U.S. commercial real estate is already in a downturn, according to roughly 20% of the respondents of the latest RCLCO Sentiment Survey, taken at the end of 2018. Lump in people who think the downturn will begin some time in 2019, and nearly half of respondents are feeling pretty gloomy.

The latest number — 46% — is decidedly more pessimistic than six months ago, at the time of the previous survey. Then only 30% of the respondents felt that a downturn had started or was coming soon.

Also, 59% of respondents expect real estate market conditions to worsen over the next 12 months, which is well above 31% of respondents who said so six months ago and 19% of respondents in the year-end 2017 survey.

The number of year-end 2018 respondents anticipating better conditions during the next 12 months is significantly lower (12%) than in the previous survey (37%) and in the year-end 2017 survey (44%).

Yet the survey findings don't point to panic. Respondents aren't overwhelmingly concerned by a softer market; 95% of them said they believe the impact of the downturn will be “slight” or “moderate.”

Respondents said the shift won’t be too painful because there are sound real estate fundamentals going into the downturn, with supply and demand relatively balanced, fewer markets overbuilt than in previous downturns, and tighter leverage and credit compared to the downturn of 2008, RCLCO reports.

The anticipated downturn will be across property types. Respondents said that most product types have moved firmly into the “late stable” phase of the real estate cycle, with the other product types quickly approaching that phase.

Also, a majority of respondents anticipate that within the next 12 months, for-sale residential, resort/second home product and retail will have moved into the “early downturn” phase.

According to the survey's reckoning of the business cycle, there are six stages: early downturn, full downturn, bottom, early recovery, early stable and late stable.

Although the various product types are positioned differently within the “late stage” phase and have moved at varying speeds over the past six months, their current positions are consistent with the sentiment that the downturn is approaching, the report notes.

RCLCO’s Market Sentiment Survey, undertaken twice a year by industry consultancy RCLCO, queries experienced real estate professionals nationwide, with 60% of respondents having worked in the real estate industry for 20 years or more, and 79% of respondents in C-suite or senior positions in their organizations.

Developers and builders comprise the largest share of respondents, at 38% of the sample. Another 17% are investors or capital allocators, followed by 10% in design or architecture firms.