October 19, 2022

NAIOP's Sentiment Index is designed to predict general conditions in the commercial real estate industry over the next 12 months by asking industry professionals to predict conditions for their own projects and markets.

The NAIOP CRE Sentiment Index for September 2022 is 47, down from April’s reading of 53. It is at the lowest level since September 2020. This reading suggests that respondents expect conditions for commercial real estate to deteriorate over the next 12 months

• Respondents expect higher interest rates, higher cap rates, and a decrease in the supply of equity and debt over the next year.
• Their outlook for occupancy rates, face rents and effective rents is also less optimistic, though they still expect rents to grow.
• Respondents also expect a sharp deterioration in general industry conditions over the next 12 months.
• The only positive development in the September survey is that respondents expect a slower pace of construction cost inflation over the next year.
• Despite a more pessimistic outlook for development conditions, developers plan to maintain recent deal volume over the coming year.
• Most respondents expect to be most active in projects or transactions related to industrial properties over the next year.