CREFC's 4Q 2024 Sentiment Index Highlights Broad Optimism as Market Dynamics Stabilize

NEW YORK, Jan. 28, 2025 /PRNewswire/ -- The CRE Finance Council (CREFC), the industry association representing the $6.1 trillion commercial and multifamily real estate finance sector, today released its Fourth-Quarter 2024 (4Q24) Board of Governors (BOG) Sentiment Index survey results. Conducted from December 19, 2024, to January 6, 2025, the survey indicates continued improvement in market sentiment despite evolving views on interest rates.

The 4Q24 Sentiment Index demonstrated continued improvement in market confidence, rising 5% to 126.6 from 121.1 in 3Q24. The current reading is the highest ever recorded for the Index. This increase reflects sustained optimism about market conditions even as expectations adjust to a "higher-for-longer" interest rate environment.

Key Highlights from the 4Q24 Core Questions:

• Economic Outlook: Optimism continues to grow, with 42% of respondents expecting improved economic performance over the next 12 months, up from 32% last quarter.
  
  
• Federal Policy: A dramatic shift in sentiment regarding government actions, with 74% expecting a positive impact on CRE finance-related businesses, up from 17% last quarter.
  
  
• Rate Impact: A notable decline in positive rate impact expectations to 33% from 85%, with most respondents (58%) now neutral.
  
  
• CRE Fundamentals: A significant improvement in the outlook for fundamentals, with 65% expecting improvement (up from 40%) and fewer expecting worsening conditions (12% vs 23%).
  
  
• Transaction Activity and Financing Demand: Expectations for both investor demand and borrower financing needs strengthened further, with 86% and 91%, respectively, anticipating increased activity.
  
  
• Market Liquidity: Confidence in debt capital markets liquidity continued to improve, with 81% expecting better conditions, up from 77% last quarter.
  
  
• Overall Sentiment: The industry outlook strengthened significantly, with 77% expressing positive sentiment, up from 57% last quarter, with no negative responses.

Additional Topical Insights:

The survey revealed that while higher-for-longer interest rates remain the primary concern (51% of respondents), the industry appears to be adapting to this new environment. An overwhelming 95% of respondents expect CRE transaction volume to increase by at least 10% in 2025, suggesting growing confidence in market activity despite rate challenges. Interestingly, respondents identified multifamily (30%) and office (23%) as the property sectors offering the best risk-adjusted investment opportunities.

Lisa Pendergast, President and CEO of CREFC, commented: "Overall, the 4Q24 survey results suggest that the CRE finance industry believes the market is on more solid footing heading into 2025. While concerns about higher-for-longer interest rates persist, our members see stabilizing CRE asset prices, rising transaction volumes, and a demand for CRE financing that remains both consistent and resilient."

For more information about the 4Q24 BOG Sentiment Index and the full survey results, please click here or contact Raj Aidasani at raidasani@crefc.org.

About CREFC and the Board of Governors Sentiment Index

The CRE Finance Council (CREFC) is the trade association for the commercial real estate finance industry. Approximately 400 companies and 19,000 individuals are members of CREFC. CREFC's members play a critical role in the U.S. economy by financing office buildings, industrial properties, multifamily housing, retail facilities, hotels, and other types of commercial and multifamily real estate.

Over 50 senior executives in the commercial real estate finance markets represent CREFC's Board of Governors. These leaders come from every sector of the commercial real estate lending and mortgage-related debt investing markets, including balance sheet and securitized lenders, loan and bond investors, mortgage bankers, private equity firms, loan servicers, rating agencies, attorneys, accountants, and others.

CREFC's BOG Sentiment Index aims to gauge quarter-to-quarter shifts in market conditions for the CRE finance market. The survey, first administered in 2017, consists of nine core questions and additional topical questions. Responses to the core questions are equally weighted and summed to create a single index value.

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SOURCE CRE Finance Council