CREFC's 2Q 2025 Sentiment Index Jumps as CRE Market Optimism Rebounds

NEW YORK, July 30, 2025 /PRNewswire/ -- The CRE Finance Council (CREFC), the industry association representing the $6.2 trillion commercial and multifamily real estate finance sector, today released its Second-Quarter 2025 (2Q25) Board of Governors (BOG) Sentiment Index survey results. The index surged 27.8% to 112.3 from 87.9 in 1Q25, marking a decisive return to positive territory, reversing last quarter's sharp decline, and climbing back above the neutral 100 baseline.

Conducted from July 8 to July 22, 2025, the survey captured a dramatic shift in sentiment as market participants adapted to the evolving economic landscape and found renewed optimism in stabilizing interest-rate expectations and improving capital market conditions. The rebound represents one of the strongest quarterly improvements in the index's history.

Key Highlights from 2Q25 Index Core Questions:

• Economic Outlook: Sentiment flipped positive, with only 27% of respondents expecting worse economic conditions over the next 12 months, a dramatic improvement from 80% last quarter. 54% expect stable conditions and 19% anticipate improvement.
  
  
• Federal Policy: Governors see a much more favorable policy landscape, with 49% expecting a positive impact from government actions (up from 11% in 1Q25) and only 16% anticipating a negative impact (down from 59%).
  
  
• Rate Impact: Positive shift with 38% seeing favorable rate movement (up from 30%), while negative sentiment dropped to 27% (from 30%).
  
  
• CRE Fundamentals: The outlook for fundamentals stabilized, with only 19% of respondents expecting worsening conditions (down from 50% last quarter). 81% now foresee fundamentals improving or remaining unchanged.
  
  
• Transaction Activity: Expectations for investor demand soared, with 65% predicting more demand (up from 35%) and only 3% expecting less demand (down from 20%).
  
  
• Financing Demand: The board is exceptionally bullish on financing demand. 86% of respondents expect more borrower demand, up from 48% in 1Q25. Notably, 0% of respondents expect less demand.
  
  
• Market Liquidity: Confidence in capital availability returned, with 92% expecting better or the same liquidity (up from 74% last quarter) and only 8% expecting worse conditions (down from 26%).
  
  
• Overall Sentiment: The industry's overall outlook showed a robust recovery, with 49% now holding a favorable view (up from 22%) and only 8% remaining negative (down from 43%).

Additional Topical Insights:

The survey revealed evolving risk perceptions, with geopolitical shocks remaining the top concern at 36%, followed by macroeconomic slowdown fears at 28%. Notably, 71% of respondents reported increasing appetite for new CRE lending or investment in the second half of 2025, with just 6% foreseeing a pullback. The emergence of AI-driven data center demand garnered significant attention, with 72% expecting positive impacts on the overall CRE market. Interest rate expectations moderated, with 78% of respondents expecting at least one 25 bps rate cut by year-end 2025, with the majority (53%) anticipating the target range will fall to 4.00% - 4.25%. Similarly, 87% expect the 10-year Treasury yield to end the year at or below 4.50%.

Lisa Pendergast, President and CEO of CREFC, commented: "The turnaround in our Sentiment Index highlights the CRE finance industry's resilience and adaptability. What's especially encouraging is the breadth of the recovery – from robust borrower demand to optimism around AI-driven data centers. Challenges remain, but the market is regaining its footing."

For more information about the 2Q25 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. More than 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.

Nearly 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, launched in 2017, tracks quarterly shifts in commercial real estate finance sentiment through nine equally weighted core questions, supplemented by topical insights.

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SOURCE CRE Finance Council