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CREFC Survey Cites “More Tempered Outlook” for Economy, Borrower Demand
The CRE Finance Council (CREFC) on Thursday reported a slight decline in its First-Quarter 2024 (1Q 2024) Board of Governors (BOG) Sentiment Index survey. The latest index dipped to 105.4, a 4% decrease from the previous quarter’s 109.9. CREFC cited notable shifts in the economic outlook, the impact of higher interest rates for longer and cooling expectations around borrower demand for financing.
Sixty-one percent of respondents expect the U.S. economy to perform the same over the next 12 months compared to the preceding 12 months, up from 31% last quarter. Only 24% anticipate better economic performance, down sharply from 54% in Q4 2024.
Opinions on the impact of mortgage and cap rates are mixed, CREFC said. Thirty-one percent of respondents expect a positive impact and 37% anticipate a negative one, marking a shift from the previous quarter’s more optimistic 48%.
Conversely, expectations for commercial real estate fundamentals are cautiously optimistic. Twenty-four percent predict improvement over the next year, compared to 15% in the previous quarter.
In the area of financing demand, there was a noticeable cooling in expectations in the latest survey, with 69% anticipating increased demand, down from 88% in the prior quarter. The industry’s overall sentiment appears to be stabilizing, though, with 84% of responses being positive or neutral, up from 81% last quarter.
Lisa Pendergast, executive director of CREFC, said, “The 1Q 2024 survey results reflect a more tempered outlook amid continued economic uncertainty. While there is a notable shift toward a more cautious outlook, this is balanced by strategic adjustments across our industry. We are navigating these uncertain times with a focus on adapting to market realities and today’s regulatory environment.”
- ◦Financing
- ◦Economy
