Rising Interest Rates, Tighter Liquidity, Hybrid Work, and Cost Cutting Reflected in Roundtable’s Q4 Sentiment Index

Q4 Sentiment Index chart

The Real Estate Roundtable’s Q4 Economic Sentiment Index dropped to an overall score of 39, five points lower than the previous quarter. Commercial real estate executives cited a reduction in available equity and debt capital, changes in post-pandemic office use, general business cost cutting, and employee layoffs among the contributing factors causing market uncertainty and a decrease in transactions. (News Release and Entire Q4 Report, Nov. 18)

Roundtable ViewJeffrey DeBoer Real Estate Roundtable

  • Roundtable President and CEO Jeffrey DeBoer, above, said, “Industry executives report that asset valuation difficulties, coupled with the tightened availability and cost of capital, have caused a slowdown in commercial real estate investment and overall transactions. This situation, magnified by steep inflation and interest rate hikes, is leading to investor hesitancy. Additionally, while some businesses are instituting greater return-to-the-workplace policies, many are not, partially due to employee reluctance. Ultimately, greater clarity on businesses’ future post-pandemic workspace demands is needed to provide a more reliable window into asset valuations, particularly in the office sector.”
  • “As an industry, we’re working with tenants to provide attractive building safety and use amenities—and where possible, converting underutilized property types to other uses, including housing. We continue to urge policymakers and business leaders to push for the safe return of workers to their shared, physical workspace. A back-to-the-workplace movement would increase overall economic productivity and competitiveness, help preserve urban small businesses, and lower the threat to the property tax base of municipalities throughout the nation,” DeBoer added.
  • The Roundtable’s Economic Sentiment Index—a measure of senior executives’ confidence and expectations about the commercial real estate market environment—is scored on a scale of 1 to 100 by averaging the scores of Current and Future Economic Sentiment Indices. Any score over 50 is viewed as positive.
  • Although the Q4 Overall Index registered an Overall score of 39, the Current Index registered 29—a nine-point drop from Q3 2022—and the Future Index posted a score of 48 points, a dip of three points from the previous quarter. (Download Q4 report, Nov. 18)

Market Perspectives

RXR's Scott Rechler on CNBC's Squawk on the Street

  • The return of office workers to buildings in New York, Boston, Atlanta, San Francisco and other cities is languishing well below pre-pandemic levels as hybrid work, layoffs and higher interest rates act as drags on the office market, according to a Nov. 17 New York Times article. Despite the headwinds, office owners believe demand will eventually return.
  • Roundtable Chairman Emeritus (2015-2018) William Rudin (Co-Chairman & CEO, Rudin Management Company, Inc.) noted in the article that occupancy was much higher at buildings occupied by financial companies, many of which have required employees to return to the workplace.
  • The impact of layoffs, macroeconomic trends, and office demand were discussed this week by Roundtable Board Member Scott Rechler (Chairman CEO, RXR), above, in a CNBC Squawk on the Street interview. Rechler, a member of the New York Fed, said he expects the next 12 to 18 months will be “choppy” as the Federal Reserve continues to fight inflation, but that a strong economy will emerge with significant growth potential.

Economic conditions and commercial real estate markets will be discussed during The Roundtable’s Jan. 24-25 State of the Industry in Washington.

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Commercial Real Estate Executives Report Steady Q4 Market Fundamentals

Commercial real estate leaders report positive market fundamentals across asset classes, according to The Real Estate Roundtable’s Q4 2021 Economic Sentiment Index. Industry leaders describe steady supply, demand and financial conditions for multifamily, industrial, life science and other assets while expressing some caution about the strength of office and hotel assets. Leaders also noted conditions vary by geography and local governmental policies.

Topline Findings

Jeffrey DeBoer, Real Estate Roundtable President and CEO

  • The Roundtable’s Overall Q4 2021 Sentiment Index registered a score of 73, which reflects continued optimism about general market conditions despite a slight dip of five points from the previous quarter. The Economic Sentiment Overall Index is scored on a scale of 1 to 100 by averaging the scores of Current and Future Indices. Any score over 50 is viewed as positive. 

