Q2 survey reveals notable confidence boost
Optimism has surged across the commercial real estate (CRE) finance sector according to the CRE Finance Council (CREFC) Second-Quarter 2025 (2Q25) Board of Governors (BOG) Sentiment Index, which shows a significant rebound.
The index jumped 27.8% to 112.3 from 87.9 in 1Q25, decisively returning to positive territory above the neutral 100 baseline. The CREFC noted this marks one of the strongest quarterly improvements in the index’s history.
The turnaround, captured in a survey conducted from July 8-22, 2025, indicates renewed confidence attributed to stabilizing interest-rate expectations and improving capital market conditions.
The economic outlook flipped positive, with only 27% of respondents now expecting worse economic conditions over the next 12 months, a stark improvement from 80% last quarter. Similarly, 49% anticipate a positive impact from government actions, a substantial rise from 11% in 1Q25.
Confidence extends to market activity, with 86% of respondents exceptionally bullish on financing demand, expecting more borrower interest—a notable increase from 48% in 1Q25, and 0% expecting less demand.
Investor demand also soared, with 65% predicting an increase. Market liquidity shows a strong return, as 92% expect better or the same capital availability.
Beyond core metrics, the survey highlighted evolving risk perceptions, with geopolitical shocks remaining the top concern at 36%, followed by macroeconomic slowdown fears at 28%. A significant 71% of respondents reported an increasing appetite for new CRE lending or investment in the latter half of 2025.
The emergence of AI-driven data center demand also garnered attention, with 72% expecting positive impacts on the overall CRE market. Interest rate expectations moderated, with 78% anticipating at least one 25 bps rate cut by year-end 2025.
“The turnaround in our Sentiment Index highlights the CRE finance industry’s resilience and adaptability,” said Lisa Pendergast, president and CEO of CREFC. “What’s especially encouraging is the breadth of the recovery—from robust borrower demand to optimism around AI-driven data centers. Challenges remain, but the market is regaining its footing.”
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