Commercial Real Estate Executives Signal Increased Caution in Q2 Sentiment Survey

(WASHINGTON, D.C.) — The Real Estate Roundtable (RER) today released its Q2 2025 Sentiment Index, reporting a decrease in confidence in the commercial real estate market environment among industry executives due to policy uncertainty, rising costs, and cautious investor sentiment. The quarterly Sentiment Index, measuring executive perceptions on market conditions, asset values, and capital availability, declined to an overall score of 54, down 14 points from last quarter. The Current Conditions Index dropped to 50, reflecting a 15-point decline, while the Future Conditions Index decreased by 12 points, settling at 58. The 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.

RER President and CEO Jeffrey DeBoer said, “While respondents note early signs of market stabilization and improved transactional discipline, lingering concerns over U.S. trade policies and other economic headwinds are tempering optimism for the remainder of 2025. The office sector remains under pressure, but is experiencing a gradual rebound as return-to-office trends continue to shift closer to pre-pandemic patterns.”

He added, “Uncertain tariff policies are driving up construction costs and weighing on long-term investment decisions. At the same time, the Federal Reserve’s decision to hold interest rates steady is slowing capital formation and delaying needed transactions. We need pro-growth economic policies that encourage productive investment, strengthen communities, and promote long-term stability. Extending and making the 2017 Tax Cuts and Jobs Act (TCJA) provisions permanent, along with advancing incentives to address our nation’s housing supply shortage, are crucial to help achieve these goals.”

The Q2 Sentiment Index topline findings include:

• The Q2 2025 Real Estate Roundtable Sentiment Index registered an overall score of 54, a decrease of 14 points from the previous quarter. The Current Index registered at 50, a 15-point decrease compared to Q1 2025. The Future Index posted a score of 58 points, a decrease of 12 points from the previous quarter, reflecting uncertainty around policy direction, rising costs, and execution risk. While market sentiment remains cautious, respondents are seeing early signs of stabilization and improved transactional discipline. Nevertheless, expectations for improvement have softened compared to last year, and many investors remain hesitant to re-engage.

• Market conditions remain mixed, with general uncertainty, along with sector and geographic bifurcation, driving sentiment. 37% of respondents believe that general market conditions are worse than this time last year, and 37% of respondents believe that general market conditions are better than this time last year. Close to half (47%) of Q2 survey participants expect general market conditions to show improvement one year from now, while 20% of Q2 participants expect general market conditions to be somewhat worse in a year. Logistics and high-quality multifamily remain bright spots, while hospitality and office—particularly commodity space—continue to face significant challenges. From a geographic standpoint, the Midwest is showing relative resilience, whereas sentiment around the Sunbelt reflects concern over elevated supply and near-term softened demand.

• 42% of respondents believe asset values are roughly unchanged compared to a year ago. The remaining respondents are divided, with 22% believing asset prices have increased and 36% believing they have declined. Looking ahead, the outlook is cautious: 38% expect asset prices to remain stable over the next year, while another 38% anticipate a slight decline.

• Perceptions of equity capital are widely varied, though 34% of respondents believe the availability of equity capital is better than it was a year ago. Sentiment around debt capital has brightened, as 43% said the availability of debt capital has improved from last year. Looking forward, 45% of respondents believe that equity capital availability will be better in one year and 39% believe debt capital availability will be better in one year.

Some sample responses from participants in the Sentiment Index’s Q2 survey include:

“The one thing that every investor – domestic and foreign – wants is stability. The environment in the United States is incredibly unstable, so some of our investors are sitting on the sidelines.”

“Foreign capital flows into the U.S. will shrink in the near term. That said, the U.S. is typically the first market to readjust in terms of pricing, and that will create opportunity.”

“We’re starting to see slightly more trades, which opens up the door to better visibility into valuations, and as a result, may improve the comfort and volume of future trades.”