  • Roundtable President and CEO Jeffrey DeBoer (above) said, “Our Q4 Sentiment Index score is a 29-point increase over the same time period last year. This is a solid indication of significant progress in the overall economy as more businesses continue to reopen under cautious, local COVID-19 protocols.” 
  • He added, “CRE leaders are encouraged by the safe (albeit slow) return of employees to their work places, robust retail consumer appetites, and the gradual return of domestic and international travelers to hotels, resorts and other hospitality assets. The commercial real estate industry continues to play an active role in accommodating new business and individual preferences that will help the economy adjust post-COVID.” 
  • “Industry leaders are concerned with accelerating inflation, supply chain obstacles and still unclear questions regarding future office space desires,” DeBoer noted. 
  • The Roundtable’s quarterly economic survey also shows that 85 percent of respondents believe that general market conditions today are “much better or somewhat better” versus one year ago – and that 61 percent anticipate conditions will continue to improve one year from now. 
  • The report’s Topline Findings include:
    • The Q4 2021 Real Estate Roundtable Sentiment Index registered a score of 73, a decrease of five points from the third quarter of 2021 and a 29-point increase over Q4 2020. Despite the slight downtick from Q3, participants largely expressed optimism regarding the current fundamentals of the commercial real estate market.
    • That said, perceptions vary by property type and geography, with industrial, multifamily, life sciences and data centers most in favor. Delayed return-to-office policies and questions about office space demands have resulted in a degree of uncertainty. 
    • Asset values have trended upward across asset classes compared to the previous quarter.
    • Participants cited a continued availability of debt and equity capital. International investors remain highly interested in opportunities within the United States.

Infrastructure & CRE

Chicago skyline upward

  • DeBoer also noted, “The recent passage of the $1.2 trillion bipartisan infrastructure bill by Congress will help the commercial real estate industry to ramp up its existing suite of climate-friendly practices by reimagining, building and retrofitting America’s built environment.” 
  • He added, “The Roundtable is also encouraged that the bill emphasized the expanded use of public-private partnerships to reach infrastructure goals – as well as measures that will streamline the federal permitting process and improve key federal energy data that support EPA building labels.” 

Data for the Q4 survey was gathered in October by Chicago-based Ferguson Partners on The Roundtable’s behalf.  See the full Q4 report

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Commercial Real Estate Leaders Report Improving Market Conditions Amid Uncertain Return-to-Office Trends

Q3 2021 Sentiment Index Chart

Commercial real estate executives report improving market conditions, through consistent growth of various asset classes, despite uncertainty surrounding employees returning to the office, according to The Real Estate Roundtable’s Q3 2021 Economic Sentiment Survey released today. The report shows the continued positive momentum for industrial, multifamily and single-family assets, with hospitality continuing to improve with increased travel. 

Market Conditions

  • “As the commercial real estate industry continues to adapt in the face of the global pandemic, we recognize the changing demands and expectations for hospitality, shopping centers, office buildings, travel and convening spaces,” said Real Estate Roundtable President and CEO Jeffrey DeBoer. “Strong, stable and growing real estate markets can be a driving force for the nation’s economic recovery, and contribute productively to a world struggling to overcome COVID and its variants. Investment in these reimagined spaces presents the opportunity to move the economy forward for the benefit of all Americans.”
  • The Roundtable’s Q3 Current Conditions Index of 85 increased 7 points from the previous quarter, the highest index recorded in its thirteen year history.
  • The Economic Sentiment Overall Index is scored on a scale of 1 to 100 by averaging Current and Future Indices; any score over 50 is viewed as positive. The Roundtable’s Overall Q3 2021 Sentiment Index registered at 78 – a one-point increase from the previous quarter
  • The Roundtable’s quarterly survey shows that 89 percent of respondents believe that general market conditions today are “much better or somewhat better” versus one year ago – with an abundance of available capital compared to one year ago.
  • However, this quarter’s Future Conditions Index of 71 decreased 4 points compared to last quarter, indicating uncertainty still remains while the country continues to recover from the COVID-19 crisis.

