The commercial real estate industry is anticipating a slightly smoother year ahead, according to a new survey of NAIOP members.

The April 2024 survey found sentiment among the industry organization’s membership was favorable for the first time since the spring of 2022, indicating that respondents are anticipating conditions to improve for the industry in the next 12 months.

It has been a challenging time for CRE. Deal volume plummeted in 2023, dropping by 51% compared to 2022’s transaction volume, according to MSCI Real Capital Analytics. Commercial foreclosures are up and, as of the start of the year, banks were expecting CRE losses to grow.

April 2024 respondents had a positive outlook for every component that factors into the survey except for construction costs, which they expect to be higher next year, the survey found.

“This marks a turnaround in sentiment for most CRE fundamentals, which was negative for almost every Index component in September,” the report says.

Among areas where respondents expect improvement were the slight return of demand and deal volume.

NAIOP does a CRE sentiment survey twice a year, in April and September. For the three previous surveys, respondents indicated that they expected conditions over the next 12 months to be “unfavorable” for the commercial real estate industry.

The survey is distributed to NAIOP members around the country. Their answers are calculated into an “index.” If respondents chose the most optimistic answer to every question, NAOIP said, the index would be 100. If all members chose the most pessimistic response to every question, the index would be 0.

April 2024’s survey resulted in an index of 52. The previous survey reported an index of 46, while the two before that were 47. The most optimism ever captured on the index was an index of 57, in September 2018 and 2019.

Respondents to the survey were predominantly working in the industrial and office sectors, as well as multifamily.