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TORONTO — The Q2 2024 CRE Industry Conditions and Sentiment Survey, a quarterly survey that collects insights on current market conditions and future expectations, was released recently by Altus Group Limited.

The latest survey draws on feedback from 560 seasoned CRE professionals representing over 97 firms in the U.S. and Canada from March to April.

The survey highlights participants’ perspectives on several topics, including:

• Operating environment expectations: Most respondents describe the near-term operating environment as “somewhat challenging,” reflecting a slight improvement over the previous quarter. While a near-term recession is not anticipated, the next expected economic downturn is predicted to be shallow and short-lived.
• Current focus areas: Over the next six months, the primary focus remains on managing existing portfolios and exposures. Respondents expect interest rates, cap rates, revenue and net operating income growth rates to remain stable.
• Transaction intentions over the next six months: The majority of respondents (80 per cent in the U.S. and 65 per cent in Canada) intend to transact over the next six months, indicating plans to buy, sell or both. The quarter’s transaction appetite is driven more by larger firms with CRE exposure greater than US$5 billion.
• Property performance expectations: For the fourth consecutive quarter, industrial and multifamily asset classes are expected to be best performers over the next 12 months, with retail also expected to be as attractive as multifamily among U.S. respondents. The office sector is anticipated to be the worst performer.
• Capital availability: Expectations for debt capital availability among U.S. respondents have significantly improved across various sources (excluding banks) compared to the previous quarter. Canadian respondents expect capital availability to remain low over the next 12 months.
• Priority issues: The cost of capital remains the top priority issue for the fourth consecutive quarter, followed by concerns about insurance costs in the U.S. and construction costs in Canada.

“CRE expectations appear to be stabilizing, despite several challenges remaining in the near-term outlook,” said Omar Eltorai, director of research at Altus Group, in a statement. “As CRE values continue to adjust to what survey participants perceive as ‘fairly priced’ and transaction appetite remains high, it seems we may be nearing the bottom of the recent market downturn.”