CRE Execs: Present Looks Good but Year Ahead May Be Cloudy

GlobeSt. – A survey of the 60 senior executives in the commercial real estate finance markets who compose the CRE Finance Council’s Board of Governors found them optimistic about the present but increasingly doubtful about the year ahead.

For the third quarter, 84% of the Board indicated they are seeing the same or more activity today than before the pandemic—up from 57% in the second quarter.

Nearly double the number (47%) of the executives predicted foreclosures and REO assets will remain low, compared to the 26% who had the same outlook a quarter ago with a three-fold drop in those who thought there would be significant increases in those problem areas coming.

However, the Board saw clouds on the horizon.

Looking at the overall economy, there was a drop in the number of members looking for it to perform better over the next 12 months from 88% in the second quarter to 67% in the third.

For offices, Board sentiment that the asset class would fare the worst post-pandemic jumped to 28% from 5% which the Council interpreted as a greater intensity about concern that remote and hybrid work models would rise as Covid-19 fades.

There was also a greater concern over corporate spending as 82% of the respondents said they expect a slow recovery of business travel compared to 69% in the second quarter.

These sentiments are a change from the CREFC’s second quarter report released in June, when it pointed to a “continued positive outlook for commercial and multifamily real estate finance.”

In that survey, 83% of the Board had an overall positive sentiment for all commercial real estate finance business over the next 12 months, up from 72% in the first quarter.