CREFC's 3Q 2023 Board of Governors Sentiment Index Reveals Cautious Improvement

October 10, 2023

New York, October 10, 2023 – The CRE Finance Council (CREFC), the industry association that exclusively represents the $5.9 trillion commercial and multifamily real estate finance industry, announced the results of its Third-Quarter 2023 (3Q 2023) Board of Governors (BOG) Sentiment Index survey. Administered between September 12 and 22, 2023, the survey serves as a reliable barometer of CRE finance market conditions and outlook as perceived by senior members of the industry.

The 3Q 2023 BOG Index rose by 5% to 82.7 from 78.5 in the previous quarter, signaling a cautious uptick in sentiment. The results show that while the overall sentiment toward CRE finance businesses improved, a sizable 58% still maintain a negative outlook. This, however, was down from 67% recorded in the previous quarter.

Key Highlights from the 3Q 2023 Core Questions:

  • Economy: While expectations for the U.S. economy in the next 12 months remain subdued, there was a notable reduction in respondents expecting worsening conditions (44% in 3Q 2023 from 55% in the prior quarter).
  • Policy: The sector expects increased negative effects from federal legislative and regulatory actions, with 56% expecting detrimental impacts compared to 49% in 2Q 2023.
  • Rates: Concerns that mortgage and capitalization rates will negatively impact CRE finance businesses rose to 80% in 3Q 2023 from 65% in 2Q 2023.
  • CRE Fundamentals: Optimism is returning slowly, with an increase in those expecting improvements or no changes in fundamentals like occupancy and rents.
  • Transaction Activity: Growing optimism was detected in investor demand for CRE/multifamily assets, with 33% expecting more demand compared to 25% in 2Q 2023.
  • Financing Demand: Borrower demand for financing is expected to rise, with 53% expecting more demand, unchanged from 2Q 2023.
  • Liquidity: A notable shift in expectations for heightened CRE debt liquidity was seen, moving toward a positive or neutral stance.
  • CMBS Capital Markets: There was a clear rise in positive sentiment for CMBS and CRE CLO demand and improving spreads.
  • Industry Sentiment Less Negative: As noted earlier, a majority (58%) maintain a negative outlook, down from 67% in the prior quarter.

Observations from Additional Topical Questions:

  • Higher for Longer. The market anticipates sustained higher rates.
  • Multifamily. There is increased concern over multifamily, with rising costs, slowing rent growth, and mounting maturities despite a low current delinquency rate.
  • Office Tiering Dominates. Respondents note a significant tiering in the performance of properties, notably in the office segment.
  • Return to Office? Many expected a stronger return-to-office trend than what they see today.
  • Cautiously Optimistic. Responses reflect a cautious anticipation of more transactions in the coming quarters amidst prevailing challenges around property values and the lack of loan production.

"This quarter’s BOG Sentiment Index signals a tempered increase in optimism; however, the texture of this optimism is layered,” said Lisa Pendergast, Executive Director, CREFC. “Key concerns reverberate around the anticipation of higher-for-longer rates, regulatory overstep, and the broader economy. As we navigate this period of prolonged uncertainty, CREFC will continue to be a resource and advocate for the industry and its members.”

For a summary of the results of the 3Q 2023 survey, please click here.

About CREFC’s 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 over 18,000 individuals are members of CREFC. CREFC’s members serve a critical role in the US economy by financing office buildings, industrial and warehouse properties, multifamily housing, retail facilities, hotels, and other types of commercial and multifamily real estate.

Nearly 60 senior executives in the commercial real estate finance markets represent CREFC’s Board of Governors and hail from every sector of the commercial real estate lending and mortgage-related debt investing markets. CREFC Governors include balance sheet and securitized lenders, loan and bond investors, mortgage bankers, private equity firms, loan servicers, rating agencies, attorneys, accountants, and others. CREFC’s Governors serve up to six years on CREFC’s Board and are all senior members in their firms and the industry.

CREFC’s BOG Sentiment Index, which was launched in 2017, aims to gauge quarter-to-quarter shifts in market conditions for the CRE finance market and the outlook for the future. The survey consists of nine core questions, as well as added topical questions (not factored into the BOG Index). First administered in 2017, he Index equally weighs the responses to each question and then sums those weighted responses to create a single index.

For media inquiries, please contact: Aleksandrs Rozens at, 646-884-7567.


Aleksandrs Rozens
Senior Director, Communications

The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2023 CRE Finance Council. All rights reserved.

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