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A new CRE Finance Council survey is out, and the results show the commercial real estate industry is cautiously optimistic about the days ahead — with a strong emphasis on “cautiously.” 

Market sentiment is up slightly in CREFC’s second-quarter board of governors survey, just a smidge above the 2017 baseline following a sharp drop in Q1. However, while only 8% of respondents have a negative sentiment surrounding 2027, the vast majority — 68% — were neutral. 

When discussing the survey on this week’s First Draft Live, Bisnow Editor-in-Chief Mark F. Bonner said the question viewers should be asking is: Is CRE finance stabilizing or just going quiet before the next move? To answer that question, Bonner sat down with Lisa Pendergast, who has spent the last decade as president and CEO of CREFC and is retiring in a few weeks. 

Pendergast said she feels conflicted about retiring amid so much turbulence for the industry, because these are the environments where you “really show your mettle.” And despite how difficult things may be today, she said she believes CRE’s past challenges, including the pandemic and the Global Financial Crisis, were more “jarring.” 

The last few years have been brutal for CRE financing. Pendergast said elevated rates have devalued properties enough that underwriting loans and determining future value on 10-year fixed-rate loans are “very, very challenging.” 

She added that the market sentiment uptick seen in the CREFC survey is a sign that CRE is “fighting back to a more normal environment” and adjusting to where rates stand today. 

“It’s been a topsy-turvy world because of the severe rate shocks we’ve seen, and to an extent, the world has gotten comfortable with where we are — not happy, but comfortable. We can manage within this world,” she said. 

Watch the video below to view the full conversation: