among the key findings:

  • The reading showed positive changes in seven questions, with five of them reaching all-time highs: employment; face rents; effective rents; available debt; and available equity.
  • The highest reading in the survey indicated that CRE executives expect to add employees at real estate companies over the next 12 months.
  • At the same time, however, respondents are greatly concerned about the costs of construction materials and labor as indicated by the lowest score recorded for each category since the survey started.

The most positive changes in the survey that helped keep the Index above zero were positive expectations regarding the availability of capital (both debt and equity), as well as the outlook that effective rents will rise over the next 12 months. Year-over-year, the readings for the availability of equity and debt capital increased by 2.50 percent and 2.80 percent respectively, and the prospects for effective rents increased by 2.50 percent.

Access the full report, individual answers and commentary on each of the survey questions, and graphs here.


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