Commercial real estate leaders expect stronger rent growth and rising occupancy over the next year, but escalating financing challenges and persistent construction costs are tempering overall industry sentiment, according to the Fall 2026 CRE Sentiment Index Report released by the Commercial Real Estate Development Association (CREDA).
The Fall 2026 CRE Sentiment Index fell to 48, down from 52 in March, marking its first reading below the neutral threshold of 50 since September 2023.
The survey underscores a market navigating diverging forces, with solid property fundamentals on one side and tightening financial constraints on the other.
The sharpest contraction in the fall survey occurred in the capital markets outlook. Interest-rate favorability experienced its largest survey-to-survey drop since April 2022, plunging from a score of 52 in March to 31 in the latest reading.
Respondents indicated they expect both debt and equity capital to become slightly less available in the coming months, while first-year cap rates are anticipated to rise.
At the same time, supply-side headwinds continue to challenge developers. Expectations regarding material and labor costs reached their most pessimistic levels since April 2022, signaling that inflation and resource constraints remain significant barriers to project feasibility.
Despite financial and construction pressures, commercial real estate professionals expressed confidence in underlying demand across key asset classes.
Survey respondents anticipate faster rent growth than previously projected in March, along with steady gains in overall occupancy rates. In addition, developers and building owners reported expectations for higher overall transaction volume, increased project dollar volume, and modest hiring growth over the next 12 months.
Industry leadership noted that these mixed indicators reflect a transitional period for commercial development and investment.
“Marc Selvitelli, CREDA president and CEO, is tracking what these competing trends mean for investment, the development pipeline, and the broader commercial real estate outlook as market participants adjust to elevated costs,” CREDA noted in conjunction with the report’s release.
