- The Real Estate Roundtable’s Sentiment Index reached 73 in Q4, up 9 points from Q3, with expectations for market improvement in 2025.
- The Future Index climbed to 77, its highest level since 2011, while 88% of respondents anticipate better market conditions within a year.
- Asset values are expected to stabilize or go up, and the availability of equity and debt capital is improving, despite high capital costs.
- Industrial, Class A office space, shopping centers, and data centers show promise, but multifamily and office deals remain challenging.
As reported in GlobeSt, the overall CRE sector is cautiously optimistic. The latest Real Estate Roundtable Sentiment Index hit 73 in Q4—its highest reading since 2021—fueled by encouraging asset values and improved capital access.
Survey Says
The Index, which measures executive views on market conditions, showed improvement in both current and future sentiment, with the Future Index reaching 77—its highest level since 2011.
A large majority of respondents see better conditions now than a year ago, with 88% projecting further improvements in 2025.
Nearly 80% of respondents expect asset values to rise or remain steady, suggesting a sense of stability. More than 60% of respondents noted improvements in capital access, and 80% expect availability to increase in 2025.
Despite improved capital flow, high capital costs remain a hurdle, especially for new entrants facing increased scrutiny from limited partners, who want to see strong returns before reinvesting.
Sector-Specific Trends
While optimism is high across sectors, certain areas stand out. Industrial properties, data centers, and Class A office space are attracting interest. Scaled asset managers with ‘hyperscale’ data centers are positioned to dominate, leveraging strong capital reserves and competitive terms. M
Multifamily prices are another story, and office deals remain limited, with a significant bid-ask spread due to tightened lending.
Retail, including shopping centers, shows solid demand, especially on the East Coast, where office leasing activity is rebounding faster than in the West. Corporate earnings growth and more leasing activity signal a recovery, though the high cost of insurance remains a concern across the board.
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Realistic Concerns
Survey respondents acknowledge that many hurdles remain. Some are concerned about geopolitical risks, natural disasters, and port strikes—highlighting current macroeconomic headwinds.
Others caution that only high-quality assets with strong sponsorship will thrive, while obsolete or overleveraged properties could struggle.
Recovery in leasing and transactions is expected to be slow until broader market confidence returns, but the sentiment overall suggests most investors are ready for improved conditions. Improved access to capital, recovering asset values, and strong interest in specific sectors all add up to a promising outlook.
