Commercial real estate professionals remain pessimistic about the market conditions in the year ahead. The September 2020 NAIOP CRE Sentiment Index came in with an average score of 45, indicating that market professionals have an "unfavorable" outlook for the next 12 months, according to the organization.

Respondents to the survey were more pessimistic than in the previous survey conducted at the start of the pandemic in mid-March. Pessimism increased in nearly all categories, including the outlook for the markets where respondents are active, as well as occupancy rates, face rents, effective rents and employment. The survey also shows an expectation that cap rates will increase nominally, but the outlook was on par with responses from the previous survey.

While the overall outlook showed continued uncertainty about the recovery, there were areas where respondents had an improved outlook compared to the start of the recession. Market processionals were less pessimistic about the availability of financing. Over the next 12 months, they expect debt to be as available as it is today and for equity to be more available, although only slightly. Respondents also showed improved outlook for construction costs. While they expect that labor and materials fees will continue to rise, respondents believe these costs will rise less rapidly than they believed in March.

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Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on GlobeSt.com and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.