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CRE sentiment: COVID concerns and two bright spots

Posted by   /  May 13, 2020  /  No Comments

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By Mike Sunnucks | Rose Law Group Reporter

A national index gauging the condition of commercial real estate has fallen into the unfavorable range due to the impact of COVID-19.

But the NAIOP CRE Sentiment Index did see improved expectations when it comes to construction labor and material costs.

The NAIOP CRE Sentiment Index posted a score of 45 after a survey of commercial real estate developers, brokers, and investors.  A score below 50 indicates unfavorable market conditions.

The new score is the first time the NAIOP index has dropped below 50 since the real estate industry group started the surveys in 2016.

The same sentiment index scored a 57 in September.

The survey gauges commercial real estate sentiment for the next 12 months. The outlook for equity dropped significantly.

The industry bright spots were expectations of lower costs for construction labor and materials. Those costs have been hitting commercial developers and contractors as well as home builders.

The expectation is that COVID-19 will delay projects and developments creating less demand and lower prices for materials and with all the upheavals with jobs there will be more workers and contractors in the marketplace.

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