Commercial Real Estate Investment Outlook

Special Report, Third Quarter 2016

Investor Sentiment Finds Post-Peak Stability

Reduced Financial Market Volatility and Durable Economy Alleviate Some Investor Concerns

Commercial real estate investor sentiment has cooled a bit in the past 18 months. Yet despite the increased prevalence of caution in the marketplace, investors still hold a favorable outlook on fundamentals and access to capital, spurring many to proceed with plans to expand portfolios. 

Exclusive results from the third quarter NREI / Marcus & Millichap Investor Sentiment Survey show that after peaking at a high of 187 in the fourth quarter of 2014, the Investor Sentiment Index has pulled back to 162 in the current survey. “I think we’re entering a more balanced environment where investor optimism has eased back and they are evaluating acquisitions and dispositions more carefully,” says John Chang, first vice president of research services at Marcus & Millichap. 

Sentiment is still very good by historical standards. In fact, it remains higher than pre-recession levels in 2004 and 2005 when the index stood at 138 and 148, respectively. It also is notable that the index climbed three basis points compared with the last survey conducted in the first quarter.