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Sentiment Index

NAIOP Sentiment Index: U.S. Commercial Real Estate Outlook is Positive, with Underlying Concerns about Debt, Equity, Employment
New Sentiment Index surveys NAIOP member developers, owners and investors 
Washington, D.C. (April 4, 2016) – NAIOP, the Commercial Real Estate Development Association, has announced the launch of its Sentiment Index, which outlines expectations about general conditions in the commercial real estate industry over the next 12 months.
The spring 2016 Index figure is 0.60, a positive reading that means that respondents believe market conditions over the next year (March 2017) will continue to favor the commercial real estate industry and could even be slightly better than they are today. 
The Index is not based on an analysis of historical data, but rather it represents the outlook of commercial real estate developers, owners and investors. This is the inaugural Index to be released, following a beta test period of one year.
View the full results and download a PDF of the report at 
“The Sentiment Index reflects the outlook among industry leaders and establishes a critical benchmark as the commercial real estate market evolves,” said Thomas J. Bisacquino, NAIOP president and CEO. “With this Index, NAIOP is keeping members appraised of what’s ahead. While in slight decline since our first beta test in February 2015, this index remains close to zero; reflecting the expectation that the commercial real estate market is approaching a period of stability.”
Among the key findings:
The biggest positive changes in the survey related to the cost of construction materials and labor. Survey respondents expect them to rise, but not by as much as they did in the September 2015 survey. The cost of construction materials is expected to be less of a hindrance to development in the next year. 
The three most notable declines came in relation to debt, equity and employment. Despite downward movement, the readings are still positive, meaning respondents expect capital to remain available. Respondents believe equity will be available but not necessarily plentiful in 12 months, and a sentiment decline regarding equity reflects concerns about reserve requirements and rising interest rates. Overall, respondents indicated that they are likely to add jobs, but at a more modest rate.
Face rents, effective rents, and occupancy rates will grow. Face and effective rents are expected to increase moderately over the next year, indicating that operating expenses and/or concessions could increase at a rate faster than face rents.
About the Index
The Sentiment Index is designed to predict general conditions in the commercial real estate industry over the next 12 months. The forecast is not based on an analysis of historical data, but rather a look into the future by commercial real estate developers, owners and investors. NAIOP members are asked to respond to questions based on their ongoing work, including projects in their pipelines. The survey is conducted biannually, in March and September. The survey is sent to 5,000 NAIOP members who develop, invest in and operate commercial real estate in the office, industrial, retail and multifamily sectors. 
The data is compiled and analyzed by Tom Hamilton, Ph.D., MAI, CRE, and Gerald Fogelson Distinguished Chair in Real Estate at Roosevelt University in Chicago. The survey questions and statistical methodology were created, refined and finalized between 2014 and 2016 by the NAIOP Distinguished Fellows listed on the NAIOP Sentiment Index online version. To find out more about the NAIOP Sentiment Index, visit
About NAIOP: NAIOP, the Commercial Real Estate Development Association, is the leading organization for developers, owners and related professionals in office, industrial, retail and mixed-use real estate. NAIOP comprises 18,000 members in North America. NAIOP advances responsible commercial real estate development and advocates for effective public policy. For more information, visit
Kathryn Hamilton
(703) 904-7100, ext. 165

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