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NAIOP Sentiment Index Points to Expectations of Challenging Conditions for Next 12 Months
The latest NAIOP CRE Sentiment Index is down from spring 2022, suggesting that respondents expect unfavorable conditions for commercial real estate over the next 12 months. Currently the index stands at 47, compared to 52 in April, 56 a year ago and a pandemic-era low of 45 in March 2020.
Higher interest rates, higher cap rates and a decrease in the supply of equity and debt are expected over the next 12 months. Respondents to NAIOP’s survey predict a sharper increase in cap rates and greater contraction in 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 rent growth.
“Uncertainty with respect to interest rates and inflation certainly contributes to the current index; however, we do see signs of long-term strength in our industry,” said Marc Selvitelli, president and CEO of NAIOP.
- ◦Financing
- ◦Economy