Topline Findings:

Chicago skyline upward

  • The Q3 2021 Real Estate Roundtable Sentiment Index registered a score of 78, an increase of 1 point from the second quarter of 2021 and a 36-point increase over Q3 2020. The speed of the economic recovery compared to only 6 months ago has provided more clarity and certainty for specific asset classes, with the biggest looming question marks being the impact of employees returning to the office and rising inflation risk.
  • Industrial performed exceptionally well throughout the pandemic and has maintained positive momentum through the first half of 2021. Additionally, multifamily and single-family suburban assets continue to attract strong demand. Previously challenged assets such as hospitality have rebounded and remain hopeful to reach pre-pandemic levels with increased travel and employees returning to the office.
  • Assets classes with durability or the perception of durability such as high-quality multifamily, long-term net lease office, and industrial have all hit record levels, all while certain sectors and regional markets (in particular, those relying heavily on mass transit) have yet to fully recover.
  • Respondents cited a continued abundance of available debt and equity capital, which has led to significant amounts of capital sitting on the sidelines waiting for attractive deployment opportunities.
  • DeBoer also noted, “Historically, the real estate industry has played a pivotal role in catalyzing economic recovery following national and worldwide events, and we have the opportunity to play that role again. With the recent infrastructure policy developments in Washington, it is a once-in-a-generation opportunity to rebuild cleaner, safer, and more climate-friendly buildings. With private capital readily available for investment, we are hopeful federal and public private partnerships will continue to fuel job creation and equitable economic development needed to continue the progress made in the economic recovery.”

Data for the Q3 survey was gathered in July by Chicago-based Ferguson Partners on The Roundtable’s behalf.  For the full Q3 report, visit here.

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2021 Annual Report – Meeting Today’s Challenges & Shaping Tomorrow’s Opportunities

View Full Report – 2021 Annual Report – Meeting Today’s Challenges & Shaping Tomorrow’s Opportunities

Policy Updates – RER YouTube Channel

The Real Estate Roundtable’s YouTube Channel

May 28, 2021 – Real Estate Like-Kind Exchanges Congressional Briefing

April 19, 2021 – Discussion with John Anzalone – Partner, ALG Research 

April 12, 2021 – Interview – Robert S. Kaplan, President and CEO, The Federal Reserve Bank of Dallas

January 28, 2021 – A Conversation on Leadership – Penny Pritzker – Former U.S. Secretary of Commerce

January 27, 2021 – Leading on Tax Policy – Sen. Ron Wyden (D-OR) – Chairman, Senate Finance Committee

January 27, 2021 – Interview – Sen. Sherrod Brown (D-OH), Chairman of the Senate Banking, Housing, and Urban Affairs Committee

January 25, 2021 – Finding Unity – An Interview with Sen. Joe Manchin (D-WV) 


October 5, 2020 – Listening Session with EPA Administrator Andrew Wheeler

September 22, 2020 – FY 2021 Nominations for the Board of Directors – Fall Roundtable Meeting

September 22, 2020 – Emerging Global Real Estate Investment Trends Panel-Fall Roundtable Meeting

September 22, 2020 – The Roundtable’s Equity, Diversity, and Inclusion Committee – Fall Roundtable Meeting

September 21, 2020 – A View from the Senate – Interview with Sen. Tim Kaine (D-VA)

September 21, 2020 – Prospects for a Pandemic Risk Insurance Act – Rep. Steve Stives (R-OH)

September 21, 2020 – Senate Majority Leader – Sen. Mitch McConnell (R-KY)

September 9, 2020 – Testimony and Q&A – Jeffrey DeBoer – The Status of the Federal Reserve Emergency Lending Facilities

September 4, 2020 – Bisnow Interview – Jeffrey DeBoer On His Game Plan To Push The CRE Agenda Before The Election

July 30, 2020 – The Real Estate Roundtable COVID-19 Economic Crisis Alert – Walker Webcast – All Eyes On Washington: What will the next stimulus bill do for CRE?