Data for the Q2 survey was gathered by Chicago-based Ferguson Partners on RER’s behalf in April. See the full Q2 report.

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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(WASHINGTON, D.C.) — The Real Estate Roundtable’s Q3 2025 Sentiment Index reflects increased confidence among commercial real estate executives as market conditions stabilize and sector-led growth emerges. The Q3 Index posted an overall score of 67, a 13-point increase from the previous quarter, with notable increases in both the Current (63) and Future (71) indices.

RER President and CEO Jeffrey DeBoer said, “Our Q3 Sentiment Index results show that market conditions have continued to stabilize in a meaningful way, supported by improved supply and demand. Commercial real estate executives are increasingly optimistic that the next 12 months will bring continued improvement. That said, certain property types continue to face headwinds, and capital access remains uneven across markets and sectors. Even so, the prevailing sentiment is that stability is returning and opportunities are emerging.”

While challenges remain, industry leaders see meaningful opportunities ahead, particularly in multifamily, data centers, and select office markets.

He added, “The provisions in the One Big Beautiful Bill Act should help accelerate this momentum— expanding housing supply, revitalizing communities, spurring job-creating investment nationwide, and strengthening the broader economy. Coupled with improving debt capital availability and stabilizing asset values, these policies set the stage for renewed growth. Moving forward, industry leaders and policymakers must continue to work together to promote investment, ensure credit access, and address persistent supply-demand imbalances in housing and other high-need property sectors.”

The Q3 Sentiment Index topline findings include:

• The Q3 2025 Real Estate Roundtable Sentiment Index registered an overall score of 67, an increase of 13 points over the previous quarter. The Current Index registered 63, a 13-point increase over Q2 2025. The Future Index posted a score of 71 points, an increase of 13 points over the previous quarter, reflecting sentiment that operating conditions have largely stabilized: occupancy and demand are holding, and values appear to have bottomed. Participants expect modest, sector-led growth, yet acknowledge lingering headwinds for weaker property types.

• Sentiment around general market conditions has markedly increased since last quarter (Q2). Only 10% of respondents believe that general market conditions are worse than this time last year, and 56% of respondents believe that general market conditions are better than this time last year. Almost three- quarters (73%) of Q3 survey participants expect general market conditions to show improvement one year from now. Multifamily, data centers, and NYC office shine while industrial supply is overbuilt.

• Half of respondents believe asset values are roughly unchanged compared to a year ago. The remaining respondents are divided, with 32% believing asset prices have increased and 18% believing they have declined. Looking ahead, the outlook is optimistic: 59% expect asset prices to rise over the next year, 32% believe asset values will remain stable, and only 9% anticipate a slight decline.

• Perceptions on the availability of equity capital relative to last year are muted, with 50% of respondents believing equity availability is unchanged compared to a year ago. On the other hand, sentiment around debt capital has risen significantly, as 65% said the availability of debt capital has improved from last year. Looking forward, 55% of respondents believe that equity capital availability will be better in one year and 48% believe debt capital availability will be better.

Survey participants noted that the market is increasingly sector-specific, with performance tied closely to location, asset quality, and loan maturity schedules. Comments highlighted stabilizing fundamentals, renewed deal competition, and a narrowing bid-ask spread in transactions.

Some sample responses from participants in the Sentiment Index’s Q3 survey include:

“The market feels largely stable. There is still uncertainty about what lies ahead, yet conditions are far steadier than we have seen in recent years.”

“Real estate is a local business, and this cycle underlines how unique every market and product type really is. There is no ‘one-size-fits-all’ answer; it all depends on where you are, how favorable your product is, and the date of your loan maturity.”

“Debt is liquid with tight spreads; on the equity side it’s a ‘haves and have-nots’ market. Quality product will still get funded.”

Data for the Q3 survey was gathered by Chicago-based Ferguson Partners on RER’s behalf in July. See the full Q3 report.

The Real Estate Roundtable (RER) 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.