July 24, 2020 – The Real Estate Roundtable COVID-19 Economic Crisis Alert – Interview with Rep. Darin LaHood (R-IL)

July 10, 2020 – The Real Estate Roundtable COVID-19 Economic Crisis Alert – Public Policy in the Age of COVID: Shaping the CRE Recovery 

May 14, 2020 – The Real Estate Roundtable COVID-19 Economic Crisis Alert – National Economic Policy Responses to the COVID-19 Crisis

May 6, 2020 – The Real Estate Roundtable COVID-19 Economic Crisis Alert – Interview with Dr. Joseph Gardner Allen, Assistant Professor with the Harvard T.H. Chan School of Public Health

May 5, 2020 – The Real Estate Roundtable COVID-19 Economic Crisis Alert – “The Policy Response to COVID-19: Implications for Real Estate” – hosted by the Pension Real Estate Association (PREA)

May 1, 2020 – The Real Estate Roundtable COVID-19 Economic Crisis Alert – Unpacking the Federal Stimulus – Bisnow Webinar

April 21, 2020 – The Real Estate Roundtable COVID-19 Economic Crisis Alert

April 10, 2020 – The Real Estate Roundtable COVID-19 Economic Crisis Alert 

April 3, 2020 – The Real Estate Roundtable’s COVID-19 Economic Crisis Alert 



Real Estate Roundtable Statement on President Biden’s American Jobs Plan and American Families Plan

(WASHINGTON, D.C.) — “President Biden’s American Jobs Plan and American Families Plan offer very credible initiatives to address some of our nation’s most pressing needs — a modernized infrastructure, a more comprehensive approach to climate-related matters, as well as increased investments in housing, education and child care.    

The real estate industry strongly supports bold actions to finance infrastructure needs, expand the economy, and promote job growth, particularly solutions that help keep real estate — which employs over 13 million Americans and provides three-quarters of local tax revenue — in healthy balance.  

Responsibly financing these, and other, initiatives obviously will require additional tax revenue.   

Many businesses and communities are still straining to emerge from the COVID-19 pandemic. As policymakers consider the options to raise this needed revenue, we strongly urge that the focus be on broad-based tax increases that do minimal damage to job creation, risk taking and entrepreneurial activity.     

Unfortunately, particularly when considered in total, many of the tax proposals accompanying the American Jobs Plan or American Families Plan, would reduce economic activity, impede job growth, and diminish opportunities for startup businesses and those less advantaged.  

Eliminating the reward for investing capital, risking personal savings and borrowing, providing construction guarantees, or providing plain old sweat equity would have enormous economic impacts across the country . . . some of which are known, but many of which are unknown and could result in significant unintended consequences.   

Rewarding risk with a capital gains rate that is lower than the ordinary tax rate, allowing real property to be traded with some tax deferral, recognizing that risks that qualify for capital gains treatment are not just associated with cash investments — together these policies encourage the productive risk-taking that spurs investment in economically struggling communities and more challenging assets, like affordable housing.  

The current law in these areas may be in need of review and reform, but repealing these incentives is simply not wise.   

As this important process moves forward, The Real Estate Roundtable will share data, research, and recommendations with the Administration and lawmakers to advance sound tax policy that is fair, productive and provides equal opportunities for all Americans.”

The Real Estate Roundtable brings together leaders of the nation’s top publicly-held and privately-owned real estate ownership, development, lending and management firms with the leaders of major national real estate trade associations to jointly address key national policy issues relating to real estate and the overall economy.

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Roundtable Analysis and Summary of The American Rescue Plan

March 6, 2021 – Senate Democrats passed an amended, $1.9 trillion pandemic relief package, The American Rescue Plan – that has now been sent back to the House for final passage before current unemployment benefits expire March 14. 

See The Roundtable’s document — “Summary and Analysis of Key Economic Provisions in The American Rescue Plan.”

February 27, 2021 – The American Rescue Plan Act of 2021 (H.R. 1319) was passed by the House of Representatives is a $195 trillion COVID-19 relief package that provides $638 billion in tax cuts, offset by $45 billion in tax increases, and represents over 2% of GDP in 2021.


test for AE — linking Roundtable Weekly

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2021 National Policy Agenda

2021 Policy Agenda (entire agenda)


Tax Policy 

Capital & Credit

Energy & Climate

Infrastructure & Housing

Homeland Security


Roundtable’s Q4 Sentiment Index Shows CRE Execs Optimistic Despite Serious Market Challenges; Walker Webcast Focuses on the Future of Urban Real Estate

Commercial real estate executives expressed a modest increase in optimism about market conditions despite serious COVID-related challenges, according to The Real Estate Roundtable’s Q4 Economic Sentiment Index released this week. (Roundtable news release, Dec. 2)

  • A majority of respondents to the survey also noted that general conditions one year from now will be either “somewhat better” or “much better” than today. 
  • “Nearly every sector of the commercial real estate industry is facing serious economic challenges due to the overall impact of the pandemic. High unemployment, closed businesses, travel reductions and more have ripped into otherwise healthy real estate portfolios, creating challenges for all building owners in meeting their payroll, utility, tax and debt service obligations. Overall industry low leverage, general market balance, and functioning capital markets are positive influences that – when coupled with growing good news regarding vaccines – results in an increased optimism on part of industry leaders,” said Real Estate Roundtable President and CEO Jeffrey DeBoer. 
  • DeBoer also said,  “That optimism is dependent however on urgently-needed additional COVID relief from Washington and on the rapid testing and availability of effective vaccines. Federal lawmakers and regulators must support further assistance to bridge people and businesses into a post-COVID economy. Help is needed quickly for local governmental budgets, as well as for people and businesses negatively economically impacted by the pandemic. And some protection from unnecessary lawsuits must be provided to businesses to spur a more robust transition back to workplaces. ” 

The Roundtable’s Q4 Sentiment Index topline findings include:

  • The Sentiment Index registered a score of 44, an increase of two points from the third quarter of 2020. Respondents continued to express optimism about future conditions, and many noted increasingly positive trends in their own portfolios. Participants from the hospitality and retail sectors were understandably less optimistic, but felt market dynamics were strong enough that successful recoveries were possible.
  • Respondents referenced stronger markets for industrial and multifamily properties, while retail and hospitality properties were perceived as challenging in this environment. Dynamics in the office sector remain uncertain for most participants as work from home policies have created an uncertain future operating environment.
  • Lower leverage and continued forbearance have combined to allow owners to retain their positions, despite distress within their portfolios. As a result, owners are resistant to realizing discounted asset prices while buyers are seeking discounts as steep as 30% within the hospitality industry.
  • Most respondents cited accessible capital markets for high quality assets, and an increase in debt as well as equity availability. Many also noted the real estate market in general has lower levels of leverage than seen in the last downturn.

Future of Urban Real Estate

Walker Webcast with Mark Parrell and Owen Thomas image

On this week’s Walker Webcast, Roundtable Member Willy Walker (Chairman & CEO, Walker & Dunlop) discussed the pandemic’s impact on urban centers with Roundtable Board Member Owen Thomas (CEO, Boston Properties) and Roundtable Member Mark J. Parrell (President & CEO, Equity Residential Investments). 

  • Thomas commented, “It’s all about the virus. CEOs increasingly are understanding the problems with all remote work. Cultures are getting stretched and it is difficult to do more creative and strategic work, to procure new customers when everyone is working remotely. Companies want to get their employees back to work but companies are also very concerned about liability. What’s going to change all that around is health security.”
  • He added, “We have to get people back to the offices, back to the big cities for the overall economy to recover.”
  • Parrell noted, “When we think about our urban centers, there are places like New York that have been around 400 years and they’ve been resilient over time. (During) the last two decades in New York, up to the pandemic, the quality of life improved so much. These cities are capable of recovery, but good leadership is required. It will be very important that these cities be led by both public and private minded individuals who, like the Partnership for New York for example, are trying to put the city back together and on its feet. Once the cities re-energize, renters will return.”
  • Parrell added, “I do think there’s going to be a migration back into city centers, based initially on price and on activation as the vaccine gets broadly distributed.”

The pandemic’s ongoing impact on CRE and the policy response will be a focus of discussion during The Roundtable’s virtual State of the Industry Business Meeting and policy committee advisory committee meetings on January 27-28, 2021.

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